Pretty much since it lowered its monthly subscription price to the attractive just under $10 a month mark last year, there have been questions about MoviePass' sustainability. Last week, as a part of an SEC filing, the service sought to assuage some of those concerns by being transparent about its finances and how changes to its business model are helping to keep it in business. However, the stock of parent company Helios & Matheson Analytics took a dive after the reveals, causing some to take an alarmist tack, heralding MoviePass' imminent demise. Yet, despite all the skeptics, MoviePass' parent company remains unfazed. Ted Farnsworth, head of Helios & Matheson Analytics, had this to say about the recent death knells:
There's been a feeding frenzy of negativity, but it's not going to slow us down. I'm not worried at all. You're going to see. We're doing more acquisitions of movies and companies.
It is of course unlikely that Ted Farnsworth would publicly take a dim view of MoviePass' future prospects, but he certainly sounds confident here that the service will not only survive, but will thrive going forward. The reason for all the sky is falling talk came from that SEC filing wherein MoviePass disclosed that it only had $15.5 million in available cash. That sounds like a lot, but when you consider that MoviePass currently spends more than that each month to finance subscriber tickets, it begins to look grim, which certainly contributed to the stock drop and the click-worthy headlines that followed. However, Ted Farnsworth also remarked that even without raising more money, the service has 17 more months worth of cash to live on and it has $300 million available to it from an equity line of credit; therefore, any eulogizing would be premature at best.
While it may be hasty to say that MoviePass is doomed, it isn't unfair to say that the service needs to find a way to adapt or diversify its business model in order to become profitable or at least not be operating at such a loss. As Ted Farnsworth told Variety, while at the Cannes Film Festival, the service is already doing that by acquiring movies and other companies in addition to the changes it is making to save money. MoviePass recently began stopping subscribers from seeing the same movie twice (the same weekend Avengers: Infinity War came out) and it has already begun to buy movies such as the upcoming heist movie, American Animals. MoviePass' presence at Cannes shows that it plans on continuing this course of action by buying films and then pushing subscribers to check them out through the app.
So, it appears that MoviePass is bullish on its future for now amidst all the public consternation about its sustainability. The folks at MoviePass and Helios & Matheson clearly know that they have tapped into something, as the interest in the service has quickly driven the subscriber base to over 2 million, with the expectation of that number growing and hitting 5 million by year's end. It is not uncommon for a startup to be in debt and go through growing pains such as this, operating at a loss for a time before becoming profitable, as services like Netflix and Spotify can attest to.
After a brief hiatus, MoviePass recently reintroduced its popular unlimited plan of $10 a month. Whether you have MoviePass or not, there are plenty of reasons to go to the theater this year, check them out in our 2018 release schedule.
