Whether you're a moviegoer standing in line at the local megaplex box office, or a stock trader working the trading floor at Goldman Sachs, or a frequent shopper at Walmart, it is increasingly likely that you might overhear any of these lines in reference to the start-up movie subscription purveyor, MoviePass: "MoviePass is going out of business..." "MoviePass stock is tanking..." "MoviePass faces a cash crisis..." "MoviePass has less than one month of cash left..." "MoviePass is running out of money..."
You wouldn't be out of line to conclude that the end is near for MoviePass, the disruptive movie subscription service that lets users see up to a movie a day for a flat monthly payment of under $10.00. The news stories have been piling up and the stock of Helios & Matheson Analytics, MoviePass' owner, has, indeed, fallen precipitously (from a high of over $30, to a recent low of $.60, a drop of 98%). This is certainly the type of thing you'd expect from a company in the throes of collapse.
Variety caught up with Ted Farnsworth, the CEO of Helios & Matheson in Cannes, however, and he shrugged away the notion that MoviePass was about to become a F*cked Company (the definitive start-up death tally destination from '02-'07). According to Farnsworth, MoviePass has well over $300 million available to fund its business (with upwards of $300 million available on an equity line of credit, with just over $15 million on hand and over $27 million in receivables from its subscriber payments). Farnsworth confidently postured, "We've got 17 months' worth of cash without further raises of capital."
Skeptics have seized on last week's public filing by Helios that claimed that it had only $15.5 million in available cash and was dramatically cutting losses through new program changes. The naysayers also cite the recently issued opinion by Helios' accountants that there was "substantial doubt" that the company could remain viable. These recent reports, however, tell only part of the story.
Farnsworth and Mitch Lowe, MoviePass' CEO and a co-founder of Netflix and former CEO of RedBox, convinced AOL/Oath to sell MovieFone, the legacy movie destination, to MoviePass for an undisclosed sum that was very likely a sizeable write-off for AOL/Oath and a very cheap acquisition for MoviePass. What's more, Farnsworth is teasing a pivotal acquisition to be announced in the coming days at Cannes. Farnsworth went on to say, in regard to the acquisition, "It's going to be substantial. People are going to go, 'Hmm how did they pull it off'?"
While Helios' (and MoviePass') cash position is likely quite a bit better than the naysayers would admit, there is no question that the subscription model for big screen entertainment is both disruptive and necessary. The fact is that movie fans hate the prices of movie tickets and have, for a long time. Prices continue to go up while actual attendance stalls, driven more by major event films while most other titles are eagerly awaited on disc/digital, surfacing mere months after theatrical release. One thing that MoviePass' meteoric acceleration to over 2 million members has shown is that movie fans are hungry to get a better admission value at the megaplex.
While AMC Theaters (through their CEO, Adam Aron) continues to publicly bash MoviePass, Cineworld (the largest exhibitor in the UK and new owner of the U.S. chain Regal) has made subscriptions work overseas. Here in the U.S., Cinemark is also working on its own subscription plan (no real word yet on sign-ups). Meanwhile, MoviePass waffles a bit, with frequent 'adjustments' to its terms of service and plans, frequent variances and partnerships and quivering members who are never certain if their MoviePass will actually work when they show up to the box office.
While the final chapter is (or may be) a long while from being written, an observer might do well to keep in mind the many failings and foibles of Twitter (remember the "fail whale"?) and even Netflix, for whom the story was so shaky that a nominal 7 figure exit to Blockbuster (R.I.P.) was once considered. As for MoviePass...? We'll all have to wait and see how this plays out!