Information technology firm Helios and Matheson Analytics Inc. is seeing big returns on its $27 million investment in MoviePass, an online ticketing service. According to Reuters news reports, Helios and Matheson shares saw a 30 percent increase on Wednesday (Oct. 11).
MoviePass is a movie subscription service offering membership to more than 90 percent of movie theaters around the country. Members have access to unlimited viewings at participating movie theaters, paying only for concessions at the door. After reducing its monthly membership fee from $49.95 to $9.95, the company saw its subscriber numbers increase from less than 20,000 to more than 400,000 in under a month – and the company’s growth will likely continue.
“With undeniable value proposition for moviegoers, and as more than 37 million people see at least one movie per month, we believe that estimate could prove conservative,” said Brian Kinstlinger, analyst for Maxim Group.
Kinstlinger has projected another 2.5 million or more subscribers will add themselves to the MoviePass ranks in the next year. Its popularity has already sent Helios and Matheson Inc.’s shares skyrocketing more than 1,000 percent since Aug. 15.
The Netflix-style subscription service is led by a Netflix co-founder, Mitch Lowe. Lowe is “seeking to spur the sort of revolution for movie theaters that Ryanair did for airlines or Netflix did for video streaming,” according to the Reuters article.
PYMNTS.com caught up with Ted Farnsworth, chairman and CEO of Helios and Matheson, to discuss the strategy behind introducing subscription commerce into the movie industry.
On average, MoviePass subscribers spend 123 percent more on concessions than regular moviegoers, since the subscription model makes the negligible ticket cost an afterthought, according to Farnsworth. This makes the arrangement even more lucrative for theater owners, considering they make 80 percent of their sales off concessions – especially now, with an exploding MoviePass subscriber base, he added.
Farnsworth noted the subscription strategy has been particularly popular among smaller cinemas and theaters. “The ones that really love us are the little independent guys, the ones that have two or three theater chains, because we are putting people in their seats,” he said. “We are paying them the full price and they are making more money on the concessions.”