Do you have a MoviePass membership? You may want to make the most of it over the next couple of months since MovePass could well become MoviePast. The movie theater subscription service, which allows customers to see a new movie every day for $9.95 a month, is running out of cash, Bloomberg reported Tuesday, citing an SEC filing.
MoviePass' parent company, the information tech firm Helios & Matheson, acknowledged in the 8-K filing that it had $15.5 million in cash at the end of April, but that it's been burning through about $21.7 million a month since October of 2017. The company also has $27.9 million on deposit with merchant processors, representing funds from long-term memberships and annual subscriptions that customers have already paid. MoviePass says it will have access to those funds too, but "I've always known that it was going to take a lot of money to put into it, to get it to the other side," Ted Farnsworth, the CEO of Helios & Matheson, told Bloomberg. When asked if the company would operate through May, he said, "Oh God, yes. May, June, July."
The company's money problems may not come as a surprise to subscribers who've endured multiple changes to the business and subscription structure in recent months. To slim expenses, MoviePass stopped customers from seeing the same film multiple times, restricted certain movies and cut ties with some theater franchises. Additionally, in an effort to better capitalize on its users, Helios & Matheson is hoping to sell the data it collects on customers or form partnerships with other brands.
MoviePass made a splash when it announced its $9.95 service last summer, a pricing model that involved buying discounted tickets from the traditional theater chains. AMC Entertainment Holdings told Bloomberg in a conference call that MoviePass has been purchasing hundreds of thousands of tickets at around $12 on average. Meanwhile, MoviePass subscribers are attending about three movies each month. That math wasn't working.
Stacy Spikes and Hamet Watt launched MoviePass in 2011, but in 2016, Mitch Lowe joined the company as CEO. Lowe was one of the founding executives at Netflix and was the president of the DVD rental kiosk service Redbox until 2011. But under Lowe's leadership, the New York City-based business faced harsh criticism from customers who said they waited months for their subscription cards to arrive in the mail. Now, customers may fear that their golden ticket to the silver screen is in jeopardy.