Parent of MoviePass raises prices, cuts service; shares sink

Helios and Matheson Analytics

31/07/2018 18:55

By David Randall
    NEW YORK, July 31 (Reuters) - The parent company of
embattled movie theater subscription service MoviePass announced
on Tuesday that it will seek to limit losses by hiking its
monthly fees by 50 percent within the next 30 days while
limiting opportunities for subscribers to see most films during
their first two weeks in theaters. 
    Shares of MoviePass parent Helios and Matheson Analytics Inc
 HMNY.O  were down 36 percent at midday in see-saw trade that
saw shares surge briefly by over 150 percent on the
announcement. Shares of AMC Entertainment Holdings  AMC.N , the
biggest U.S. movie theater chain which offers a rival ticket
service, jumped 7.5 percent in midday trading.
    "We believe that the measures we began rolling out last week
will immediately reduce cash burn by 60 percent and will
continue to generate lower funding needs in the future," Chief
Executive Officer Ted Farnsworth said in a statement. 
    The company's shares have plunged 96 percent over the last
week after it was unable to make required payments to its
merchant and fulfillment processors. Service interruptions left
its 3 million customers unable to access movie tickets. 
    The company, which says it accounts for roughly 6 percent of
U.S. box office receipts, is one of just a few disruptive
technology companies that chose to go public during its growth
phase.  L1N1SA1SY  This has heightened investor attention and
made its share price more volatile. 
    Farnsworth in his statement noted that the company has
"challenged an entrenched industry while maintaining the
financially transparent records of a publicly traded company."
    Michael Pachter, an analyst at Wedbush Securities, said the
price hike and service cuts could hurt MoviePass as a competitor
in the marketplace. He noted that the price increase from $9.95
to $14.95 puts the price point just $5 lower than the $19.95
subscription service offered by AMC. 
    At the same time, the AMC service, called A-List, includes
IMAX and 3D films and allows subscribers to view up to three
films a week, he added.  
    "Raising the price and making people wait may get
(MoviePass) to break even, but the question is how many of them
will stick around when you can spend five dollars more and go to
an IMAX showing on opening night," Pachter said. "My guess is
they will lose a lot of customers. And maybe survive."

 (Reporting by David Randall; Editing by Jennifer Ablan and
David Gregorio)
 ((David.Randall@thomsonreuters.com; 646-223-6607; Reuters
Messaging: david.randall.thomsonreuters.com@reuters.net))