MoviePass is a runaway train that relentlessly burns through cash to keep itself going. But the head of its parent company is doing a lot of press to insist that everything’s fine. In fact, he claims the theater subscription company is 2 million subscribers away from breaking even. An upcoming family plan could help push it over the top, and MoviePass confirmed to Gizmodo its hoping to have it out within a month.
On Wednesday, MoviePass announced that it surpassed three million paying subscribers for its movie-a-day service. In a statement sent to Gizmodo, the company claimed: “MoviePass’ rapid growth is within its projections that estimate the service will exceed 5 million paying subscribers by the end of 2018.” It also said that it currently accounts for five percent of the U.S. box office on average, and during peak weeks it gets closer to seven percent.
For theaters and Hollywood, that’s a sweet deal. MoviePass is paying full ticket price every time a customer uses it and only collects a monthly fee of $9.99-per-month. Currently, the average price of a movie ticket is $9.16, so MoviePass is obviously bleeding cash—and it freely admits that fact. Last month, shares in its parent company, Helios and Matheson, plummeted when it revealed it only had enough cash on hand to keep going for a few more weeks. Then it reassured everyone that it had a $300 million line of credit that would sustain it for 17 more months at its current rate of spending. But MoviePass has to keep growing if it ever wants to gain the leverage it needs to convince Hollywood it’s worth making a deal to work together. Its stock price is down 99 percent from its high last October.
Helios and Matheson’s CEO, Ted Farnsworth, has been doing a lot of interviews in the last few days to assure everyone that things are fine... FINE! He told Vice that from the beginning the company calculated it “pretty much” needed 5 million subscribers in order to be “cash flow–positive.” But growth has slowed significantly since it first announced its new deal and people crashed its website trying to signup. Farnsworth told CinemaBlend that it has some new features that coming that could help its expansion:
So that’s a family plan, and it’s also the ‘bring-a-friend’ plan. ... It would be the same [cost] that it is right now. We might do something down the road to get more of a discount for the family plan. ... But it’s all the convenience of going with your family. You’ve got it all in one app, one card, one everything.
One of MoviePass’s biggest issues is that it’s confusing to use and it’s bad at customer service. Yes, subsidizing people’s movie tickets is pretty spectacular customer service in itself, but not if people don’t get how to use it. When a family of four can easily spend $60-$70 bucks going to a movie and getting some popcorn, MoviePass is an attractive option. But you have to get four cards, use the app four times for four different purchases, locate the right theater, maybe choose assigned seating individually, pick up four different tickets at the theater, and hope everything works out while your kids are going crazy.
Farnsworth said that there’s no plan for a discounted a plan at the moment, but it will be much easier to handle multiple tickets at a time. A representative from MoviePass confirmed the accuracy of CinemaBlend’s report to Gizmodo in an email.
MoviePass wants studios to pay it to promote its films through its app, emails, website, and other platforms like its recent acquisition of MovieFone. It claims that movies it promotes can see box office benefits of up to 30 percent a week and they tend to have more staying power. Farnsworth told Vice that it even envisions a future when tickets to some movies are only available through its app.
Farnsworth optimism this week seems almost entirely disconnected from reality. Speaking with Screen Rant, he said that the financial side of the business is the “least challenging” part of his job right now. He said the biggest challenge is improving MoviePass’s customer service and tech alongside its rapid growth. He appears ready to offer any and everything to grab up market share. When Vice jokingly asked if they’ll ever get free popcorn with their ticket Farnsworth said, “you want free popcorn? We’re gonna give you free popcorn, free beer, free coffee, and a free movie.” Surely he was joking, right? But he doubled down in a followup saying, “You know what? Absolutely. We will.” He thinks that’s totally a realistic possibility, especially if a user is going to see one of the films MoviePass owns.
Oh yeah, MoviePass acquires movies now. It also kind of bought a movie studio last month. “Everybody thought we were out of money and then we turn around and buy one of the biggest production houses in Hollywood,” Farnsworth told Screen Rant. The comment almost carries an implied, “Isn’t that crazy?!” It is. It’s absolutely crazy.
There’s something exciting about a startup with a new business model just saying fuck it and doing whatever it takes while the clock ticks down. At the moment, it doesn’t seem to be putting anyone out of a job and customers get this great deal. But as The New York Times pointed out last month, it’s also a bit disturbing. “76 percent of the companies that went public last year were unprofitable on a per-share basis in the year leading up to their initial offerings, according to data compiled by Jay Ritter, a professor at the University of Florida’s Warrington College of Business,” was a particularly sobering piece of data from the Times piece. An economy propped up by businesses that are just trying to spend their way to profitability is totally unsustainable.
Will MoviePass be the Pets.com of the disruption era? Will it change the game and make going to the movies great again? Will we get free popcorn and beer? We’ll probably know in less than 17 months. If you want to use the family plan to take your kids to some free movies, Farnsworth says it’ll probably happen in mid-July.