SALT LAKE CITY — The future of MoviePass doesn’t look so bright.
The subscription service’s parent company Helios and Matheson said Monday it needs $1.2 billion. The company hopes it can raise the funds through selling stock and debt securities.
MoviePass is a subscription service that jumped in popularity after it started offering one movie ticket every day for $10 per month. However, the company has continued to change its subscription plans since it often loses money on each subscriber.
HMNY’s stock dropped to $0.22 Monday after the new filings came to light.
As the Deseret News reported, HMNY said the company spends about $21.7 million per month on MoviePass. At the time, the company only had $15.5 million cash on hand.
According to CNN, HMNY spent $40 million on MoviePass in May alone.
HMNY said the MoviePass business model was “highly uncertain.”
“We are unable to estimate the actual funds we will require,” the company said, according to Bloomberg.
MoviePass currently has about 3 million paid subscribers, according to the Deseret News, with hopes of reaching 5 million by the end of the year. MoviePass hopes to add a family plan, surge pricing and bring-a-friend options to help reach new customers to offset costs.
MoviePass has even purchased a movie production company, called Oasis Films, to help with revenue too.
But even that has shown problems. One of the production company’s latest films, John Travolta’s “Gotti,” flopped at the box office, meaning MoviePass may have lost money on the film.
MoviePass may be its own worst enemy. Writer Rob Lefebvre of Engadget opined that MoviePass’ rash decisions often hurt the company’s public profile and lead to fewer subscribers.
For example, MoviePass CEO Mitch Lowe found himself in hot water after he said the company collected public data on its users. The company then changed its plan to three movies per month before switching it back, causing an uproar among users.Comment on this story
“Making sweeping policy changes on the fly seems to be how MoviePass rolls, and it's pretty annoying,” Lefebvre wrote. “Look, I generally know that companies like this can change things up as they go without warning; it's in the terms of service somewhere. What MoviePass really needs to do is to keep customers like me happy, not sell more equity.”
Lefebvre wrote that other companies have started similar plans — like this one, this one and, oh yeah, this one — which may be more suited for customers who don’t like the constant change in policies and procedures.