This was a case where subscriber growth was not of any real benefit since Helios and Matheson had only a small amount of fixed costs, and there was significantly negative gross margins (over -100% at times) on its subscription revenue. This resulted in MoviePass's economic model being broken as it could lose $15+ per subscriber per month and would lose more money (in total) with more subscribers.
Helios and matheson full#
However, Helios and Matheson was never able to generate a large amount of revenue from MoviePass outside of subscription revenue, and it was also paying full price for most of the movies its subscribers saw. This led to tremendous growth, as one could save $20 per month (and more in some urban areas) just from seeing three movies per month.
Helios and matheson movie#
Great For Consumers, Bad For InvestorsĪt its peak, MoviePass was a great deal for consumers, allowing people to see one movie per day for a flat price of $9.95 per month.
The cost to keep it operational in its current form would greatly exceed any initial purchase price though. It should be fairly easy to come up with enough money to purchase MoviePass. įrom Helios and Matheson's perspective, it may be worthwhile to sell the assets for a nominal amount as long as certain liabilities are also assumed by Farnsworth's group.įor MoviePass's longer-term future, the issue remains the ongoing cash burn. The other assets that Farnsworth is attempting to acquire have a modest amount of value, but MoviePass may have negative value due to associated liabilities including the class-action lawsuits. One would potentially be better off just starting a new movie subscription service at this point. As well, the MoviePass brand has been severely damaged over the last year and a bit. This is a perplexing move since there still appears to be no path to profitability with MoviePass (at least at a subscription price that would attract new users). A Bid For AssetsĪ few days after the MoviePass shutdown announcement, CEO Ted Farnsworth announced that he was resigning in order to make a bid to acquire MoviePass, MoviePass Films, MoviePass Ventures, and Moviefone. Helios and Matheson also indicated that a strategic review committee would examine whether the whole company could be sold or reorganized, or whether individual assets could be sold off.
The cash burn due to MoviePass over the last couple of years had been astronomical, although the cash burn was significantly reduced in recent months due to the shrunken subscriber base, outages, and restrictions. Helios and Matheson announced that it was shutting MoviePass down, as it was unable to secure additional money to fund its continuing cash burn. This bid attempt was unexpected, although Helios and Matheson's assets can likely be purchased for a minimal amount of money as long as the purchaser is willing to take on the remaining liabilities associated with MoviePass (such as class-action lawsuits). Subsequent to that announcement, Ted Farnsworth resigned from Helios and Matheson in order to launch a bid to acquire some of Helios and Matheson's assets (including MoviePass). It also noted that it was looking at various strategic options including a sale of the whole company or individual assets. Helios and Matheson ( OTC:HMNY) recently announced that MoviePass was shutting down after failing to find additional funding to finance its operations.
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