Moviefone, the iconic voice of the now-discontinued telephone service marketing theatrical releases and ticket sales, has been sold for $1 million in bankruptcy proceedings involving Helios and Matheson Analytics, which also owned the defunct MoviePass subscription ticket service.
Founded in 1989, Moviefone offered callers movie, ticket and screening information nationwide. The service was acquired for $388 million in 1999 by AOL, which in 2017 merged with Yahoo to become Oath. Helios and Matheson bought the brand in 2018 for $8 million from Oath in a largely stock-based transaction. (Oath in 2019 was renamed Verizon Media.)
Helios and Matheson Analytics, owner of the shuttered Movie Pass theatrical ticket subscription service, among other businesses, has filed for Chapter 7 bankruptcy protection.
Under a Chapter 7 bankruptcy filing, the debtor’s assets are sold off to pay the lenders (creditors) whereas in Chapter 11, the debtor negotiates with creditors to alter the terms of the loan without having to liquidate assets.
Per a regulatory filing, New York-based HMNY said that after “considering” strategic alternatives, the company and its subsidiaries MoviePass and Zone Technologies, each filed a voluntary petition for relief under the provisions of Chapter 7 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York on Jan. 28, 2020.
HMNY said its remaining board members — Prathap Singh, Gavriel Ralbag, Muralikrishna Gadiyaram and Joseph Fried — had tendered their resignations, leaving the former high-flying entertainment disruptor without a board.
In addition, Parthasarathy Krishnan, interim CEO, and interim CFO Robert Damon resigned their positions.
The bankruptcy court will assign a trustee to HMNY to determine distribution of the company’s assets, including MoviePass Ventures, a subsidiary founded to co-acquire films with film distributors.
Titles included American Animals, John Travolta’s Gotti and The Row with Lionsgate. The company also co-produced a series of low-budget direct-to-videos with Bruce Willis, including 10 Minutes Gone.
HMNY acquired upstart MoviePass in 2016, and together with former Netflix/Redbox executive Mitch Lowe, set about upending the theatrical business with a $10 monthly, daily access to any exhibitor’s screening.
The venture proved a hit with consumers as more than 3 million joined MoviePass, but a fiscal failure as the platform was on the hook paying theaters face value for every ticket used by subscribers.
The service lost hundreds of millions of dollars, and despite venturing into movie productions, distribution and a reverse stock transaction, could not elevate HMNY’s stock value above a penny.
MoviePass shut down four months ago with both Lowe and HMNY boss Ted Farnsworth exiting the company.
Former Helios and Matheson Analytics CEO Ted Farnsworth just doesn’t know when to quit.
A day after stepping down as CEO of the parent to shuttered MoviePass ticket subscription service and related businesses (MoviePass Films, Moviefone), Farnsworth reportedly is cobbling together a group of investors to buy select MoviePass assets.
According to The Wall Street Journal, which cited HMNY internal documents, including Farnsworth’s resignation letter, the executive eyes continuing MoviePass Films, which generated several original releases starring Bruce Willis.
Whether Farnsworth — a longtime MoviePass cheerleader along with the service’s CEO Mitch Lowe — would bring back MoviePass is unclear.
Launched in 2017, the $9.95 monthly ticket service offered subscribers daily access to a non-3D theatrical screening. At its peak, MoviePass had more than 3 million subscribers eager to take advantage of a business model that hemorrhaged money.
The service sought to make deals with exhibitors who were paid face value by MoviePass for every ticket used by subscribers in exchange for user data.
Chains such as AMC Theatres, Regal Cinemas and others wouldn’t bite, opting instead to launch competing ticket services.
Despite several attempts to re-invent the MoviePass business model, investors pulled the plug on HMNY shares — especially after two reverse-stock option split attempts.
Whether investors would line up behind Farnsworth for another edition of MoviePass remains to be seen. HMNY could also sell the assets to a third party.
Subscription theatrical movie service MoviePass will shut down Sept. 14 at 8 a.m. (EST), according to a letter from CEO Mitch Lowe on the site.
“Over the past several months, MoviePass worked hard to relaunch its groundbreaking subscription service and recapitalize the company,” he wrote. “While we were able to relaunch the service for some of our subscribers with an improved technology platform, our efforts to recapitalize the company have not been successful to date.”
He wrote that subscriptions will be refunded.
“MoviePass will be providing subscribers with appropriate refunds for their period of service already paid for,” he wrote. “Subscribers will not need to request a refund or contact MoviePass customer service to receive a refund. Subscribers will not be charged during the service interruption.”
The new service comes as ticket subscription pioneer MoviePass has suspended service indefinitely as it grapples with a business model that is not aligned with an exhibitor and thus hemorrhages money.
Regal subscribers can watch as many standard format movies as they want. There are no blackout dates, and advance tickets can be acquired as soon as they go on sale.
For special formats, subs can upgrade their ticket to VIP, ScreenX, 4DX, Imax, RPX and 3D, by paying the usual standard upcharge.
Moviegoers who sign up for Regal Unlimited will be automatically enrolled in the Regal Crown Club program. Through the Regal Crown Club, members accumulate credits at the box office and concession stand to earn rewards, including free popcorn, soft drinks, movies and merchandise.
“This is the [subscription] program moviegoers have been craving,” Ken Thewes, chief marketing officer at Regal, said in a statement.
Regal Unlimited subs get a 10% concessions discount on all food and non-alcoholic beverages — as well as a free large popcorn and large drink on their birthday.
Along with all the Crown Club benefits, subs earn credits for every dollar spent, including the opportunity to attend advance screenings.
“Regal Unlimited is the best value option for movie fans,” said Kelly Hawkins, VP of loyalty at Regal.
Fiscally challenged MoviePass suspended service midday July 4 for an indefinite period of time to revamp its app.
The eight-year-old movie ticket subscription pioneer, in an email to subscribers, said the stoppage was in order to “provide the level of service you deserve.”
“We have listened and we understand the frustrations of our subscribers,” Mitch Lowe, CEO of MoviePass, said in the July 3 email. “We plan to make this improvement by utilizing an enhanced technology platform, which is in the final stages of completion.”
During the shutdown, MoviePass will not take on new subscribers. Existing subs will be credited for the number of affected days once the service continues.
Owned and operated by Helios Matheson Analytics, the service at its peak generated more than 3 million subscribers paying $9.95 for daily access to theatrical releases.
The business model quickly proved unsustainable as MoviePass paid exhibitors face value for each ticket consumed by subscribers. Unable to reduce ticket fees and market subscriber data to exhibitors, the service hemorrhaged money — losing $329.3 million, on revenue of $232.3 million in 2018.
In March Helios said it received nearly $6 million in funding from an unidentified investor.
“There’s never a good time to have to do this,” Lowe said. “But to complete the improved version of our app, one that we believe will provide a much better experience for our subscribers, it has to be done.”
Regardless, movie subscription service appears here to stay as exhibitors grapple with burgeoning over-the-top video competitors.
AMC Stubs A-List service has more than 800,000 subs, while rival Regal Cinemas is working on its own branded service. Atom Tickets and Cinemark have separate subscription plans in place.
AMC Theatres May 20 announced its branded Stubs A-List subscription ticket program now tops 800,000 moviegoers — an increase of 200,000 members in 2019. The number make the service the No. 1 service in North America, and well ahead of its one-year target of 500,000 members by June 26.
“We believe we’ve cracked the code to make this concept successful for AMC, our shareholders, our studio partners and most importantly, our guests,” CEO Adam Aron said in a statement.
The milestone comes after the world’s largest theatrical exhibitor reported a net loss of $130.2 million compared to profit of $17.7 million in its most-recent fiscal period. Revenue dropped 13.2% to $1.2 billion.
Indeed, AMC contends the service contributing to the bottom line as A-List members bring friends and family with them to the movies.
Launched in 2018, $19.95 Stubs A-List affords subscribers up to three movies per week, in every available AMC showtime and format, including “Imax at AMC,” “Dolby Cinema at AMC,” RealD 3D and “Prime at AMC.”
Stubs A-List subs have the same privileges as AMC Stubs Premiere members, including free upgrades on popcorn and soda, free refills on large popcorn, express service at the box office and concession stand, no online ticketing fees and 100 points for every $1 spent on the monthly Stubs A-List fee, tickets purchased for friends and family, and food & beverage spending at AMC.
AMC Stubs Premiere and A-List uers receive a $5 reward for every 5,000 points earned, which translates to a 10% credit toward future AMC purchases.
Marvel Studios’ Avengers: Endgame can’t come fast enough for AMC Theatres.
The world’s largest theatrical exhibitor, May 9 reported a first-quarter (ended March 31) net loss of $130.2 million compared to profit of $17.7 million in the previous-year period. Revenue dropped 13.2% to $1.2 billion from $1.38 billion last year.
Total attendance fell 12.2% to 79.8 million from nearly 91 million. In the U.S., attendance dropped 11.1% to 54.9 million from 61.8 million. Foreign attendance dropped 14.5% to 24.8 million from 29 million.
In the quarter, AMC owned, operated, or had interests in 636 theatres in the U.S. and 365 theatres internationally.
The chain attributed the metrics declines due to a weak box office and comparisons with the previous-year quarter’s release of Black Panther, which was the second-highest grossing Q1 movie in history.
While AMC has usurped the ticket subscription market from MoviePass through its branded Stubs A-List program, its 4.8% decline in total average ticket price (2.4% decline on a constant currency basis) reflected implementation of the program and other promotional pricing initiatives, as well as declines in Imax and 3D volumes primarily due to the mix of films during the period.
Stubs A-List ended the quarter with more than 785,000 subscribers.
AMC implemented a 10% membership price increase in 10 states and a 20% price increase in five states. Based on the average frequency of subscribers, their associated full-price bring-along guest attendance, their food and beverage spend and the price increases in the first quarter, AMC contends the A- List program resulted in incremental profitability in the first quarter compared to estimated results if the program had not existed.
“This is largely attributable to the power of the AMC platform: stemming from experiential initiatives and enhancements at our theatres; a frictionless use of technology to communicate, engage and sell to our guests,” CEO Adam Aron said in a statement.
The service offered a two-ticket plan priced at $6.99 monthly (also billed annually); $9.99 for two tickets, including 3D, 4D and Imax formats; and $14.99 for three tickets, including 3D, 4D, Imax formats.
The strategy differed from MoviePass, which has attempted to circumvent exhibitors through a populous approach — with disastrous fiscal results.
The service’s parent, Helios Matheson Analytics, had its stock delisted by Nasdaq after investors fled MoviePass following tens of millions of dollars in quarterly losses due to an unsustainable business model, uncooperative exhibitors and frequent user policy changes, among other issues.
MoviePass reportedly has little more than 200,000 subscribers after once topping 3 million.
Meanwhile, AMC Theatres, the nation’s largest exhibitor, launched its own subscription service, AMC Stubs A-List, which earlier this year reached 700,000 subs paying $20 monthly fee.
Sinemia alluded to A-List for its decision to shut down.
“We are all witnessing that the future of moviegoing is evolving through movie ticket subscriptions,” Sinemia said. “However, we didn’t see a path to sustainability as an independent movie ticket subscription service in the face of competition from movie theaters as they build their own subscriptions. Thanks to the cost advantage and cross-sell opportunities, movie theaters will be prominent in the movie ticket subscription economy.”
MoviePass, the fiscally-challenged theatrical ticket subscription service, has reportedly shed about 90% of its peak of more than 3 million subscribers from June 2018.
According to BusinessInsider, which cited internal data obtained from the former high-profile service, MoviePass has generated just 13,000 new subs since launching an “uncapped” plan in February affording subs daily access to a theatrical screening for $9.95 monthly fee.
The new plan, which was a reboot of a previous price point that attracted 100,000 subs in 48 hours after launching in 2017, also enables MoviePass to throttle frequent users.
MoviePass owner Helios and Matheson Analytics disputes the subscriber tally, calling the data “incorrect” without elaboration.
Regardless, the MoviePass business model paying exhibitors face value for every movie ticket consumed by subscribers remains financially unsustainable.
The service hemorrhaged hundreds of millions of dollars, sending HMNY stock into a nosedive. Company shares were delisted from Nasdaq earlier this year.
Stacy Spikes, who co-founded MoviePass in 2011, sold it to HMNY in 2017 and was fired from the company in 2018, told BusinessInsider the $9.95 price point was never intended to be permanent.
“[It was] thought of as a promotional thing, in a way celebrating HMNY buying us. But we hit 100,000 [subs] in 48 hours. So I’m like, ‘OK, turn it off. We reached our goal,’” Spikes said.
The executive concluded that $12.99 was the least MoviePass could charge, while a $75 option including Imax and 3D screenings was considered as well.
“But the overriding voice [at HMNY] was, ‘No, this is awesome, look how fast we’re growing.’ And it was this moment of ‘but $10.’ It doesn’t fly. Now the plane is falling,” Spikes said.
In fact, when HMNY CEO Ted Farnsworth and MoviePass CEO Mitch Lowe were photographed joyfully in front of an AMC Theatre on Times Square after surpassing 1 million subs, Spikes had a different reaction.
“That photo changed [MoviePass’] relationship in the marketplace,” he said. “The tone turned it more adversarial [with exhibitors]. Up to that point, MoviePass had been the underdog champion for going to the movies.”
Indeed, AMC Theatres, which had initially been supportive of MoviePass under CEO Gerry Lopez, became increasingly less so under new CEO Adam Aron.
Aron made it a point to repeatedly question the MoviePass business model on fiscal calls and in press releases – despite generating millions in revenue from MoviePass subs.
Last year AMC launched the AMC Stubs A-List subscription service, which has generated about 700,000 subscribers paying $19.95 monthly for access to three screenings weekly in any format.
AMC recently raised prices to $21.95 or $23.95 depending on the market subscribers live in.
Spikes says the initial success of MoviePass, AMC Stubs A-List and Cinemark’s service underscores market demand for a subscription business model.
“The good side was cinema had not been taken seriously since Netflix really got its footing,” he said. “So what I liked about that was this had risen to the zeitgeist of conversation. Seventy-five percent of [MoviePass] members were under the age of 26. Cinema was an event people cared about again. So while there is a sadness around the brand, I was happy to see that this is front and center.”