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MoviePass parent drops 31% on looming cash crunch
The big question in the media world today is whether MoviePass parent company Helios and Matheson can stanch the bleeding of its cash flows before it becomes insolvent.
In a new filing today with the SEC, Helios informed investors that it had $15.5 million in available cash, with another $27.9 million in accounts receivable from members of MoviePass on longer-term subscriptions. Under accounting rules, those dollars can’t be used to fund current expenses. The company said that it has lost $21.7 million a month between September and April this year.
Investors dumped the stock following the filing, and the stock was down 31 percent at the close of the equity markets today.
While linear math would seem to indicate that the company is on track for insolvency in a matter of days, the filing and its CEO are maintaining an optimistic line. The company said that following a series of product changes, including more verification that a subscriber actually watched a film themselves, it should reduce its cash loss on the service by 35 percent during the first week of May.
In an interview with TechCrunch, MoviePass CEO Mitch Lowe struck a positive view on the future of the business. He argued that unlike in the past, where a new app or service would raise venture capital and then invest it in the business, you can just handle capital concerns as you need them. “Today what you do is you raise enough money month by month to fund essentially that negative cash flow,” he said. “We are 100% confident that we have the committed funding to do it.”
In order for the company to avoid insolvency, the company will need to continue to sell its common stock to investors on a regular basis to fund that negative cash flow. The company said that sales of its common stock will need to begin this month in order to fund operations. If the company is unable to do so, “we may be required to reduce the scope of our planned growth or otherwise alter our business model, objectives and operations, which could harm our business, financial condition and operating results,” it wrote in the filing.
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MoviePass brings back ‘unlimited’ movie subscription plan
It’s hard to keep track with what MoviePass is doing these days, but here’s trying. Today, MoviePass has brought back its nearly all-you-can-watch monthly movie subscription, Variety reports. With its original plan, subscribers can watch up to one movie a day, every day.
This comes after MoviePass removed this subscription last month in favor for a promotional $29.95 three-month plan that only let people see four movies a month. At the time, however, MoviePass CEO Mitch Lowe said the move didn’t mean the unlimited plan would never come back.
“We’re continually testing various promotions with different partners, and the current iHeartRadio deal is consistent with that approach,” a MoviePass spokesperson said at the time. “This does not mean that our unlimited subscription will not be offered in the future.”
MoviePass currently offers two plans — the $9.95 a month “unlimited” one, and a $7.95 a month plan that lets you see just three movies per month and includes a three-month trial to iHeartRadio’s all-access plan.
But there’s another service on the market that’s caught my eye as of late. It’s called Sinemia, which costs $15.99 a month for three movies per month. Yes, it’s more expensive than MoviePass, but the key differentiator is the fact that you can buy movie tickets online, ahead of time. With MoviePass, you have to physically go to the theater to purchase your tickets.
“MoviePass is excited to once again offer our popular $9.95 per month plan where you can see a movie a day in the theaters,” a MoviePass spokesperson said in a statement to TechCrunch. “The demand for this unlimited plan is incredible, and we have a clear path to even stronger growth. We’re confident in our model, and we’re looking forward to continuing to deliver great value to all of our members.”
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MoviePass CEO says he doesn’t know if the one-movie-per-day subscription will ever return
MoviePass is known for a pricing model that sounds too good to be true — in exchange for paying $9.95 per month, subscribers get up to one movie ticket per day.
At least, they used to: If you try to sign up now, that isn’t quite what you’re offered. Instead, there’s a bundle that combines a three-month trial for iHeartRadio All Access with four tickets per month on MoviePass — still a pretty good deal (especially since MoviePass says 88 percent of users see fewer than two movies per month), but not quite as irresistible as the old plan.
Does this represent a permanent change in the MoviePass business model? Well, the company has experimented with bundling before, but when The Hollywood Reporter asked CEO Mitch Lowe whether the movie-per-day-plan might return, he replied, “I don’t know.”
“We just always try different things,” Lowe said. “Every time we try a new promotion, we never put a deadline on it.”
We reached out to a MoviePass spokesperson who confirmed that The Hollywood Reporter story is accurate. They also said that this doesn’t affect any of the subscribers who signed up under the old plan.
MoviePass’ parent company Helios and Matheson Analytics sold additional stock last week in what seemed like a move to raise money for the service. (TechCrunch’s own parent company Verizon/Oath recently sold Moviefone for a stake in MoviePass.) At the same time, filings revealed that an independent auditor had raised “substantial doubt” about whether MoviePass would be able to continue operating as “a going concern.”
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MoviePass’s parent company is getting crushed after offering new stock
Helios and Matheson Analytics is looking to push additional capital into its prime and wildly popular asset, MoviePass, by raising money in a new stock sale that appears to be giving Wall Street fits.
Looking to raise additional capital, Helios and Matheson said it would sell up to $150 million in a stock sale that essentially seems geared to fund MoviePass’s expansion. Helios and Matheson is the largest shareholder of MoviePass, which is an increasingly popular service for going to watch movies. MoviePass’s parent company saw a sharp decline in its stock price today, with its value dropping around 40% as a result of the announcement.
“Helios and Matheson may use the net proceeds from this offering to increase the Company’s ownership stake in MoviePass or to support the operations of MoviePass and MoviePass Ventures; to satisfy a portion or all of any amounts payable in connection with previously issued convertible notes; and for general corporate purposes and transaction expenses,” the company said in the release. “The Company may also use the proceeds to make other acquisitions.”
Helios and Matheson recorded a net loss of around $150 million in 2017 (attributed to its acquisition of the majority stake in MoviePass). The company acquired a majority stake in MoviePass toward the end of last year. At the end of 2017, the company had around $25 million in cash and cash equivalents, according to their last annual report.
MoviePass allows users to spend around $10 per month to get one ticket to a movie every day, albeit with some strings attached. But it offers a way for theaters to fill seats and still acquire revenue from concessions and other products while allowing viewers to actually get in the door without paying a steep ticket price that might come with that movie.
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MoviePass’ parent company acquires Moviefone
Helios and Matheson Analytics, which already owns movie ticket subscription service MoviePass, has acquired Moviefone.
Despite the old-school name, Moviefone is now a digital media business with trailers, movie information and ticketing via Fandango — it says it reaches 6 million unique visitors each month.
Moviefone was previously owned by Oath, the Verizon subsidiary formed from the merger of AOL and Yahoo. (Oath also owns TechCrunch). AOL acquired Moviefone for $388 million back in 1999.
The deal includes a $1 million cash payment, as well as stock that could bring the total value up to $23 million, according to Variety. That means Oath now has a stake in MoviePass . It will also continue sell Moviefone’s digital ad inventory.
MoviePass, meanwhile, allows customers to pay $9.95 a month (or less) to get one free movie ticket per day, albeit with inconveniences like the need to physically buy your ticket at the theater. Acquiring Moviefone is supposed to help the company expand into content and advertising.
“This natural alignment between MoviePass and Moviefone will help us grow our subscriber base significantly and expand our marketing and advertising platform for our studio and brand partners,” said MoviePass CEO Mitch Lowe in the acquisition release. “Moviefone has been a go-to resource for entertainment enthusiasts for years, and we’re excited to bolster its presence and bring this iconic platform into the entertainment ecosystem of the future.”
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MoviePass CEO backpedals on location tracking and talks strategy to break even by 2019
In a rare moment of contrition, MoviePass CEO Mitch Lowe admitted misleading both consumers and advertising execs with statements last week that the company tracks the location of users before and after they go to the movies. “We don’t do the things I described,” he told TechCrunch. As for location, “We don’t record it, we don’t save it, we don’t… Read More
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MoviePass CEO proudly says the app tracks your location before and after movies
Everyone knew the MoviePass deal is too good to be true — and as is so often the case these days, it turns out you’re not the customer, you’re the product. And in this case they’re not even attempting to camouflage that. Mitch Lowe, the company’s CEO, told an audience at a Hollywood event that “we know all about you.” Read More
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MoviePass drops pricing to under $7 per month, if you opt for the annual plan
MoviePass, the subscription service that lets consumers pay a monthly fee to see unlimited movies in theaters across the U.S., is slashing its prices yet again. The company announced today it’s now offering its service for $6.95 per month, down from the current price of $9.95 per month, when customers commit to a one-year subscription plan. That works out to a flat fee of $89.95… Read More
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