MoviePass Parent Board Member Quits, Citing Lack of Financial Disclosures

Helios and Matheson Analytics, parent of ticket subscription service MoviePass, Aug. 30 disclosed that a member of its board of directors has resigned under protest.

Carl Schramm, in an Aug. 25 letter to Ted Farnsworth, CEO of HMNY, said he was resigning as a director, including positions on the audit committee, compensation committee, nominating and corporate governance committee and the pricing committee, citing a failure to receive necessary financial information on the company and subsidiary MoviePass.

Schramm served on the board since Nov. 9, 2016.

“I have sought, often unsuccessfully, information about the company’s financial status and operations, and explanations of company strategy,” Schramm wrote. “I have objected to the manner in which a number of business decisions have been presented to the board by management, without sufficient time for the board to examine complex documents, to review significant transactions, or to discuss how the proposed actions fit into the company’s strategic plan.”

Indeed, HMNY and MoviePass have engaged in numerous strategic moves aimed at buttressing the latter’s business model enabling subscribers daily access to a theatrical screening for $9.95 monthly fee.

With the service losing millions of dollars more per month than it generates, HMNY’s stock valuation has plummeted to 2 cents per share – after a 1-for-250 shares reverse stock split. A subsequent price hike was scuttled, with subscriber restrictions put in place instead.

In response, HMNY said it was unaware of any unanswered requests for information by Schramm. It said the board and committees of which Schramm was a member have met at least 25 times thus far in 2018.

HMNY contends it has kept the board “fully informed” and has provided all information needed for members to exercise their responsibilities.

HMNY said that since acquiring 92% stake in MoviePass, it has experienced unprecedented and unanticipated growth – including issues that have placed significant demands on management and the board, as evidenced by the number of board and committee meetings.

“But the company firmly believes all board and committee meetings have been duly noticed and held, and no material information has been withheld from any board member,” Farnsworth wrote in a filing.

MoviePass Inks Promo Deal with Postmates Courier Service

Looking to retain subscribers and diversify revenue streams, fiscally-challenged ticket subscription service MoviePass Aug. 30 announced a promotional deal with Postmates, the San Francisco-based online courier service.

Postmates gives consumers access — via courier delivery — to more than 250,000 local merchants that were previously inaccessible online in more than 385 cities. Postmates has helped create an alternative infrastructure for local businesses to better compete against retail goliaths such as Walmart, Amazon and Target.

The agreement affords MoviePass subs special discounts and credit toward both services through promotions within the MoviePass app.

MoviePass will promote Postmates within its app and on corporate parent Helios and Matheson Analytics’ Moviefone.com website and provide subs with access to Postmates delivery credits, a week-long free trial of subscription service, Postmates Unlimited, and a credit toward one month of MoviePass.

MoviePass CEO Mitch Lowe said the pact is part of a larger strategy to provide an array of deals to subs, tapping different companies and brands to develop “creative and innovative” consumer offerings.

Previous MoviePass brand partners include iHeartMedia, Fandor, Costco and others. Additionally, this relationship furthers MoviePass’ ongoing effort to develop non-subscription-based revenue channels.

“Knowing that the vast majority of our subscribers generally have at least one streaming subscription at home, it was a no-brainer to bring them real value not just at the movies but on the comfort of their couches through our relationship with our friends at Postmates,” Lowe said.

Diversifying revenue streams would appear to be a mandatory considering HMNY’s stock is trading at 2 cents per share as Wall Street and consumers turn their backs on the MoviePass business model – and ongoing changes to it.

The $9.95 monthly service a year ago generated millions of subs offering daily access to a theatrical screening. With MoviePass paying exhibitors face value for every ticket used by subs, the service has been hemorrhaging millions of dollars more than it generates. As a result, theatrical access has now been restricted to three screenings monthly, in addition to select movies and exhibition times.

At the same time, AMC Theatres launched a rival service enabling subs access to three screenings weekly for $19.95 per month. The service has more than 260,000 subs.

MoviePass Now Limiting Title, Showtime Options

Fiscally-challenged ticket subscription service MoviePass is changing its rules again in an attempt to remain solvent.

The service Aug. 16 informed subscribers in an email it is now limiting them to select titles and showtimes per day.

The new restrictions are part of an updated plan enabling subscribers access to three movies per month. Subs previously had access to one theatrical screening daily for a $9.95 monthly fee – a business plan that was burning through more cash than was being generated.

The MoviePass website listed seven movies subscribers could watch Aug. 16, which included Blackkklansman, The Meg, The Miseducation of Cameron Post, We the Animals, Skate Kitchen, Juliet, Naked and Summer of 84.

On Friday, Aug. 17, subs have access to Mile 22 and Christopher Robin, but not The Meg and Blackkklansman. The former titles are replaced by Alpha and Slenderman on Aug. 18.

Subscribers do not have access to Crazy Rich Asians until Sunday, Aug. 19 – and then only in select markets. The same applies to the aforementioned titles.

Investors continued to hammer corporate parent Helios and Matheson Analytics’ stock, which closed down 37.5% at 3 cents per share. Despite HMNY issuing millions of shares daily in an attempt to buttress the stock, the company ended Aug. 16 with a market cap of just $200,000.

Separately, two class action lawsuits have been filed against HMNY alleging its executives mislead investors on the fiscal health of MoviePass, among other charges.

 

 

 

 

MoviePass Missteps No Laughing Matter

Fiscally challenged MoviePass caught a break when it ditched a planned price hike and instituted a limit on the number of theatrical movies subscribers could see in a month.

The new rule limiting the service’s 3 million subs to three screenings (instead of daily access) should go far staunching the reported $45 million monthly cash burn that has sent investors fleeing and left analysts scratching their heads.

But is it enough? Shares of MoviePass corporate parent Helios and Matheson Analytics are trading around 9 cents per share. The stock has become a day-trader’s punching bag with more than 460 million shares trading hands Aug. 6.

Throughout it all MoviePass CEO Mitch Lowe and HMNY CEO Ted Farnsworth have maintained high profiles in corporate and fiscal mismanagement.

Lowe, the former Netflix executive and Redbox boss, has a reputation as an industry visionary/disruptor. Following HMNY’s 92% acquisition stake in MoviePass last August (the service was founded in 2011 by African American businessmen Stacey Spikes and Hamet Watt), Farnsworth and Lowe slashed the $50 monthly fee to $9.95 and went on the PR offensive.

Consumers noticed, and the subscriber base ballooned from 20,000 to 600,000, and then 1 million as the concept of essentially watching a theatrical movie for free 30 out 31 days caught fire.

Lowe and Farnsworth predicted MoviePass would hit 5 million subs by the end of the year and be profitable. At the same time, the duo got cocky.

MoviePass would do more than facilitate increased exhibitor foot traffic, it expanded into indie film acquisitions (American AnimalsGotti) and acquired ’90s holdover Moviefone (largely for Verizon’s minority investment).

Lowe and Farnsworth hyped MoviePass’ user data, and what it could mean to marketers. And that’s when things veered off the rails.

As first reported in March by Stephanie Prange at Media Play News, Lowe, speaking at an industry event, bragged the service knew a lot of details about its subscribers.

“We know all about you,” Lowe said at the self-serving keynote, “Data is the New Oil: How Will MoviePass Monetize It?”

“We get an enormous amount of information,” he said, noting the company knows subscribers’ addresses and can glean demographic information based on where they live. The company also can track subs via the app and a phone GPS.

“We watch how you drive from home to the movies,” he said. “We watch where you go afterwards.”

The reaction was swift. Like an exploding Orwellian timebomb, media pundits, including social, jumped all over Lowe’s bravado, forcing the executive to clarify his comments. MoviePass quickly hired a VP of customer service to assuage any subscriber concerns.

That didn’t stop Farnsworth from perpetuating the service’s data prowess – at the same time MoviePass continued to hemorrhage money.

“Boggles my mind,” Farnsworth told Media & Entertainment Service Alliances’ Smart Content Summit in New York last month, contending studios knew little about the people who watch their movies.

Actually, studios and exhibitors know a lot about their customers, according to Adam Aron, CEO of AMC Theatres, the nation’s largest movie theater chain – and major beneficiary of MoviePass paying face value for every ticket redeemed by subscribers (see photo above).

Indeed, Aron said AMC applied its consumer insight when launching A-List, a $19.95 rival service enabling subs to see three movies weekly on any AMC screen, including Imax and Real3D.

“What gives us confidence that $20 [subscription fee] is the right level for AMC is, it was more than double what anybody else [i.e. MoviePass] was charging,” said Aron.

With his back against the wall, and HMNY’s stock about to be de-listed, Lowe admits management made mistakes.

“I should have accelerated the process of reducing the burn faster in hindsight,” Lowe told The Wall Street Journal. “We’ve been whipsawing people back and forth. I think we’ve got it now.”

Wishful thinking, as more than 302 million HMNY shares traded hands Aug. 7, with the stock falling to 7 cents per share.

 

 

MoviePass to Limit Subs to 3 Movies Monthly, Abandons Price Hike

Financially strapped MoviePass plans to limit subscribers to three theatrical screenings per month as it desperately tries to cut overhead costs and avoid insolvency. The service is also canceling a planned price hike.

The change comes just days after the service, which has more than 3 million subscribers, said it would increase the monthly subscription fee 50% to $14.95 (from $9.95) and restrict daily access to movies (i.e. blockbusters) released on more than 1,000 screens until two weeks after their debut.

“We have heard our MoviePass community and we will not be raising prices to $14.95 a month,” the service said in a statement. “The new plan is focused on usage by the bulk of our subscribers who have historically used MoviePass to attend three movies or fewer a month. Additionally, the new plan addresses past misuses which imposed undue costs on the system, including ticket scalping, unauthorized card usage and other activities, which in the past necessitated the use of certain remedial measures that have sometimes been inconvenient for our subscribers.”

In an interview with The Wall Street Journal, MoviePass CEO Mitch Lowe said the latest change would take effect Aug. 15 and help slash the company’s monthly cash burn by 60%. Through June, the service was spending $45 million more per month than it was generating.

“[Subscribers] will not be affected at all by this program, and even better, they’ll stop hearing MoviePass is going out of business,” said Lowe.

Indeed, with corporate parent Helios and Matheson Analytics’ stock hovering around 7 cents per share — after a 205-to-1 consolidation of shares — the company is in dire straits on Wall Street. Most analysts have written off a company that was heralded as industry disruptor/innovator just last September. Company officials predicted 5 million subs by the end of the year.

HMNY was forced to take out an emergency loan (since repaid) just to keep the lights running. Lowe admits efforts to stem the fiscal hemorrhaging should have been instigated earlier.

“I should have accelerated the process of reducing the burn faster in hindsight,” Lowe said. “Now I realize no matter how patient investors say they will be, they never are.”

How subscribers react to the new rules remains to be seen. AMC Theatres’ rival $19.95 service, AMC Stubs A-List, has generated nearly 200,000 subs since launching a month ago. It offers members access to three movies per week on any AMC screen, including Imax and Real3D.

MoviePass Claims Box Office ‘Power’ as Stock Continues to Tank

With its penny stock cratering — down 49% in mid-morning (Aug. 1) trading at 25 cents per share — Helios and Matheson Analytics, parent of ticket subscription service MoviePass, is on a last-gasp PR offensive hoping to reassure fleeing investors.

HMNY said it paid back an emergency $6 million loan taken out last week to keep select operations (i.e. paying exhibitors for tickets redeemed by subscribers) running.

The firm issued an Aug. 1 regulatory filing outlining MoviePass’ contributions to studios and the domestic exhibition market — notably that MoviePass subs on average saw six more movies in the past six months than non-subscribers.

“It is incredible to see the power MoviePass has achieved with its sub base in eleven months,” Ted Farnsworth, CEO of HMNY, said in a statement. “MoviePass is one of the top contributors to the film industry without owning a single theater.”

HMNY said MoviePass accounted for 22.7% of opening weekend box office for Lionsgate’s Blindspotting; and 12% of the total box office for Magnolia Pictures’ U.S. Supreme Court documentary, RBG.

Other benchmarks included 16.8% of July 26 previews for Paramount Pictures’ Book Club; 13% of Warner Bros.’ Tag opening weekend domestic box office; and 5% of Universal Pictures’ The First Purge opening weekend. MoviePass said it paid for more than 150,000 tickets subscribers redeemed for First Purge.

The service said 30.8% and 25.4%, respectively, of its subs saw Oceans 8 and Game Night (Warner Bros.), compared to 4.9% of the U.S. moviegoing population. Another 17.7% (2.3%) saw Blockers (Universal Pictures) and 12.8% (1.6%) watched Hereditary (A24).

Indeed, with more than 3 million subscribers, MoviePass has had a major impact on exhibitor foot traffic. But its hemorrhaging money in the process. With subs paying just $9.95 monthly for daily access to a theatrical screening, attendance is up as subs flock to free screenings.

That could change as MoviePass implements a 50% price hike to $14.95 and restricts access to movies releases on 1,000+ screens.

MoviePass CEO Mitch Lowe says the company has learned “a few points” about the film industry over the past 12 months — which apparently didn’t involve overhead costs.

HMNY is spending millions more per month than it recoups in subscriber revenue — a fiscal reality that continues to spook investors — but not HMNY management.

“We are able to create immense value with our film partners by driving traffic to their films and effectively increasing the valuation of their films on the back-end deals they create,” Lowe said. “Not only do we want to provide an amazing deal for our subscribers, but we also want to be a positive force in Hollywood.”

“We are also beginning to see the benefits of our acquisition and integration of Moviefone.com (acquired from Verizon for an equity stake) into the MoviePass family, with new revenue being generated from studios and brands,” added Khalid Itum, VP of business development.

MoviePass Upping Subscription Cost 50%, Restricting New-Release Access

Fiscally-challenged MoviePass July 31 announced it is increasing the monthly cost of its theatrical ticket subscription service 50% to $14.95 within the next 30 days.

Corporate parent Helios and Matheson Analytics said the service would also restrict subscriber access to new movies opening on more than 1,000 screens during the first two weeks of release.

“These changes are meant to protect the longevity of our company and prevent abuse of the service,” CEO Mitch Lowe said in a statement. “While no one likes change, these are essential steps to continue providing the most attractive subscription service in the industry.”

MoviePass said the move would cut monthly churn by 60% and prevent abuse of the service. It claims to be generating $4 to $6 per subscriber in non-subscription (concessions) revenue in the current third quarter.

“Over the past year, we challenged an entrenched industry while maintaining the financially transparent records of a publicly traded company,” Ted Farnsworth, CEO of Helios, said in a statement. “We believe that the measures we began rolling out last week will immediately reduce cash burn by 60% and will continue to generate lower funding needs in the future.”

Approaching the one-year anniversary of its standard $9.95 price point, MoviePass has grown to more than 3 million members, and claims to be contributing to “record” box office growth, responsible for about 6% of the nation’s total box office sales in the first half of 2018.

Much of that sub growth has been fueled by a business model that enables users to watch movies for free 30 days out of 31-day month. The more subscribers frequent theaters, the more MoviePass has to pay exhibitors full face-value for each ticket consumed.

The service said it would continue with surge pricing for more popular movies, partnerships with 3rd party media inventory to increase scale and reach of marketing efforts driven by data; creating strategic marketing partnerships and promotions with studios, content owners, and brands, and integration of Moviefone.com to support the media buys of brands and studios

The service also operates MoviePass Ventures and MoviePass Films, which acquire, fund and distribute indie movies.

Regardless, news of the changes didn’t stop HMNY shares from falling – down more than 5% at 75 cents per share in midmorning trading.

On Yahoo Finance, hosts discussed their dissatisfaction with MoviePass.

 

MoviePass to Offer Imax, Real3D Movies by Labor Day

Theatrical ticket subscription service MoviePass will offer subscribers access to Imax and Real3D movies by Labor Day weekend, CEO Mitch Lowe said in an interview.

Speaking to BusinessInsider.com, Lowe said the premium titles would cost subscribers a surcharge from $2 to $5, depending on the movie. MoviePass currently charges subs $9.95 monthly to see one standard theatrical screening per day.

“Imagine you’re a customer and now you can go to what typically might be a $17 or $18 ticket for an extra $5?” said Lowe. “That’s going to be extremely valuable.”

Meanwhile, expect to see surge pricing take effect on all 3+ million MoviePass subs by the end of this month. The program, which charges users extra to see popular movies during weekend debuts, was rolled out in select markets over the July 7-8 weekend.

Lowe said subs, which get one free pass on surge pricing per month, can avoid the price hike by watching a blockbuster movie during the week.

“Our whole mission is to reenergize the occasional moviegoer, those people who were only going four or five times a year, now they are going nine, 10, 12 times a year with MoviePass,” said Lowe.

How much all of this energizes investors remains to be seen. MoviePass corporate parent Helios and Matheson Analytics saw its stock rise more than 7% in afternoon trading after falling to a record low 17 cents per share July 11.

Mitch Lowe: MoviePass (Still) Plans to Break Even by Yearend

Fiscally-challenged theatrical ticket subscription service MoviePass will apparently stop losing money by the end of the year, according to CEO Mitch Lowe.

The former executive at Netflix and Redbox June 27 took to social media (in a Q&A on Reddit.com) to address ongoing concerns about the platform’s financial viability after parent Helios and Matheson Analytics admitted the service is hemorrhaging millions of dollars more monthly than it takes in.

HMNY’s stock closed down at 21 cents per share June 27.

“It takes a lot of investment and significant losses in order to build a multibillion dollar entertainment company,” wrote Lowe. “Look at Spotify, Netflix and Amazon — there are many different companies that lost money for years and are only now turning a profit.”

Lowe said MoviePass would like to break even on subscription revenue, while generating income from advertising, brand partnerships and content licensing.

“The reason we keep our price low is to attract the occasional moviegoer,” Lowe wrote, while avoiding HMNY’s share price and fiscal health. “There are more than 200 million occasional moviegoers in the U.S., who only go to the movies four to five times a year without MoviePass and nine to 10 times a year when they join MoviePass. If we get enough occasional moviegoers to offset the frequent moviegoer, everything will balance out.”

Respondents peppered Lowe with assorted questions, complaints and personal commentary regarding what some characterized as “annoying afterthoughts,” recently imposed by MoviePass, including requiring subscribers to scan ticket stubs to prove they’re not seeing the same movie twice and limiting ticket purchases to same-day viewing.

“Having to buy [a ticket] day-of is a huge issue in areas with assigned seats,” wrote one subscriber. “This is what tipped me over to signing up with [rival subscription service] AMC [Stub A-List].”

Lowe responded, saying MoviePass invested millions building a patented platform that gives subs access to 91% of the theaters across the country – unlike AMC’s subscription service.

In February, MoviePass sued upstart competitor Sinemia for patent infringement.

“We intend to continue to be vigorous about protecting our patents in the future,” Lowe wrote.

He said “utilization” (repeat movie viewing) has dropped “significantly” among subscribers since MoviePass ended repeat viewings, instituted ticket verification and price surcharges during peak moviegoing periods.

“Movies are seasonal, and summer is high point,” wrote Lowe. “When we adjust based on seasonality, it has an impact. The new peak pricing feature is also aimed at helping curb heavy use, or supplement that use with more revenue. The important thing is that we’re building pricing to be flexible. We can tweak it as needed.”

 

MoviePass Tops 3 Million Subscribers

MoviePass, the movie ticket subscription service, has topped 3 million subscribers according to corporate parent Helios and Matheson Analytics. The service is projected to reach 5 million subs by the end of the year.

MoviePass claims to represent more than 5% of total U.S. box office receipts, with its peak weeks nearing 8% of box office. The percentage increases to 30% when factoring in targeted indie films.

“Consistent growth in subscribers means we can utilize our media companies in ways no one has seen before,” Ted Farnsworth, CEO of HMNY, said in a statement. “With its considerable market share of moviegoers, MoviePass expects to influence its subscribers to engage with our other revenue channels throughout the entire film industry ecosystem.”

HMNY recently acquired Moviefone from Verizon, which has enabled MoviePass to expand its advertising offerings. In addition, subsidiary, MoviePass Ventures, acquired economic interests in American Animalsand John Travolta film, Gotti, and teamed up with MoviePass to drive box office for those films, which HMNY contends will maximize downstream revenue opportunities – including subscription video-on-demand (SVOD), electronic-sell-through (EST), DVD, Blu-ray, 4K) and other forms of distribution.

“MoviePass is moving quickly and decisively on a course to continue innovating the film industry from the ground up and delivering audiences for films and films for audiences,” said CEO Mitch Lowe. “This is the eve of a transformative time in the movie industry. We are witnessing the dawn of a new Golden Age, where audiences, studios, and exhibitors are all connected, from top to bottom — all in the interest of diversifying the movie-going palate and demonstrating the success of smaller, independent titles.”