WEATHER AUTHORITY : Heat Advisory View Alerts

Is MoviePass too good to be true?

Will the meteoric, feelgood rise of movie subscription service MoviePass end like a clich- Hollywood melodramatic tea...

Posted: Apr 20, 2018 3:38 PM
Updated: Apr 20, 2018 3:38 PM

Will the meteoric, feelgood rise of movie subscription service MoviePass end like a clich- Hollywood melodramatic tearjerker?

MoviePass, which buys tickets from theaters and offers them to subscribers, is losing money. That's not a shocker, considering members pay just $7.95 a month to see a movie a day.

The company's majority owner, Helios and Matheson Analytics, issued a dire warning about the company's ability to stay in business in a regulatory filing earlier this week.

"MoviePass has incurred losses since its inception and has a present need for additional funding. These factors raise substantial doubt about the Company's ability to continue as a going concern," Helios and Matheson Analytics said in its annual report.

The company is raising more money, but that's worrying investors too.

Helios and Matheson Analytics announced Thursday it was selling $30 million worth of new shares through warrants that valued the stock at $2.75 a share -- nearly 30% below the stock's closing price of $3.83 on Wednesday.

All this bad news has caused shares to plunge more than 40% since Monday. The stock is now down more than 60% this year.

MoviePass has grown rapidly over the past few months. It announced in February that it had 2 million subscribers, just one month after it topped the 1.5 million mark.

Nonetheless, investors are clearly worried that the company's low-priced plans are too good to be true. The company's "going concern" warning seems to confirm that.

Related: Blockbuster deal! MoviePass buys Moviefone

But that hasn't stopped MoviePass from offering even more gimmicky promotions. It now has a special limited-time $6.95 a month plan for new subscribers.

The company also just teamed with bankrupt radio company iHeartMedia to let people see four movies a month for 3 months and get a 3-month trial of the iHeartRadio's All Access on demand service for $29.95.

MoviePass is hoping to eventually become profitable by selling more advertising. The company announced earlier this month that it was buying Moviefone from Verizon, which inherited the nearly three-decades old service when it acquired AOL.

Shares of Helios and Matheson Analytics actually surged more than 30% just this past Monday after Verizon disclosed it now has a more than 9% stake in the company.

"MoviePass is growing at warp speed. Put it and Moviefone together and it gives us more advertising opportunities," Ted Farnsworth, CEO of Helios and Matheson Analytics, said in an interview with CNNMoney after the Moviefone deal was announced.

Farnsworth added in a statement to CNNMoney Friday that the company is "100% confident in the MoviePass model and the impact we are making in the entertainment industry."

"The success point for MoviePass has always been growing a subscriber base that could be analyzed in data sets to highlight consumer trends to studios and industry partners," he said.

But investors realize that advertising is another business that is notoriously fickle.

Related: Coming soon to a theater near you: Surge pricing for hit movies

They are also worried that the big chains that MoviePass currently buys tickets from -- AMC, Regal and Cinemark -- may cut out MoviePass with subscription services of their own.

Regal, which is now owned by UK-based Cineworld, has experimented with charging more for tickets during peak movie times and less at times when attendance tends to be lighter. Think of it as Uber-style surge pricing, but for movies.

And Cinemark unveiled Movie Club, a monthly plan that lets people buy a movie ticket a month for a discounted price of $8.99, last year.

MoviePass has another problem. It wants to be the Netflix of movie tickets. But we are in an era of so-called peak TV, led by Netflix, other streaming services and cable. Who has time to go the movies when there are so many shows to binge watch?

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 67649

Reported Deaths: 1912
CountyConfirmedDeaths
Hinds5656118
DeSoto368031
Harrison253036
Madison244368
Rankin229235
Jackson228843
Jones191659
Forrest182056
Washington168942
Lee147941
Lauderdale141192
Neshoba128692
Lamar122614
Oktibbeha112739
Bolivar111834
Warren109533
Lowndes108538
Panola106214
Sunflower105425
Scott100320
Lafayette98317
Copiah95728
Leflore94765
Pike93836
Holmes90049
Grenada84921
Yazoo83312
Lincoln83241
Pontotoc8308
Simpson80330
Monroe80155
Leake79025
Wayne77421
Coahoma77213
Tate73629
Marshall7019
Marion68420
Union64316
Adams62925
Winston62316
Covington62113
George5895
Pearl River55439
Newton54311
Tallahatchie53011
Attala52325
Walthall50120
Chickasaw47019
Noxubee45912
Alcorn4345
Tishomingo4216
Calhoun4209
Prentiss41710
Claiborne40913
Smith40613
Clay39714
Hancock39514
Jasper3889
Itawamba37510
Tippah36713
Tunica3517
Clarke32626
Montgomery3265
Lawrence3228
Yalobusha31510
Humphreys29411
Quitman2701
Carroll26111
Greene25512
Perry2437
Amite2356
Webster23512
Kemper23414
Jefferson Davis2336
Wilkinson21113
Stone2055
Sharkey1995
Jefferson1957
Benton1431
Choctaw1354
Franklin1312
Issaquena262
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 99926

Reported Deaths: 1781
CountyConfirmedDeaths
Jefferson13258244
Mobile10517207
Montgomery6835149
Madison544734
Tuscaloosa423076
Baldwin365125
Unassigned363064
Shelby330936
Marshall318937
Lee270047
Morgan241118
Etowah216232
DeKalb183013
Calhoun180717
Elmore173138
Walker153964
Houston141912
Russell13872
St. Clair135418
Limestone134913
Dallas133123
Franklin128820
Cullman122712
Colbert120716
Lauderdale118919
Autauga117421
Escambia108717
Talladega104814
Jackson10144
Tallapoosa86579
Chambers84438
Dale83525
Clarke82610
Blount8124
Chilton8097
Butler76736
Coffee7646
Covington73720
Pike7087
Marion58026
Barbour5765
Lowndes57324
Marengo56515
Hale47826
Bullock46611
Winston45711
Perry4454
Washington44312
Bibb4425
Wilcox43210
Monroe4215
Pickens4049
Randolph40310
Conecuh39310
Sumter36418
Lawrence3512
Macon33914
Crenshaw3265
Choctaw28712
Cherokee2758
Henry2643
Clay2635
Geneva2631
Greene25211
Lamar2292
Fayette2125
Cleburne1271
Coosa1033
Out of AL00
Tupelo
Clear
90° wxIcon
Hi: 96° Lo: 75°
Feels Like: 96°
Columbus
Clear
88° wxIcon
Hi: 95° Lo: 73°
Feels Like: 100°
Oxford
Clear
88° wxIcon
Hi: 92° Lo: 71°
Feels Like: 94°
Starkville
Clear
88° wxIcon
Hi: 91° Lo: 70°
Feels Like: 96°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather