MoviePass subscribers have had a tough go of it over the last six months, with the service changing terms, dropping unlimited moviegoing, limiting access to first-run movies, and in at least once instance, going offline completely because it ran out of money. The myriad changes have removed most of the incentives that made MoviePass a compelling value in the first place, so customers have been using it less and less — and according to the head of MoviePass’ parent company, that’s exactly what the owners want.
“People are going to less than one movie a month,” Helios and Matheson CEO Ted Farnsworth said on Tuesday during a chat at The Wrap’s entertainment industry conference, TheGrill. “So technically, subscription alone right now is doing just fine, now it’s tacking on all the other things on top of it.”
It’s such a casual admission that it’s easy to overlook just how absurd Farnsworth’s statement is. MoviePass, the company that sold itself as a friend to cinema and moviegoers because it wanted to encourage audiences to see as many movies as possible, considers it “just fine” that subscribers are seeing less than one movie a month with it. The service has thrown up so many barriers to access that its subscribers aren’t using it regularly. Success!
Lack of use is what MoviePass needs to survive
From a business standpoint, this lack of use is obviously what MoviePass — and Helios and Matheson — need to survive. The MoviePass all-you-can-eat subscription was never sustainable financially, with the company shelling out full price for movie tickets to theaters even while it was taking in only $9.95 a month from subscribers. If people actually used MoviePass, there’s no way the subscription side of its business couldn’t run at a loss, but that’s where the “things on top of it” Farnsworth refers to come into play.
Thus far, those things have included ancillary businesses and revenue streams. MoviePass sells advertising for some movies, it acquires and distributes others, and it once toyed with collecting user location data to create third-party partnerships, until user outcry caused it to retract the idea. Helios and Matheson is a data analytics company, ultimately, and when it acquired MoviePass in 2017 it was apparent that it wasn’t suddenly pivoting to just selling movie tickets. Quickly ramping up a massive user base, with a trove of data about those users, was clearly part of a strategy that would allow it to monetize in different arenas — hence the price drop to the aggressive $9.99 unlimited plan in the first place.
When the issues became too big to ignore, the stock price of Helios and Matheson reacted, with the stock price plummeting to as low as a single cent. But despite that, the company has continued onward, and during his conversation at TheGrill, Farnsworth also claimed the company has recently secured an additional $65 million in funding to keep things afloat. Helios and Matheson declined to provide additional specifics to Business Insider when contacted about the investment, and given the company’s penchant for touting numbers that don’t always hold up to scrutiny, it’s probably a good idea to wait to see exactly what this latest round of funding truly entails before drawing any further conclusions about the company’s future.
But in either case, Farnsworth and MoviePass seem to have gotten the short-term result they were looking for from the announcement. As of this writing, the stock’s price has jumped more than 150 percent. Granted, that still puts the stock at less than four cents, but it is a significant bump — and when a company is struggling for survival as much as MoviePass is, financial market optics can be everything. If only it cared that much about its customers.