Last December, subscription movie ticket service MoviePass announced that it had signed up 1 million paying customers for its $9.95-a-month service that allows subscribers to see one movie a day on the more than 36,000 screens the company has agreements with. Friday morning the company lowered the annual subscription rate for new subscribers to $6.95 per month for an unspecified limited time.
The subscription service is controlled by Helios & Matheson Analytics Inc. (NASDAQ: HMNY), which owns about 81% of MoviePass stock.
MoviePass CEO Mitch Lowe commented:
Our vision has always been to make the movie going experience easy and affordable for anyone, anywhere. With the current growth and support that we’ve seen within the last several months, our studio and exhibitor revenues and other marketing partnerships have motivated us to lower the price once again, offering movie lovers greater access to MoviePass.
Helios & Matheson CEO Ted Farnsworth added:
We believe our business will succeed by granting the public greater access to see movies how they were originally intended to be seen – in theaters. As the leading movie theater subscription company, we want to bring better value to our MoviePass fans. With this new annual plan, MoviePass is bringing cinema back to the masses.
But is that what the masses want? According to data from BoxOfficeMojo.com, domestic ticket sales dipped 2.7% year over year in 2017. For 2018 to date, domestic receipts total about $2.54 billion of which “Black Panther” accounts for more than $610 million, almost a quarter of all ticket sales. Sales still trail 2017 for the same period by 0.6%.
Making it cheaper to go to a movie is not the same as making it easier. According to data from Statista, 54% of Americans prefer to watch movies at home while only 13% prefer to watch movies in a theater. Only 3% of Americans visit a movie theater at least once a week, compared with 22% who say they never go to a theater.
Before MoviePass lowered its monthly subscription to $10 last September, the subscription rate was $50 a month and the company had about 20,000 subscribers. At an average theater ticket price of around $9, MoviePass had a chance to make a (modest) profit by appealing to ardent moviegoers.
But that audience is small, so the firm apparently chose to chase scale rather than profits, a strategy that has worked pretty well — up until now — for Spotify. The music streaming leader is about to go public after losing hundreds of millions of dollars with no immediate prospect of turning that around. Whether that model will work for MoviePass remains to be seen.
Helios & Matheson stock traded down about 2% in the noon hour Friday, at $3.07 in a 52-week range of $2.20 to $38.86. The 12-month consensus price target is $15.50.