MoviePass Struggling to Sell Tickets to Its Own Movies

NEWS ANALYSIS — Gotti, the Italian crime boss biopic starring John Travolta dropped by Lionsgate and acquired (partially) by MoviePass, generated $1.67 million during its opening box office weekend.

Media reports say the movie subscription service owned by Helios and Mathenson Analytics (HMNY) accounted for about 40% of the $10 million budgeted film’s tickets sold. That’s a bigger percentage than the $135,000 opening weekend for American Animals, the indie heist film HMNY’s MoviePass Ventures acquired last year at Sundance.

While Gotti infamously generated a 0% score on Rotten Tomatoes, the reality is that MoviePass essentially bought four out of every 10 tickets sold to its own movie. That’s because the service pays theater operators face value for every ticket “purchased” by its 3 million subscribers, who pay $9.95 monthly for access.

The margins might actually be better since MoviePass has leveraged ticket price discounts with many indie exhibitors in exchange for generating foot traffic.

It used to be in distribution, we’d all gossip whether a studio was buying tickets to their own movie to goose their opening. But in the case of MoviePass, there’s no secret: They’re literally buying the tickets to their own movie!” an unidentified indie studio executive told Deadline.com.

But for how long? HMNY is spending more on tickets monthly than it generates in subscriber revenue — an economic reality that has plummeted the stock price to 35 cents-per-share.

MoviePass Acquires Indie Crime Drama ‘American Animals’

Subscription theatrical ticket service MoviePass acquired the rights (with The Orchard) to art crime drama, American Animals, for $3 million at the Sundance Film Festival.

The acquisition was done through MoviePass Ventures, the upstart subsidiary launched at Sundance to co-acquire movies and distribute through multiple channels, including packaged media, on-demand and streaming.

“I made this film to be watched in theaters and the fact that this incredibly impressive partnership and this innovative deal put so much emphasis on that is hugely exciting,” Animals director Bart Layton (“The Imposter”) told IndieWire.com.

With more than 1.5 million subscribers, MoviePass continues on an aggressive push to disrupt the theatrical ticketing ecosystem with a subscription-based business model. Media reports suggest the service could reach 3 million subs by April.

MoviePass just issued a regulatory offer for $400 million in future funding, and reportedly dropped select AMC Theatres in an effort to obtain better fiscal terms, including revenue sharing.

Wedbush Securities analyst Michael Pachter believes the service – which pays exhibitors full price for tickets purchased – needs at least 2 million (infrequent moviegoers) subs to break even.

Pachter says MoviePass has rev-share agreements with most (about 1,000) indie theaters – a situation it would like to replicate with national chains.

That could be wishful thinking with AMC, whose CEO Adam Aron refuses to consider the concept.

“AMC has absolutely no intention, I repeat no intention, of sharing any – I repeat, any, of our admissions revenue or our concessions revenue with MoviePass,” Aron said on the most-recent fiscal call.