MoviePass says it will start acquiring movies, too

On the heels of hitting a 1.5 million subscriber milestone and bringing on a new marketing chief, the subscription service for watching movies in theaters, MoviePass, today announced it’s going to start buying movies, too. The company says it will begin to invest in films so it can share in their success beyond the box office, including on other platforms like streaming, DVD, and on-demand.

At present, MoviePass is seeing rapid growth thanks to dramatic cuts to its subscription pricing, rolled out last year.

Essentially, the company is subsidizing the cost of its subscription with the capital it raised from data firm Helios and Matheson Analytics Inc. (HMNY), now its majority owner. The idea is that MoviePass will operate in the red while growing its subscriber base, and then hit some sort of break even point in terms of revenue before the funding runs out. (Or perhaps HMNY is willing to keep piling on more cash until that point arrives.)

HMNY believes it will eventually be able to sell the data and insights gained from a large subscriber base to studios, who could then do targeted marketing for their films to the most active movie-goers.

The model, of course, is risky. And theater owners like AMC have already lashed out against the service claiming its low-cost tickets are devaluing the movie-going experience.

But maybe MoviePass just found a sweet spot in terms of what a large number of consumers are willing to pay to actually go to the movies? After all, movie ticket prices have risen over the years, but attendance is hitting record lows. With all the other options to watch movies these days – not to mention the “peak TV” moment ushered in by the streaming era – these “in-the-theater-movies” face tough competition for consumers’ time and money.

Still, MoviePass believes it has the power to boost theater attendance, so it may as well share in the upside of the films to which it sends all of these customers; and that includes when those films start streaming across other platforms beyond the silver screen.

The company today claimed it can boost theater attendance on demand, in fact.

It says it currently buys about 3 percent of the domestic box office, but when it tweaked some things in its app – things it only described as “a series of levers within its app and marketing-based platform” (uh-huh) – it could move the needle even further. It said it did this for The Post, Three Billboards Outside of Ebbing, MissouriCall Me By Your Name and The Shape of Water. MoviePass says it impacted 10 percent of box office performance for these movies.

We should note the company didn’t share specific data that would allow these figures to be fact-checked more thoroughly.

MoviePass is now at Sundance making the pitch that it’s ready to invest in films itself.

It will do so via MoviePass Ventures, a wholly-owned subsidiary founded to co-acquire films with film distributors.

Basically, the idea here is that since it can (maybe!) boost the performance of a movie in the theatrical window, that will impact the movie’s ability to generate revenue downstream – like when the digital version goes on sale, or when it starts streaming.

And MoviePass wants a cut.

“We aren’t here at Sundance to compete with distributors, but rather to put skin in the game alongside them and to bring great films to the big screen across the country for our subscribers,” said Ted Farnsworth, CEO of Helios and Matheson Analytics Inc., in a statement. “We’re open for business. We’re here at Sundance – and SXSW is next.”