MoviePass ran out of money. Then it raised its prices and eliminated most new movies for at least their first two weeks. Just as quickly, they changed their minds and walked back those changes. Now, the service is back to its $9.95 price point, but instead of that whole see-one-movie-a-day thing it’s now “What if you just see three movies the whole month? Plus, we’ll give you a $5 discount on a fourth movie.” How much longer can this last?
When Wall Street Journal film biz reporter Ben Fritz was interviewed on KPCC’s The Frame about MoviePass’s recent money woes, he concluded, “They’re total market cap, which means the amount that Wall Street thinks the company is worth, is currently less than one million dollars. A lot of people in Los Angeles could sell their home and theoretically buy up all the stock and own MoviePass. It’s that grim. So, it’s hard to imagine them coming back from this. Perhaps they can find someone willing to buy them. They do have 3 million subscribers. They have a brand name that people know. I think that’s the only conceivable outcome and/or they go into bankruptcy.”
In reality, becoming big enough to attract a wealthy buyer might have always been MoviePass’s ultimate plan. At this point, however, with parent company Helios and Matheson’s shares selling at under a nickel on the stock market, the only reason MoviePass is still going is likely just the faint hope of salvaging something out of the whole mess in a buyout offer.
In his usual boastful salesman way, MoviePass CEO Mitch Lowe hinted as much yesterday in a Cheddar interview, “We have many offers coming in from very big [general] media companies that understand the value that we’re generating. Remember, while we’re buying 6% of all ticket [sales this year] when we promote a title we’re buying 25% and 30%. We’re boosting revenue per titles dramatically. The ones you hear about are not the only offers we’re getting to acquire the company.”
He, of course, declined to name any of the companies supposedly lining up to purchase such a distressed asset, saying only, “I can’t share with you the names, but you would recognize them.”
At this point, whenever Lowe or the Helios and Matheson guys start citing their user data certain investors just roll their eyes. Theater owners have long since either disputed MoviePass’s data claims or waved the white flag and admitted they just can’t tell for sure. “There’s no practical method to parse through the transactions individually,” Amherst Cinema’s General Manager George Myers told Movie Maker Magazine. “We started implementing a system with an adult MoviePass ticket designation just to see if we could start tracking it. But if it’s a really busy night with a line full of people and someone hands you a MasterCard, you may not catch it.”
But, the reality of the matter is almost secondary. What’s more important is that Lowe keeps saying it enough to convince someone to buy his company. After all, as of late last year MoviePass only had 9 employees, most of whom, in classic Silicon Valley fashion, were working in exchange for equity. This will have all been for naught if they can’t find a buyer.
Until then, Lowe has a new motto to go along with the new 3-movies-a-month business model and boasts of reaching profitability in 6-9 months: “Our mission is survival and then success.”
Here’s hoping someone out there is listening.
As of this writing, only 15% of MoviePass’ 3 million subscribers have converted to the 3-movie plan (to be fair, it’s only been a couple of days). Meanwhile, AMC A List has gained 175,000 subscribers in just 5 weeks.