MoviePass wants people to know that the reports of its death have been greatly exaggerated, even going so far as to kick off a press release proclaiming its ongoing vitality by paraphrasing that famous Mark Twain quote.
It only gets more bizarre from there. The ticketing service goes on to compare itself to Uber, another digital age disruptor that’s faced some headwinds, while also taking credit for a record summer box office and aligning itself with the little guy.
“Exhibitors know that without MoviePass they will be able to continue to charge exorbitant prices for theater tickets and gouge customers with overpriced concessions,” the release read. “This is exactly the attitude the taxicab industry took when Uber entered their market.”
It continues: “Furthermore, any crowing about the uptick in box office receipts this summer season should include the fact that a significant percentage of that total is directly attributable to MoviePass subscribers.”
A note here: MoviePass sells tickets. Not popcorn. It’s unclear what the subscription service is doing to drive down the price of concessions. Furthermore, the company discounts tickets for its customers, but it pays full freight for the tickets it buys from theater chains. Beyond subsidizing moviegoing for its subscribers at a potentially ruinous clip, it has not lowered the cost of movie tickets. In fact, average movie ticket prices hit an all time high of $9.38 in the most recent fiscal quarter. So if the plan was to make going to the movies cheaper, MoviePass struck out.
The defiant message comes as MoviePass’s stock is tanking amidst reports that it is strapped for cash. The ticketing service attracted some 3 million subscribers by allowing users to see a movie a day for $9.99. But MoviePass has had to backtrack on its pricing. The company recently announced that it was raising its monthly fee to $14.99 and will prohibit users from buying tickets to major studio films in the first two weeks of their release. The company, which some analysts estimate is losing as much as $20 million a month, said the new measures will help it reduce its burn rate by 60%.
MoviePass has helped popularize the idea of subscription ticketing. Its success at building a subscriber base likely spurred AMC and Cinemark to kick off their own subscription programs. However, its financial model, which is predicated on selling data and ads, hasn’t resulted in profits. In April, an independent auditor raised “substantial doubt” about MoviePass’s ability to continue operating as “a going concern.” It was an assessment that MoviePass has struggled to shake off in recent months — a period during which it has also fielded customer complaints about service outages and an ever-changing set of rules about exactly what benefits come with a membership.
In the “we’re still here” press release, MoviePass claims it has been an invaluable contributor to the summer box office. It states it contributed nearly one-fourth of the domestic box office receipts for Lionsgate’s “Blindspotting” through the first Tuesday after its release, represented nearly 17% of Thursday night previews for Paramount’s “Book Club;” and accounted for about 12% of the entire theatrical run for Magnolia Pictures’ “RGB.” Left out of this string of successes is “Gotti,” a crime drama that MoviePass helped release. It went on to earn an anemic $4.3 million while scoring a 0% rating on Rotten Tomatoes.
Overall, the company argues it is responsible for 6% of “the industry’s total box office receipts” (presumably this is a domestic number, since MoviePass does not operate abroad, so that’s something of a misstatement).
“It’s clear that because of MoviePass, more people are seeing more movies at fair prices,” the release states. “Instead of wishing us away, the industry, particularly the independent film producers, should be congratulating and supporting us. Absent MoviePass, exhibitors are fighting to preserve profits in a declining box office environment. That’s the doomed strategy.”
This type of line of feisty argumentation is likely borne of the frustration of reading about MoviePass’s impending financial ruin in story after story. It’s understandable. Yet, it’s also bizarre for a publicly traded company to state things in such an impassioned and borderline hyperbolic way. Moreover, none of these comments are ascribed to any officer or leader of the company. Not MoviePass chief Mitch Lowe, nor Ted Farnsworth, the head of its parent company, Helios & Matheson.
“Yes, we’re going through a rough patch not unlike what other disruptive enterprises experienced in their early days,” the release states. “Much of our issues can be attributed to the unprecedented growth in a business that just 12 months ago did not exist.”
Helios & Matheson’s stock closed Thursday down 56% at 10 cents a share. In October, the stock hit a high of $38.86.
Wall Street has spoken.