I’m bullish on HMNY and moviepass. A few things many people overlook, this article included -
1/ MoviePass does not reimburse 100% of the ticket price to all theaters. In at least 1,000 theaters they are getting $3 back or 25% of concessions. This number will continue to increase as moviepass proves they can drive demand.
2/ HMNY literally specializes in packaging and selling data. I think it’s a mistake to treat them as if they don’t know what they’re doing.
3/ There are not a lot of options to deploy performance marketing dollars for movies. Instead, most of the spend goes towards broad-reach, hard to track, media. They can offer studios a way to spend marketing that is not only trackable, but measurably incremental. I cannot overstate how juicy that sounds to a person in charge of spending an $X0,00,000 marketing budget.
I feel confident they can get to $5-$10 per subscriber per month in revenue on the backend. If they can hit that, maintain solid churn numbers, and manage fraud, they will have a very healthy subscription business on their hands.
There is close to 0 percentage this company survives. The stock has fallen 40% each day for past few days. AMC head says they don't discount tickets and average moviepass holder watches 3 movies a month paying average $12 per ticket. They burn 21M a month and less than that in the bank. Plus they took money from many consumers for annual passes which will get them sued for fraud.
I haven't done much research into the numbers (only popped up on my radar a while ago) but the CEO said they have access to $300m worth of capital (i.e. debt) + the service would be profitable at 5m users. Burn was supposedly reduced by 30% since introducing that recent change. Which would give them approx. 15-20 months to execute their strategy in the best case.
On the off chance this one does work out, this will likely be a 100 bagger.
> On the off chance this one does work out, this will likely be a 100 bagger.
This company will likely go bankrupt. On the off chance it doesn't go bankrupt it will likely not increase in value 10,000%.
Movie theaters already have access to what movies people are seeing. They also have control over the ticket serving infrastructure. Moviepass literally exists because movie theaters don't want to waste their own money finding a profitable balance for subscriptions. So they'll let Moviepass burn 300 million validating the idea. Worst case scenario, it's a bad idea and movie theaters lose nothing, best case scenario its a good idea and they offer the service themselves.
Now they can't watch more than 4 (select) movies per month and no repeat viewings. Moviepass hasn't changed anything because people generally are being termed out of the original breakneck deals.
I’m not sure where you came up with 3/month @ $12 each. The actual numbers could be wildly different, I don’t think it’s safe to speculate so broadly.
Also, while AMC is large, they aren’t the only game in town. They only control ~8k of the 40k screens in the US. You can bet that if moviepass is able to drive demand away from AMC they will cave eventually.
It's a quote from the CEO of AMC from their recent investor call.
"Fast forward to today, in March and April, MoviePass paid AMC $12.02 per ticket on hundreds and hundreds and hundreds of thousands of tickets each month, hundreds of thousands of their subscribers came through AMC theaters to enjoy our product. They did so at a frequency of 2.62 times in March and 2.75 times in April. Now, I took the calculator out and I multiplied 2.75 times $12.02, and I got to a number that was considerably larger than 995. So just as we were hearing that -- the MoviePass price point was unsustainable in August, we have the same questions today. And apparently we’re not alone in that view. Our doubts are now shared and articulated by MoviePass's orders."
Everyone points to data as manna from heaven, but other people need to find your data valuable. Who is going to buy moviepass data? Studios are drowning in data and still can't predict hits reliably. I'm generally an optimistic person and I don't see the silver lining here, I would be shocked if they could turn this ship around before going bankrupt.
People say the data matters, but I don't see it - data from people who want to watch movies cheaply is worth pretty close to nothing. I say this as someone who uses data a lot to manage millions of dollars in marketing spend.
Movie theaters will have their Spotify moment: When their modus operandi results in rock-bottom financials and studios have to establish a controlling stake in theaters and switch over to a subscription model. That is, if Netflix doesn't beat them to it.
It's odd, because this model would likely work outside of the US.
I sat down with the head of marketing of a large cinema chain for something completely unrelated (bumped into the guy at an event) and they have corporate plans where tickets are significantly discounted (i.e. a normal ticket is €12,95 and corporates pay €3-5 if they buy 100s in bulk).
I guess the incentive is there, because they mostly make their profits from food / candy / nachos etc that are sold to people visiting the movie theatre.
> 1/ MoviePass does not reimburse 100% of the ticket price to all theaters. In at least 1,000 theaters they are getting $3 back or 25% of concessions. This number will continue to increase as moviepass proves they can drive demand.
Consider a hypothetical scenario where Moviepass has 100 customers. Let's say the net revenue per month for 60% (60 customers) is $10 (i.e. 60% subscribe to moviepass but never see a movie).
That's $1000 a month in profit to 'play with'. If the average movie ticket is $10, that means they have 100 movie tickets of budget to spread among the remaining 40 users to break even. Divided out, that means each user can only see 2.5 movies a month before Moviepass starts losing money.
There are a couple takeaways from this (admittedly simplistic) analysis:
1. Moviepass seems to need a very high percentage of user not use the service in order to have any chance of profitability. There's just too much 'downside risk' from heavy users otherwise. That's a bit of a 'product smell' to me; you generally want o have usage of your product to have some positive correlation to your profitability.
2. Even if they strike deals with the theater chains, they're going to need to negotiate fairly steep discounts. Even if Moviepass only has to pay $5 per movie, that still only lets users see 3 movies a month, which is less than one a week. Are theaters inclined to reduce the price of a ticket to $0? It might work then, but I don't see why theaters would torpedo their average selling price (ASP).
3. Wrt performance marketing, moviepass better be selling ads to mesothelioma lawyers (~$300 cpc). I can't think of any organization that would pay enough to offset the potentially massive loss per customer.
Moviepass screams of selling $10 bills for $5. That in itself isn't necessarily bad, but to me it doesn't look like they have a way to bootstrap themselves out of this model.
They're out of cash in two months. They say they can raise up to $300M but their market cap is almost sub $50M so they won't be able to get much for the equity. And as for debt, well we'll see how much they can actually get.
"There are not a lot of options to deploy performance marketing dollars for movies. Instead, most of the spend goes towards broad-reach, hard to track, media. They can offer studios a way to spend marketing that is not only trackable, but measurably incremental. I cannot overstate how juicy that sounds to a person in charge of spending an $X0,00,000 marketing budget."
Help me out here as I don't understand this one.
Basically when I go to a theater before the trailers I get ads. Then I get ads for nearly every movie ever..... that go on forever.
What else could they possibly do? Use that data to show me ads they're already showing me?
MoviePass can show you ads in the app (or wherever) and then if you use the app to buy a ticket to tman advertised movie, they can claim the ad was responsible.
Advertisers like ads where they can see results more than just impression based ads.
"There are not a lot of options to deploy performance marketing dollars for movies"
This is 100% false in every conceivable way possible, in fact marketing something like a movie is probably the easiest example you walk through then you first start learning how to market.
I live in New York, and the other day I was queuing at an AMC when I overheard a young lady talking to her friend in amazement: "Wait, you DON'T have a MoviePass??!!" And indeed it seems that two thirds of the customers in front of me used one to buy their ticket. Granted this is a very skewed sample - the theatre has reserved seating and those paying out of pocket probably bought online in advance. But still, in a market where a matinee ticket costs $15 - $17, if you watch movies it'd be silly NOT to get MoviePass. Surely, MoviePass has transformed how people go to the movies here.
I know the company will probably fold sooner or later, but I surely will miss it when it happens, and sincerely hope that the subscription model can live on.
It will be interesting to see an statics on how much it has changed movie viewership. I'm sure there are a couple of Data Scientists or Business Intelligence people at Regal tracking attendance of Moviepass-ers, and I bet they have a plan to introduce a subscription service the minute Moviepass folds.
If I had to bet, MoviePass is the reason my Regal Points expire now.
I worked for Regal for three years. Starting as a lowly usher and quickly becoming the projector tech for Oregon and Washington.
It is the worst run company I have ever worked for.
For example when "Something About Mary" came out we put it in theater 5. 150 seats. It was selling out every show. I was the projectionist at the time and said we should put it in #3 which had 534 seats. The box office was turning away hundreds of people every few hours.
I do not care about company profits. But I do care about my friends working concessions and door and usher. If we had the movie in the right theater we could have used more workers.
But lazy managers kept the print in #5 for weeks. Since it was a pain to swap prints in the computers. It wasn't.. It took two minutes.
That is just one example of many. It got even worse when I had to contact Nashville everyday to get basic supplies. It is never fun explaining why you need a new oscilloscope to a person that doesn't know what one is.
It's true. I used to have put movies into 3 categories.
1. I'll see by myself
2. I'll see if someone else wants to.
3. Nope
With MoviePass, my friend group and I have been able to to add a 4th option to that list: I'll see it if it looks interesting enough and I have nothing better to do.
When I saw the movie Gringo, I got an email from Moviepass asking "Would you have seen this movie without MoviePass?"
I'm with you on option 4. I used to spot a movie I wanted to see, and then see it. Now I want to see a movie, and then pick the movie to see. I can't think of too many products I've experienced such a behavioral shift from.
I'd change the title too and drop "moviegoing habits" to simply "habits". I'm probably out on average 2 nights more a week than I used to be. I'll stop on the way home from standing appointments to grab dinner and a movie, just to wait out traffic. I don't think I'd ever done this before in my life.
If I owned a restaurant near a theater, I'd figure out how to be a Moviepass affiliate, in a heartbeat. Assuming they can survive, of course.
For me, it's something to do and a excuse to get together for a afternoon. None of us can feel like "shit, what a waste of money" with MoviePass. It's kinda like if a bowling alley offered all you can bowl for $14.99/month. Do we really want to go bowling every week? Not really, but it's an excuse to hang out outside of work/bars.
Another potential drawback is that if I were a teenager, I would get MoviePass and just treat the theater as my social club. If a movie was a boring drama that targeted older folks, I'd totally MST3K it with my pals[1]. Granted, I am formerly terrible teenager.
The theory is that MoviePass can strong arm theater chains once they have a sizable audience, right? I don't see what's stopping another from stepping into the same space. Where's the moat?
A theater chain could easily do it. Imagine if they come out with “AMC pass”. They’ve got the network and prime locations.
I bet they’re waiting for MoviePass to go belly up first. No point in having to compete with a company that’s literally throwing money at them (paying full price x3-4 per person per month to AMC).
I guess they could, but they don't seem to want to. Cinemark's competitor gives you ONE movie (non-premium, non-3D, etc.) a month for $8.99.
Watching the ad for it preroll every time before a movie I've 'paid for' (with MoviePass) coming on has become a running joke between me and my partner that only people who are such luddites that they've never heard of MoviePass would remotely think it was a good deal.
But the theater chains know they just need to wait— possibly for less than a month more— and MoviePass will go out of business, at which point MP users will who have gotten used to the service will have to use the chains' own subscription services that they're all launching. MP has no leverage with their cash dwindling so quickly.
I only watch about 1-2 new movies a year at best. Their service charges $10/mo. I'd rather just pay $15 one-time to watch a movie, like when I see it in a theater. It's a good idea, but I think they need to tweak their business model a bit if they want to bring in people like me that don't want to spend hundreds of dollars a year to watch garbage movies full of mutant CG gorillas punching each other.
Not every business needs to capture 100% of the populace in their target market. I too only see 2 or 3 movies a year (although I basically only watch the mutant-CG-gorilla type), and I don’t have a MoviePass because it’s not worth it to me. But I don’t think MoviePass execs are losing any sleep not capturing the kind of person who just doesn’t want to see movies, in the same way Ford probably doesn’t care much about people who don’t drive.
1/ MoviePass does not reimburse 100% of the ticket price to all theaters. In at least 1,000 theaters they are getting $3 back or 25% of concessions. This number will continue to increase as moviepass proves they can drive demand.
2/ HMNY literally specializes in packaging and selling data. I think it’s a mistake to treat them as if they don’t know what they’re doing.
3/ There are not a lot of options to deploy performance marketing dollars for movies. Instead, most of the spend goes towards broad-reach, hard to track, media. They can offer studios a way to spend marketing that is not only trackable, but measurably incremental. I cannot overstate how juicy that sounds to a person in charge of spending an $X0,00,000 marketing budget.
I feel confident they can get to $5-$10 per subscriber per month in revenue on the backend. If they can hit that, maintain solid churn numbers, and manage fraud, they will have a very healthy subscription business on their hands.