Enjoy your MoviePass membership while it lasts, because right now, things are looking financially dire for the service. On Tuesday, parent company Helios and Matheson Analytics reported that it had just $15.5 million worth of cash in the bank at the end of April, and has been burning $21.7 million a month on average. MoviePass is apparently owed another $28 million from credit card processors, but that doesn’t fix the fact that its business model mostly consists of creatively lighting money aflame in order to subsidize the movie-going habits of some 3 million customers.
MoviePass members pay $9.95 a month for a debit card that lets them catch any movie they want in theaters. Subscribers can only attend one screening a day. But each time they swipe, the company pays the theater for the full cost of a ticket—meaning that it loses money on pretty much anybody who goes to two movies per month, and in some cities even one. The thinking behind this rather preposterous-sounding scheme was that MoviePass would eventually become so popular and drive so many butts into seats that movie theaters would feel compelled to cut them into valuable concession sales or otherwise compensate them. But things haven’t quite panned out that way. For instance, the company has been in a war of words with mega chain AMC, whose CEO spent a Monday conference call mocking the arithmetic behind MoviePass’s operations and calling it “unsustainable.” Last month, the service’s financial auditor said there was “serious doubt” the company would be able to stay in business this year.
MoviePass says that its found ways to cut its monthly losses. For instance, it barred people from using the service to see movies more than once, since some subscribers were apparently just handing their debit cards to friends who wanted to see Black Panther. That move sliced their losses by 35 percent the first week of May. But that’s really just another way of saying the company is still losing millions buying movie tickets, with no obvious path out of financial perdition.
Helios & Matheson Chairman Ted Farnsworth has tried to wave off concerns that MoviePass is headed for imminent collapse, pointing out that the company is planning to raise money by selling stock, and possibly issuing debt. This does not seem to have inspired much confidence in the markets, as the company’s share price sank 31 percent today following the reports about its cash burn.