Helios and Matheson Analytics, the company behind MoviePass, may soon be delisted from NASDAQ as shares plummeted below the $1 mark yesterday, ending at a mere $0.80 per share after dropping 60% in value. This comes after the company tried to save itself with a 1-to-125 reverse split and borrowing $5 million last Thursday to cover moviegoers’ tickets.
MoviePass launched in 2011, but it wasn’t until Helios and Matheson stepped into the picture last year that it became the company we know now. Helios and Matheson bought a majority stake and introduced a new pricing model, which it had hoped to carry through into eternity – but that’s obviously no longer the dream. Now the tactics being used are simply for survival.
After last year’s acquisition, subscriber numbers for MoviePass jumped from just 20,000 to over one million.
Helios and Metheson, a Big Data company, doesn’t sell it to third parties for marketing purposes, but knows based on subscribers’ browsing data and moviegoing habits what their preferences are and what actions they wind up taking afterward.
“We can tell if you look at Spiderman and look at Wonder Woman and Mission: Impossible,” said Ted Farnsworth, CEO of Helios and Matheson. “We can tell you exactly what movie you went to out of all three trailers.”
The unsustainable model
While it worked in theory, the pricing model that made MoviePass so great just couldn’t survive without many, many more subscribers. Think of it as the same kind of model for the single-payer health insurance: the more people using it, the more sustainable it is.
MoviePass is paying full price for the tickets and subscribers are paying a flat fee to use them, but if there aren’t enough subscribers using the service, then there’s not enough money coming in to cover the high volume of tickets going out. Let’s not forget movie tickets are freakin’ expensive, too! After a while the system fails.
The model did lead to competitors launching their own versions of it, though. AMC recently countered with its own monthly subscription service, charging $19.95 per month and limiting subscribers to three movies per week. However, AMC subscribers were offered additional perks, including the ability to see movies in any format and purchasing tickets in advance. Since AMC brought in the biggest clientele numbers for MoviePass, this move is considered the initial blow that ultimately brought about the company’s downfall.
Bring on the memes
I know, I know… you came for one thing and one thing only: the memes. MoviePass’ demise may be sad for many that were cheering it on since its inception in 2011, but that hasn’t kept the trolls from making it the latest victim of brutal memes.
Godspeed, Moviepass. You flew too close to the sun. Then tried to make the sun pay a surcharge. pic.twitter.com/9amMlZV1NV
— Brian Collins (@BrianWCollins) July 30, 2018
— Mark C. (@chonginese) July 30, 2018
When MoviePass will only let you get tickets for the 4pm showing of the Emoji Movie on the concessions guy's laptop pic.twitter.com/urOOGJIF08
— The Walking Dead (@TheWalkingDead) July 30, 2018
when ur the moviepass CEO pic.twitter.com/66rItCPnFr
— Chase Mitchell (@ChaseMit) July 27, 2018
a live look at the moviepass offices pic.twitter.com/Ib08nNd9S1
— shaye (@shayedavis) July 30, 2018
I guess I’ll have to find another way to get a cheap ticket to the upcoming Christopher Robin flick.
Helio and Matheson stock must close above $1 for 10 straight days and have a market cap of $50 million in order to avoid being delisted from NASDAQ. Subscribers and stockholders are jumping ship and the stock continues its freefall. After the reverse split last Wednesday, the stock traded at $21.25. In less than a week, it was back down below $1.
With all the negativity surrounding the company, it would need to have a true underdog comeback in order for shareholders and subscribers to have any kind of hope for a Hollywood ending.