Numlock Best of 2018: The Rise and Fall of MoviePass
By Walt Hickey
Happy new Year! Numlock is back tomorrow. During the week between Christmas and New Year’s we’re doing best of’s. Today: I wrote about MoviePass several times last year. Here, I trace the journey of this beautiful catastrophe as told by Numlock News.
June 14: Moviegoers
MoviePass, the incomprehensibly solvent subscription service that lets customers attend movie screenings for about $10 per month, has exceeded 3 million paying subscribers and projects 5 million subscribers by year's end. The company claimed Wednesday that it represents 5 percent of U.S. box office receipts. On one hand, that's really high! On the other, I am a self-employed culture writer in New York during summer blockbuster season and I am riding my MoviePass like I stole it.
Dave McNary, Variety
July 5: More Fuel For The Entertaining Money Fire
For $10 per month, MoviePass subscribers can see one movie a day, and MoviePass will pay for that ticket. This means that every time a subscriber uses MoviePass, MoviePass loses money. It's essentially a wealth redistribution system that takes investor money and gives it to movie fans and I guarantee we will look back in awe on this moment in history when a company was willing to implode so I could see $80 worth of movies in June for $10. Now we've got details on the scope and extent of this money fire and it is breathtaking. Previous SEC documents said MoviePass burned through an average of $21.7 million a month. In May, that figure was $40 million. It expects its June cash deficit will be $45 million. The company told regulators it wants to sell $1.2 billion in stock and debt securities to keep the party going.
July 30: Money To Keep A Ridiculous Business Open
Helios and Matheson, the company behind MoviePass, secured a $6.2 million loan from Hudson Bay in order to survive the weekend and continue to prop up their ridiculous and frankly inspiring business model of basically unlimited movie tickets for $10 per month. MoviePass had a service interruption last week after running out of cash, and lost 70 percent of its stock value on Friday. I shudder to think about the interest rate on a loan to MoviePass and can only imagine that terms absolutely involved at least one human soul.
August 2: Movie Money
AMC Entertainment, the movie theater chain, made $1.44 billion in the three months ending in June, up 20 percent from the same quarter the previous year. There are lots of interesting things to dissect in this quarterly: admissions revenues were up 17.7 percent, but food and beverage revenues were even better, up 19.2 percent. Here’s whats really interesting and a possible major shift to the business: the AMC subscription alternative to MoviePass called “A-List” also racked up 181,790 paying members in its first five weeks. Calling MoviePass “financially troubled” is like calling the Titanic “tidally challenged,” my point being that even if MoviePass explodes like the dying star of Krypton there’s still a shot that we get Superman out of the wreckage.
August 7: Users Who Are Great At MoviePass
MoviePass, a blessed company that is essentially improvising a business model as it goes along, announced it is abandoning plans to raise prices from about $10 to about $15 per month, and instead it will cap the number of films subscribers can see each month at three, down from “however many days there are in that month.” The company claims only 15 percent of MoviePass subscribers see more than three films per month. The company pays full price whenever a subscriber sees a movie. The company says that tickets bought by its subscribers account for as much as 6 percent of box office receipts.
August 16: MoviePass Loss Per Share
Helios and Matheson, the company behind the great liberation of investor capital known as MoviePass, lost $126.6 million in the second quarter, up from a $2.7 million loss in Q2 of the previous year. That is a loss of $132.47 per share, which is legitimately nuts. MoviePass lets users pay an inexpensive monthly subscription fee to see many movies, a cash flow concept that I guarantee will work once the accountants figure out how to take the square root of a negative number while remaining GAAP compliant.
August 20: Admissions
With MoviePass, uh, trying very hard and doing its very best, AMC theaters have seen their rival movie theater subscription product scooping up new buyers. The company — which already reported 175,000 subscribers in its first five weeks — reported 260,000 subscribers after its seventh, meaning very solid growth in the two weeks that MoviePass has been in the news. AMC reported that subscribers are responsible for 1 million admissions, which is about 4 percent of its U.S. attendance.
September 18: MoviePass
MoviePass, a cautionary tale that sells monthly passes to unlimited movie screenings, is embarking on yet another reverse stock split now that owner Helios & Matheson Inc. has dipped below 2 cents per share on the Nasdaq. The company — whose sacrifice will not be forgotten by we, the humble people who got to see Incredibles 2 for the equivalent of $1.33 — has seen its stock price evaporate, but its legend will go on forever. Without the previous July 24 stock split, MoviePass would be trading at roughly $0.00007 a share.
October 8: Subscriptions for Movies
AMC Cinemas announced that 400,000 people have signed up for Stubs A-List, a subscription service that allows subscribers to see three movies a week for $19.95. The service launched just 14 weeks ago — you know, around when wealth redistribution service MoviePass was well into Act III of its Icarus reenactment — and wanted to have 500,000 enrollments at the one-year mark. The core innovation of AMC was to make sure that users were unable to do, say, $127 million worth of financial havoc in a single quarter.
October 24: MoviePass
The parent company of MoviePass saw its stock soar yesterday by 15 percent, based on the news announced that it’s going to spin off MoviePass. MoviePass — a service where users can see a number of movies every month for a flat $10 monthly fee — has been struggling financially due to funding issues, and also because its business model is terrible. When I said the stock soared I would also like to point out it is still less than 2 cents per share, down from over $30 last year. MoviePass has had some difficulty securing loans to fund their business, which I can only assume is related to either the illegality of usury, executives running out of kidneys to offer as collateral, or the Mafia no longer being interested in loaning money to doomed gamblers.
November 6: Movies
AMC’s A-List Stubs program lets people see up to three movies per week at an AMC Cinema for $19.95 per month. You know the guy who invented a slightly faster chariot after watching Icarus burn to death in the sky and fall to the ground in a blaze of failure? It’s like that, only with MoviePass, a financially doomed “unlimited movies for $10” company. AMC initially projected it would have 500,000 users by June 2019, but they will actually have 500,000 users by next week. In reaction to this, rather than going with the MoviePass strategy of letting the voracious demand consume them like a supernova, they will raise the price to$23.95 a month in the most popular areas in a year.
November 14: A Pass That Was Once Used To See Movies
Helios & Matheson Analytics is the company that controls MoviePass, as much as any entity on the planet can claim to be capable of controlling MoviePass. This has been really rough for them, as their stock is now worth less than two cents per share. Nasdaq gets a bit fidgety when a company they list gets into penny stock territory, so the company proposed doing (another) reverse stock split and giving one new share for every 500 existing shares. This would’ve allowed MoviePass to remain on the Nasdaq, and also would’ve helped it look like a company that did not accidentally sign up 3 million people to bleed it dry over the course of six months. But because this is the company that invented MoviePass we’re dealing with, they said they did not have the votes to do this maneuver and will risk delisting.
November 19: Theaters
Movie cinemas are having a truly banner year, with profit way up at the box office compared to 2017. Much like Mufasa explaining the circle of life, they likely owe a bit of that jump to MoviePass, which in this analogy is an antelope that has pretty much bled out. Box office researchers estimate that MoviePass contributed $138 million in additional box office revenue over the summer. That would account for about half of the industry’s summer box office increase.
December 4: MoviePass
MoviePass is a company that lets subscribers see several movies per month for a flat $10ish fee. Over the summer, MoviePass realized that in its quest for subscribers, it had accidentally pioneered an excellent way to turn a NASDAQ-listed company into a penny stock, one A Quiet Place screening at a time. But while I won’t be so bold as to say that MoviePass is once again on a path to prosperity, the remains of the firm have managed to reduce the bleeding. Last spring, the average MoviePass user was seeing 2.23 movies per month. Today, that’s down to 0.77 movies per month, which if you squint really hard looks like an — if not viable — at least not laughable business plan.
December 7: A Pass With Which One Views Movies
MoviePass has reportedly sobered up and will roll out a new pricing plan, ending the party. The new model starts at $9.95 in inexpensive regions for a plan that allows subscribers to see three movies in a month, with restrictions. Then it jumps to $19.95 per month to see those three movies in IMAX or 3D and up to $24.95 to see movies without time restrictions. This is an attempt to rebrand from a company that appears to be burning down to one that appears to be burning down, but so it may be reborn, phoenix-like. Let’s see if they make it: they recently reported $6.2 million cash on hand, but saw losses of $137.2 million last quarter.
December 19: Heist Movie
Yesterday MoviePass convinced its creditors to cut the debt it owed down from $44.5 million to $11.3 million, with a further chance to reduce the debt to $5.7 million should the company pay back its creditors early. On one hand, this is a savvy corporate move: the company no longer owes money in the form of debt that could be converted into stock, which means it can now raise money by selling the 2.6 billion shares it had to hold on to to satisfy those debts. On the other hand, let’s take a step back and realize what happened here. Creditors may have just taken a write down on $38.8 million worth of movies, meaning that MoviePass just Robin Hooded the equivalent of 4.3 million movie tickets from private equity firms to moviegoers. In possibly related news, MoviePass Films literally signed Bruce Willis to a three-picture deal the very same day. There is a non-zero chance he will lead the forthcoming heist movie about what MoviePass just pulled.