MoviePass Proves Great for Customers, Disastrous for Investors

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MoviePass Proves Nice for Prospects, Disastrous for Traders – WSJ

A film a day for beneath $10 a month is a good deal—however the firm providing it’s operating at a loss, dropping $98.three million on $48.6 million of income in current quarter

Michael D’Ariano has saved some huge cash because of MoviePass. However he has misplaced much more.

As one of many greater than 2.7 million subscribers to the service that lets folks see a brand new movie day-after-day for simply $9.95 a month, he has watched greater than 40 motion pictures this yr.

The Bronxville, N.Y., salesman believes in MoviePass a lot that he purchased 1,000 shares of inventory in its mother or father firm,

Helios & Matheson Analytics
Inc.,

HMNY four.75%

over the previous 4 months. He thought it might be the subsequent Netflix Inc.

His funding is popping out extra like a grisly drama than a feel-good comedy. Shares in Helios have plummeted 93% because the finish of January. Since simply final Monday, they’re down 69%, closing Tuesday at 65 cents.

“I’m saving $70 a month going to the films and shedding hundreds investing within the firm that’s letting me do this,” lamented Mr. D’Ariano.

Since slashing its month-to-month subscription worth final August from as a lot as $99, MoviePass has constructed the sort of model loyalty that the majority firms dream about. Customers evangelize on what could also be the most effective shopper worth in America. On common, a film ticket within the U.S. prices $9.16, based on an business commerce group, and far more in main cities.

25

April 17

Annual report reveals

auditors have

‘substantial doubt’

Helios can stay

a going concern

20

Sept. 14

Hits 400,000

subscribers

from fewer

than 20,000

in simply 30

days

15

10

5

zero

’18

2017

Helios & Matheson share worth

$35

Feb. eight

Surpasses

2 million

subscribers

Aug. 15, 2017

Helios &

Matheson

acquires majority

management of

MoviePass,

slashes worth to

$9.95 a month

for one movie

a day

Might eight

Helios reviews it

has solely $15.5

million money

obtainable

30

25

April 17

Annual report

reveals auditors

have ‘substantial

doubt’ Helios can

stay a going

concern

20

15

10

5

zero

’18

2017

Helios & Matheson share worth

$35

Aug. 15, 2017

Helios & Matheson

acquires majority

management of MoviePass,

slashes worth to

$9.95 a month

for one movie a day

Might eight

Helios reviews it

has solely $15.5

million money

obtainable

30

Feb. eight

Surpasses

2 million

subscribers

25

April 17

Annual report reveals

auditors have

‘substantial doubt’

Helios can stay

a going concern

20

Sept. 14

Hits 400,000

subscribers

from fewer

than 20,000

in simply 30

days

15

10

5

zero

2017

’18

Helios & Matheson share worth

$35

Aug. 15, 2017

Helios & Matheson

acquires majority

management of MoviePass,

slashes worth to

$9.95 a month

30

25

Feb. eight

Surpasses

2 million

subscribers

20

Might eight

Experiences it

has solely

$15.5 million

money

obtainable

15

10

5

zero

’18

2017

For barely greater than that, a devoted MoviePass person can see each Hollywood launch and several other obscure independents or Bollywood imports in addition.

Some stated the supply was too good to be true, an opinion that will now benefit a “spoiler alert” warning. In its annual report, filed final month, the unbiased auditor for Helios expressed “substantial doubt” about its skill to proceed working.

MoviePass pays theaters full worth for each film ticket its members order, which means that its core enterprise is designed to function at a loss. The corporate’s plan, executives have stated, is to benefit from a person base that has grown almost 150-fold in 9 months to promote commercials and to influence theaters to provide them a reduce of income.

Regardless of some successes, together with e-mail adverts for the comedy remake “Overboard” and offers with small cinema chains, MoviePass misplaced $98.three million on $48.6 million of income within the quarter ended March 31, Helios reported late Tuesday. In a regulatory submitting final week, Helios, which generates greater than 98% of its income from MoviePass, stated it had solely $15.5 million money and $27.9 million of accounts receivable.

The revelation despatched its already-struggling inventory right into a tailspin.

Helios Chief Government

Ted Farnsworth,

nevertheless, wasn’t in disaster mode when reached by telephone Friday on the Cannes Movie Pageant within the south of France, which he described as “a riot, one huge get together.”

He was searching for new movies his firm might put money into by way of its MoviePass Ventures, which buys stakes in movement footage that it could market to its customers. MoviePass Ventures already owns a part of “Gotti,” a biopic of the crime boss starring

John Travolta

that premiered at Cannes.

He argued that the corporate has entry to a whole bunch of tens of millions of dollars by way of different means, together with a deal to promote as much as $150 million of recent inventory that, when introduced final month, additionally despatched shares plummeting. Latest modifications, comparable to banning seeing the identical film twice and making some customers add photographs of ticket stubs, have introduced MoviePass’s month-to-month burn fee down by 40%, he stated.

MoviePass continues to be on monitor to succeed in 5 million to 6 million subscribers by yr’s finish, he stated, and is making ready for worldwide growth. He disavowed the corporate’s current, short-lived transfer to let new subscribers see solely 4 motion pictures a month, interpreted by some as a cost-cutting measure.

“I let totally different folks discuss me into it,” he stated. “Imagine me, we’ll by no means run it once more. I consider folks in in the present day’s world don’t need limits.”

That’s the sort of assurance Kami Koren wants. Like a lot of hyper-enthusiastic MoviePass customers, she earlier this yr set a private problem to see a distinct movie day-after-day. Most MoviePass marathoners finally report that they’ve “mainly seen each film value seeing,” as one wrote on Reddit.

However Ms. Koren, an Orange County, Calif., actress and “enormous film nerd,” hasn’t given up. She lately handed the 100-day mark and is aiming to make it a full yr, a sometimes-arduous cinematic journey she chronicles on her YouTube channel “MoviePass 365.”

She has resorted to praying that MoviePass stays in enterprise: “Each time I learn one thing, I’m like ‘Oh my gosh, what in the event that they finish and I’ve to cease doing it?’ ”

Scott McCurdy, 69 years outdated, averaged lower than one movie a yr in theaters his complete grownup life, he says, till he obtained MoviePass final August. Since then, the retired federal courts worker has seen 136.

Like another MoviePass customers, Mr. McCurdy stated he would nonetheless subscribe if it raised costs or restricted the variety of movies he might see every month.

But when it goes away totally, the Portland, Ore., resident says his new life as a cinéaste wouldn’t finish instantly.

With each ticket MoviePass buys for him, he additionally earns factors in Regal Cinemas’ rewards program. “I’ve obtained 10 free tickets banked, which might have value much more to earn than I’ve spent on MoviePass,” he stated. “It’s a humorous deal.”

Write to Ben Fritz at ben.fritz@wsj.com



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