MoviePass may have figured out how to stop losing money per subscriber

Hollis Johnson/Business Insider

• MoviePass subscribers’ average monthly usage was down to below one movie (0.77) in September, according to the company.
• In March, when the company was touting close to three million subscribers, it was averaging just over two films (2.23) per month.
• But the lack of usage may be the only thing keeping the business afloat.

The dirty little secret about movie-ticket subscription services, like MoviePass, is that the less people actually use the service, the better it is for the company offering it. And it seems that lack of usage may be the only thing keeping MoviePass afloat.

Along with filing its third-quarter financials in mid-November, revealing it had lost $130 million in the quarter, MoviePass’ parent company, Helios & Matheson Analytics, also disclosed a drop in monthly usage by MoviePass subscribers from March 2018 to September 2018. 

In March, the average usage per subscriber was just over two films (2.23) and by September it dropped to below one movie (0.77). 

The graphic below shows the epic decline in average usage over the six months:

MoviePass/Shayanne Gal, Business Insider

A lot happened to MoviePass in those six months.

Though it was touting having millions of subscribers after lowering its monthly price to $9.95 to watch one movie per day, the first sign of concern came in April when Helios and Matheson’s independent auditor stated in a filing to the SEC that it had “substantial doubt” about the company’s ability to stay in business. Since then, changes to the monthly plan that make it harder for subscribers to see films, bad customer service, the app sporadically going offline, and the rise of competitors like AMC Stubs A-List and Sinemia, have led to the dramatic drop in usage. 

Read more: MoviePass competitor Sinemia is being sued by angry customers who say it ripped them off with new fees

A source inside MoviePass also told Business Insider that the company disclosed to its staff that in October alone tens of thousands of subscribers had canceled the service.

But the reality is that it’s a good thing for MoviePass if people don’t actually go to see films — as long as they don’t cancel.

If no one is using the service, MoviePass doesn’t have to pay fees to MasterCard, which is the provider of the MoviePass debit card, or pay for the tickets from theaters that its subscribers buy.

The average movie-ticket price in the US for the third quarter this year is $8.83, according to the National Association of Theatre Owners. If you combine that price with MoviePass’ September average of 0.77, it comes out to $6.80 per subscriber that MoviePass could be paying per month (though its user base is likely skewed toward high-cost areas like New York City). With its current $9.95 per month subscription price, the company could conceivably not be losing money per ticket, or at least be close.

But the company needs more help than that.

With little money coming in besides subscriptions (the company has a handful of deals with distributors to market its titles on the MoviePass app), and the stock trading at around $0.02, it’s tough to see how MoviePass can continue to stay in business once subscribers realize they aren’t getting much value out of it.