Did Helios and Matheson Analytics Inc’s (NASDAQ:HMNY) Subsidiary MoviePass Start a fire it Can’t put out?
Helios and Matheson Analytics Inc (NASDAQ:HMNY) subsidiary MoviePass set out to stamp its influence in the movie industry earlier this year ending up with more than it bargained for. The company went ahead with its all-you-can-watch moviegoing subscription despite fierce objections from industry’s stakeholders.
In August 2017, MoviePass launched the subscription plan for a mere $10 per month. Through this plan, subscribers could watch one movie each day for only $10 a dollar short of standard charges for a single ticket.
These charges were crazily low that MoviePass had to offset the balance to movie theatres. Well, this was an expensive strategy to try to incite moviegoing. It was not long before the program encountered breakdowns. By summer MoviePass began downgrading the service to 3 movies per month.
As earlier mentioned, the movie industry was not wholeheartedly sold out to MoviePass’ idea. The National Association of Theatre Owners Chief, John Fithian, warned that in case the idea fails it will leave a lot of pissed customers all pointing fingers at the industry’s regulators.
AMC Theatres particularly objected to the subscription model but ended up taking the deal (for the paycheck of course).
How MoviePass Self-destructed in the Process
The model had a remarkable start, subscriptions were coming in fine, and by March the Program had about two million users. The problem is, as subscriptions strengthened, the company burned more cash reimbursing exhibitors.
In March, MoviePass sliced its subscription price to $7 per month. During the same period, the company struck a deal with Landmark Theatres under which MoviePass would offer e-ticketing and advanced screening reservations.
As of June the model’s subscription base was at 3 million which meant the company spent even more money for reimbursement. This meant that MoviePass’ parent company Helios and Matheson had to chip in to facilitate the expensive program. The easiest way to raise cash was by selling its shares and debt securities. This plan, however, resulted in Helios shares shading value that the company invoked a-for-259 reverse stock split on July. As of then, the company’s stock was trading below a dollar, and NASDAQ was threatening to kick the company out of the exchange.
The reverse stock split was effective albeit for a short while. Immediately the shares gained value to $22.50 before tumbling by almost half on its first trading session. During the same week, subscribers began to experience service outages- the company had no money to facilitate the program. This further punctured the company’s shares sagging below a dollar again.
The service began deteriorating henceforth as so did Helios’ shares. As of this writing, Helios and Matheson Analytics Inc (NASDAQ:HMNY) closed at $0.016 up 12% from its opening stock of $0.014.
MoviePass has since diversified from its primary focus. The company acquired Moviefone for $23 million and is planning to leverage on its content marketing strategy and advertising revenue.
For 2019, MoviePass has proposed a new three-tier pricing structure to take over from the current disastrous plan. The new model includes a Select Plan going for $9.95 to $14.95 a month much like its existing plan where select members have access to a rotating selection of films excluding opening weekends, 3D, and IMAX. The next is All Access plan for $14.95 to $19.95 a month. Subscribers for this plan won’t be limited to rotating selection of movies. Finally, the Red Carpet Plan is going for $19.95 to 24.95 a month- identical to All Access plan but includes one IMAX 2D, IMAX 3D.
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