Cancelled: Could Stacy Spikes Have Saved MoviePass From Shutting Down?
By CultureBanx Team
MoviePass shut down its platform on September 14
In Q1 2019, MoviePass had cash on hand of $2.8M
MoviePass co-founder Stacy Spikes’ innovative but fledgling creation is shutting down, and he has had to watch the fall as an outsider, after being ousted from the organization in January 2018. For a company that many people thought was too good to be true, with its unlimited movie $10 monthly pricing, they were right. Could Spikes have helped to save MoviePass from what seems to be its inevitable demise?
Why This Matters: Spikes always wanted to be methodical about testing price points, he told Business Insider “the lowest we ever got down to was $12.99 and as high as $75”. This was all before MoviePass parent company Helios and Matheson Analytics (HMNY -10.00%) came into the picture. They wanted to temporarily drop the subscription price to $10 to expedite hitting 100,000 subscribers, which they did in 48 hours, but never removed the low pricing afterwards. A fall from the subscription movie mountain top quickly ensued, when the service saw its users base plummet from more than 3 million members to about 225,000 as of April 2019, according to Variety.
It seems like the writing was on the wall for the company’s implosion, as MoviePass had been running extremely low on funds. Last summer Helios and Matheson had a monthly cash deficit of $45 million. In an effort to avoid being delisted from the Nasdaq, they tried a reverse stock split to keep share prices higher than $1. This was a failed attempt as they were delisted in February and have been trading over-the-counter ever since. At the end of Q1 this year, they had cash on hand of about $2.8 million and $13.1 million on deposit with its merchant and fulfillment processors related to MoviePass subscription revenue.
When Spikes was still at the company he claimed they tested price points significantly higher than the $10 a month that Helios and Matheson wanted, with high success rates. “$19.99 was the lowest, and we did up to $49.99. We tested regional pricing. Markets are very different. There's an $8 market in Waco, Texas, and a $17 market in Manhattan, Spikes told Business Insider.” It’s possible that if MoviePass had stuck with the various pricing models during the “Spikes Era” of the business, the platform may not have had to shut down.
Situational Awareness: Due to the shutdown, MoviePass is weighing its options, including a reorganization, selling the company’s assets, including MoviePass, Moviefone and MoviePass Films, or the company in its entirety. Although, Helios and Matheson doesn’t break out specific revenue for MoviePass, shares dropped 10% to close out last week. During MoviePass’s heyday they were contributing tens of millions in additional revenue for Helios and Matheson, while also burning cash at a much faster rate.
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