Helios And Matheson CEO: MoviePass 'Will Be The Biggest Theater Company Without Owning Any Theaters'

MoviePass is one of the most polarizing companies in the marketplace.

Despite providing a remarkable value to regular moviegoers, speculation about the viability of the business model has prompted a large short interest in the stock of MoviePass' parent company, Helios and Matheson Analytics Inc HMNY. 

The tide is turning and the big theatres are starting to embrace the company, Helios and Matheson CEO Ted Farnsworth told Benzinga. 

“100 percent our business is viable — we have studios and distributors paying us right now. What I saw from day one is that whoever controls the theatre really controls all the other revenues,” Farnsworth said. 

"The bigger your movie is at the box office, the more money you're going to make on the ancillary businesses, and the theater drives all that revenue downstream —and we are at the top of the funnel.”

'We Will Be The Biggest Theater Company Without Owning Any Theaters'

With more than 2 million subscribers, MoviePass knows that the more it increases its subscriber numbers, the more influence it will have over the industry, making a partnership with the major theater chains inevitable.

MoviePass announced it is sponsoring to the Miami Film Festival later this month, as it prepares for an international launch in Europe and select countries in South America. Farnsworth predicts MoviePass will reach 5 million subscribers by the end of 2018 and said the company will be cash flow positive once it hits 3.5 million-4 million subscribers.

If MoviePass reaches 5 million subscribers, it will account for 15 percent of movie box office revenue. With no brick-and-mortar locations, MoviePass finds itself in the same company as disruptors who completely changed an industry despite maintaining no inventory.

“We are like the Airbnb of the theater business; we are selling as many tickets as the No. 4 theater chain in America on a monthly basis and we have no bricks and mortar, no infrastructure,” Farnsworth said. 

“We will be the biggest theater company without owning any theaters.”

A Data Play

While the early speculation on whether or not the company will last likens MoviePass to Netflix, Inc. NFLX's early days — because MoviePass does not look to turn a profit through its subscription fees, but from its data — Farnsworth said his company is akin to an Amazon.com, Inc. AMZN or Facebook, Inc. FB.

“Netflix was one of the biggest shorts for years. They were the pioneer [and] they paved the path for all of us, but Netflix constantly pivoted along the way, from DVDs to streaming — then it was unlimited streaming," Farnsowrth said. 

Netflix profits from subscribers themselves, but MoviePass does not, the CEO said, describing subscriptions as a "loss leader."

Driving millions of people to movie theaters is valuable to the studios, and for MoviePass, it's valuable for advertising, Farnsworth said. 

"Amazon is not not making money on you as a subscriber. They are making [money] on a whole other ecosystem of selling you product, and there is still a whole other ecosystem out there for MoviePass."

Until now, movie studios were unable to tell who watched their movies, and theaters had limited information, Farnsworth said. It is nearly unheard of in the age of big data for a multibillion-dollar industry to have such limited information on its customer base, and Farnsworth said it's what ultimately led to the decision to drop the price of MoviePass $50 to $9.95 in August.

“This is the first time a movie studio actually knows where their advertising goes. Instead of doing a billboard, newspaper or TV ad, we know if 100,000 people went to our movie, because we paid for the tickets," the CEO said. 

Moviegoers visit a theater an average of four times per year, and MoviePass wants to double that number to eight visits, Farnsworth said — a figure where the company would nearly break even on subscriptions and increase its database on moviegoer activity. 

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