Movie Pass runs out of cash

In a Securities and Exchange Commission filing on Friday, the owner of MoviePass, Helios and Matheson Analytics, disclosed that it had borrowed $5 million in cash following a "service interruption" on Thursday because the company was unable to make certain required payments.

https://www.businessinsider.com/moviepass-outage-caused-by-company-temporarily-running-out-of-cash-2018-7

Movie pass won´t last long and it especially won't last so long that it collects enough customers to make it a "threat" to someone higher up the foodchain and they get bought out.

their business plan didn't make a lot of sense...

Yeah, I was never clear on exactly how they were supposed to make money.

1. Sell movie tickets for cheaper than the theaters sells them themselves.

2. ???

3. Profit!

-Byshop

Their business model relied on only a fraction of their subscribers using the service to cover the costs of those that do. Like people who have gym memberships but don't go. Obviously, it is clear more people are using it than they expected.

Who would have guessed only people who like going into cinemas used the service.

People are too lazy to go to gyms...

People are too lazy to go to movies....

You think that would've turn some heads on some Moviepass execs...but that wasn't the case.

Well, if they were too lazy to go to the movies but still paying for MoviePass then it wouldn't be much of a problem.

I haven't been to a movie theater in about 10 years.

I do plan to go see Bohemian Rhapsody though because that needs a lot of sound

I go to movies all the time on the weekends, but Movie Pass never came to my mind and Tickets aren't that expensive to buy which mainly depends on the time of the day they can be cheaper then the average prices.

I'm not that familiar with Moviepass, but is there more to their business strategy? I only ask because I'm increasingly hearing about more companies deliberately operating at a loss. Like, they'll be taking a loss in order to try to build up their customer base, then they shift their business strategy to one that actually turns a profit.

Obviously doesn't work all the time, and I honestly have no idea if that's what movie pass is up to. But could it be something like that, as opposed to them just plain being stupid?

perhaps it was as @lamprey263 indicated? expect a lot of people to pay but only a fraction to use it, like auto insurance or gym membership.

Good, hope they fail.

Businesses like this prey on people who think they have disposable income. Then, when it starts to fail, they jack up the rates more and more.

I do love it when capitalism actually works in favor of the consumer.

I just saw this article which sheds a little bit more light on the situation.

https://www.investopedia.com/news/how-moviepass-makes-or-doesnt-make-money/

Obviously it's a big risk and there's no guarantee this will work for them, but it's not as if they're complete idiots. Operating at a loss (for now) is clearly part of their plan, and they're hoping that they'll eventually be able to turn a profit once they have enough customers. That obviously doesn't work for everyone, but there have been cases in which that kind of business strategy has worked out very well.

I'm a bit "theater-averse" myself, but I try to catch the Marvel/Comic Book movies as quickly as possible because avoiding spoilers on the internet is like... well...

I caught Infinity War opening weekend, and that was only because I was in Hong Kong and was able to walk into a half empty theater on a Friday in the middle of the day. That movie -still- isn't out on digital yet (tomorrow, I think), much less Bluray.

-Byshop

They must have forgotten the part where going to the movies just requires time where as the gym requires time and getting off the couch. Honestly the idea was shakey from the start and when they had a more tier based system the idea was alot more sustainable. But once the price got as cheap as it did plus the only restriction was one movie a day. People like they will always do abused the system. The good is AMC and some of the other big chains came up with their own version of a movie pass like system. So thanks Movie Pass for at least being a martyr.

I love that you look at this from a half full instead of a half-empty point of view.

But yea you are correct, it seems like their whole business plan was to secure so many users, that the income generated would outweigh the cost of the tickets. But they never got enough to use it so they could cover the cost.

Credit goes to a reddit post I can't find now, but...

Movie Pass Right Now:

-Byshop

The whole gym membership thing what’s his name kept bringing up was such an illogical nutso point to make. Like there was never going to be a tipping point like gym stuff. For one, as others have mentioned, people’s willingness to go to the gym and going to the movies are worlds apart. Another thing is that a person going to the gym doesn’t cost the gym the monthly fee they get from a person each time they visit the gym. Data was also another pipe dream. Data money wouldn’t put a dent in your monthly sub costs. The actual strategy seemed to be to get enough customers to be able to strongarm theaters and studios into cutting them into their profits. A less dumb gamble but still dumb because obviously theaters would just create their own service.

Still potentially could have worked if they'd been able to cut deals with the theaters and studios sooner, or if they had a lot more money to be able to continue to operate at a loss until that happened.

But yeah...if they're already out of money and the profit-generating changes still haven't happened yet, then they're probably f***ed. Lots of businesses operate at a loss until they can generate a profit, but the key thing seems to be being able to turn a profit before running out of money. Now that they're actually getting service interuptions because they're out of money, there's a good chance that that's going to lower their customer base. Which is a pretty bad thing when their entire plan to make a profit revolves around having a high enough customer base to eventually turn a profit. If they haven't gotten to that point yet, and they're already out of money, then they're probably too far gone to be saved.

maybe that was their true intention all along? everything seems to be going to a subscription based model.