MoviePass Eyes Surge Pricing as May Cash Burn Hit $40 Million

Fiscally-challenged MoviePass reportedly plans to introduce new pricing this summer targeting movies with high consumer demand.

In an interview with Business Insider, CEO Mitch Lowe said the concept includes implementing a surcharge (from $2) for blockbuster releases and other movies on opening weekend. The idea is to negate the full ticket price impact MoviePass pays exhibitors for every screening frequented by subscribers.

In its most-recent fiscal filing, parent Helios and Matheson Analytics said MoviePass was burning through an unsustainable $21.5 million monthly in the first quarter reimbursing theaters. That funding ballooned to $40 million in May.

Meanwhile, MoviePass will also enable subscribers to bring a friend and purchase tickets for Imax and Real 3D screenings.

In a statement to Gizmodo.com, MoviePass said it is keeping the $9.95 monthly pricing plan enabling subs access to one daily screening, while launching “new, on-demand options” that include ordering “tickets specifically for certain high-demand showings for a small additional fee.”

The updated pricing comes as HMNY sold 20,000 shares of preferred stock for $164 million

MoviePass Owner Initiates $164 Million Bond Sale

NEWS ANALYSIS — The corporate owner of fiscally-challenged movie ticket subscription pioneer MoviePass has thrown another Hail Mary.

Helios and Matheson Analytics, which owns 92% of MoviePass, June 21 said it entered into a securities purchase agreement with institutional investors to issue convertible notes (bonds) worth $164 million and 20,500 shares of preferred stock.

HMNY said it would use the funds for general corporate purposes.

The bond sale comes the day after AMC Theatres — a beneficiary of MoviePass foot traffic — announced it is launching its own $20 monthly subscription service.

MoviePass, which recently topped 3 million subs on its way to a year-end goal of 5 million subs, continues to spend millions of dollars per month more than it collects paying exhibitors for tickets consumed by subscribers.

The loss-leader business model has contributed to HMNY stock languishing below 35 cents per share.

New bond holders have the option to redeem the notes within seven months at a conversion price of $1. The preferred stock is not convertible into common stock. Each share of preferred stock is entitled to 3,205 votes per share on all matters on which holders of common stock are entitled to vote.

AMC Theatres Launching Movie Ticket Subscription Service

NEWS ANALYSIS — AMC Theatres is getting into the movie ticket subscription service just in time for the summer box office — and striking a potentially fatal blow to MoviePass.

The nation’s largest exhibitor June 20 announced that beginning June 26, it is bowing AMC Stubs A-List, which gives subscribers access to screenings and movie reservations three times per week for $19.95 (plus tax) per month.

A-List includes the existing AMC Stubs ($15 annual fee) loyalty program featuring eliminated online ticketing fees, food and beverage discounts. It is good at any AMC location, any format — including Imax at AMC, Dolby Cinema at AMC, RealD 3D, Prime at AMC and BigD. Reservations can be held for a maximum of three movies at any one time in the current week or for future weeks.

Subscribers can watch up to three movies per day, including repeat screenings. The service does not use a special card and is Web and App based. Fathom Events shows, special fan events and some Indian Cinema titles are not included.

“We believe that our current and future loyal guests will be interested in this type of program, as AMC Stubs A-List rewards guests with something that no one else offers … one simple, sustainable price,” Adam Aron, CEO of AMC Theatres, said in a statement.

Aron, of course, is referring to MoviePass, the fiscally-challenged $9.95 monthly service that enables subs to one standard theatrical screening per day. With more than 3 million subs, MoviePass has been hemorrhaging money as it lines the pockets of AMC and other exhibitors at unsustainable funding rates.

MoviePass owner Helios and Matheson Analytics’ stock is trading below 35 cents per share. In its most-recent fiscal filing, the company said it was spending an unsustainable $21 million monthly reimbursing exhibitors for tickets used by subscribers.

In response to AMC, MoviePass tweeted: “Heard AMC Theaters jumped on board the movie subscription train. Twice the price for 1/4 the theater network and 60% fewer movies. Thanks for making us look good AMC.”

That was followed up by another tweet: “AMC has repeatedly disparaged our model as a way to discourage our growth because all along they wanted to launch their own, more expensive plan. We want to make movies more accessible, they want more profit.”

To be fair, AMC’s Aron never disparaged MoviePass or the subscription business model. He criticized MoviePass’ unsustainable loss-leading subscription service.

Indeed, news of the AMC service sent HMNY shares down another two cents.

 

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 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.”

 

MoviePass Parent Stock Hits New Low

Fiscally-challenged Helios and Matheson Analytics, parent of movie ticket subscription service MoviePass, saw its stock hit a new low June 5.

The company’s shares closed at 38 cents per share, after falling to 37 cents per share during day in heavy trading (23 million shares). The company’s market cap is $32.1 million. The company’s previous record low was 41 cents per share.

Regardless, MoviePass continues to diversify. May 30 it announced the launch of indie-based MoviePass Films with Emmett Furla Oasis Films, with the intent of marketing indie films to its 2.7 million subscribers across multiple platforms such as theatrical, streaming, retail, on-demand and packaged media.

 

MoviePass Eyeing Content ‘Oasis’

NEWS ANALYSIS — Helios and Matheson Analytics (HMNY), the cash-poor corporate parent of theatrical ticket subscription service MoviePass, keeps swinging for the fences. Now it wants to buy a film production company.

HMNY May 30 announced it has acquired the option to acquire indie film house Emmet Furla Oasis Films (EFO Films), whose titles include Lonesome Survivor, Broken City and End of Watch, among others. If completed, HMNY would co-0wn with EFO new business subsidiary MoviePass Films.

With HMNY’s stock trading around 40 cents per share, the deal is another corporate Hail Mary with EFO’s Randall Emmett and George Furla serving as co-CEO’s of the new company.

HMNY would own 51% of MoviePass Films, with EFO Films owning 49%. HMNY CFO Stuart Benson would serve in the same position at the new venture, with Ted Farnsworth, CEO of HMNY, serving as chairman of the board.

Mitch Lowe, CEO of MoviePass, would have a seat on the board.

“Since we began disrupting the movie industry with our unprecedented low cost movie theater subscription service, MoviePass, we have envisioned owning and developing our own content and using the power of our several million subscribers to bolster the success of our films,” Lowe said in a statement. “I believe this partnership with EFO Films will accelerate those efforts.”

Indeed, MoviePass cut its teeth in the content business earlier this year acquiring rights to American Animals with Orchard, and John Travolta’s Gotti biopic — the latter after Lionsgate dropped the film from its release schedule. Both movies are slated to be released in June.

How owning a film production company will help MoviePass, whose loss-leader business model enables subscribers daily access to a theatrical screening for $9.95 a month, is anyone’s guess.

With more than 2 million subscribers, MoviePass is a hit with consumers and a fiscal goldmine for exhibitors. But the business is burning through more than $21 million on a monthly basis, which left HMNY with about $15.5 million in cash, according to its most-recent fiscal filing.

Hedge fund Citadel Securities apparently believes the hype. It acquired a 5.4% stake in HMNY May 29, for about $1.7 million.

MoviePass Pushes Fiscal Lifeline Fantasy

NEWS ANALYSIS — The corporate parent of fiscally-challenged subscription ticket service MoviePass reportedly claims it has a $300 million lifeline that can keep operations afloat for at least a year.

Helios and Matheson Analytics (HMNY), which owns more than 90% of MoviePass, has been shrugging off its plunging stock valuation (down 98%) as investors question a business model burning through more than $20 million a month offering subscribers daily access to a theatrical movie for a $9.95 monthly fee (or $6.95 based on an annual fee).

The company, in its most-recent fiscal statement, said it had just $15.5 million in available cash. The news sent the stock freefalling to less than 50 cents per share at the close May 23.

Now, MoviePass president Mitch Lowe and Ted Farnsworth, CEO of HMNY, are telling anyone who will listen that they have access to a $300 million line of credit that can sustain operations for more than a year.

But as Business Insider reports, the line of credit isn’t really a line of credit or much of a lifeline. It’s more of a fiscal Hail Mary.

The credit is known as a “at-the-market” (ATM) sale that enables HMNY to sell shares on a daily, weekly or monthly basis to generate funds without impacting the company’s market valuation.

“It’s kind of a science,” Lowe told Business Insider. “It’s a third party that manages it on behalf of HMNY, but essentially some days they might sell, some days they might not sell. It’s all kind of based on what they believe will have the least impact on the valuation.”

But to make the ATM work requires investors willing to buy shares. And with the stock down nearly 8%  at 45 cents per share in early-morning trading May 24, who is going to buy?

Why MoviePass Matters

On a recent trip to Costco, I picked up some discounted Regal Theater tickets. While in line, I saw a friend who said, “We don’t get those anymore. We have MoviePass.”

If you are looking for a theatrical discount, indeed MoviePass beats just about everything — except for seeing a movie for free. For $9.95 a month ($6.95 a month for a year commitment), if you see one movie in roughly 30 days you are already getting that Costco discount. If you see more, the discount doubles, triples, quadruples, etc. (depending on how many movies in a month you have the time and desire to see).

Still, why should the home entertainment industry care?

Well, there are only 24 hours in a day. The time consumers spend going to the movies for little to no cost is time they won’t spend renting or buying and watching a disc or digital version of a film.

Also, each time MoviePass consumers go to a film during a month, they may perceive that content as that much less valuable. If theatrical movies are worth $9.95 or $6.95 or even much less than that — less than 50 cents apiece if you go 30 times a month — why should they pay $20 for a disc, much less EST?

I’ve watched this business long enough to remember the inception of Redbox and Netflix, both of which MoviePass CEO Mitch Lowe had a hand in getting off the ground. At the time, the industry didn’t think much of those upstarts. I vividly remember a Blockbuster spokesperson telling me kiosks were a niche business. Now Blockbuster is history, and kiosk company Redbox is the biggest physical disc rental company in the United States.

Why does MoviePass matter? Because it is disrupting the value of and way consumers perceive entertainment. That matters to the home entertainment business, as well as to our theatrical brethren.

So don’t take too much solace in the financial woes of MoviePass. I remember a long line of executives no longer in the business that wrote off Lowe’s previous ventures.

HMNY Puts Spin on MoviePass $26 Million Q1 Loss

NEWS ANALYSIS — The corporate parent of fiscally-challenged ticket subscription service, MoviePass, May 16 reported a first-quarter (ended March 31) loss of $26 million, compared with a loss of $6.4 million during the previous-year period.

To Ted Farnsworth, CEO of parent Helios and Matheson Analytics (HMNY), the quarter was huge success.

“We are excited to report our biggest quarter in Helios and Matheson and MoviePass combined history. This growth surpassed our expectations,” he said in a statement.

Indeed, HMNY said MoviePass passed 2.7 million subscribers in the quarter. Unfortunately, those subs — who have access to one theatrical screening per day for a $9.95 monthly fee — negatively impacted the bottom line.

HMNY boasts MoviePass is accepted in 91% of theaters nationwide, and indeed revenue ballooned to $49.4 million from $1.4 million a year ago. But the cost of that revenue skyrocketed to — $136 million. HMNY reported a negative $68.4 million in net cash used in operating expenses.

As has been previously reported, MoviePass continues to burn through millions of dollars more than it takes in. HMNY said it ended the quarter with $42.5 million in cash and cash equivalents.

But back to the spin. Citing third-party research hired by The Hollywood Reporter, HMNY said MoviePass continues to interrupt the theatrical market in positive ways.

It said 41% of respondents decide what theater to attend based on MoviePass, and only 18% would switch to a rival subscription service started by their favorite theater chain.

Not surprisingly, MoviePass subscribers are twice as likely to attend movies on opening weekend; 83% are seeing more movies than before they were subscribers. Respondents are twice as likely to see Oscar-nominated movies such as Lady Bird, The Post, Annihilation and I, Tonya. In addition, 49% are more willing to attend movies alone, and 49% say they are seeing movies that they wouldn’t normally see in theaters.

“Our core strategy has always been to provide a compelling value proposition to consumers that vastly improves their movie-going experience,” HMNY said in the fiscal release.

True, but someone has to pay for that strategy. And right now only MoviePass is holding the bill.