ONWARD

MoviePass is forging ahead with its grand plan, and starting a new production house

Obsession
Glass
Obsession
Glass

It’s full speed ahead at MoviePass—even as it runs short of cash.

The company, which for a monthly fee gets subscribers into a movie showing per day for roughly the cost of a single ticket, is forging deeper into the movie business as part of its plans to make moviegoing more affordable.

Parent company Helios and Matheson Analytics announced Wednesday (May 30) a new production company called MoviePass Films, which will make films that MoviePass plans to market to its 2.7 million members and other moviegoers. It’s partnering with movie studio Emmett Furla Oasis Films (EFO Films), which has produced and financed films like the cop drama End of the Watch, Martin Scorsese’s Silence, and the Mark Wahlberg-starring Lone Survivor. Helios and Matheson owns 51% of MoviePass Films and EFO Films owns the other 49%.

Helios and Matheson also has the exclusive option to buy EFO Film’s movie library and current production slate, which includes Scorsese’s upcoming movie for Netflix, The Irishman, in a cash and stock deal. “We’ve been looking for an opportunity to acquire and produce studio content on a larger scale and prove the power of the MoviePass service in the process,” Helios and Matheson CEO Ted Farnsworth said in a statement. He touted an upcoming deal at the Cannes Film Festival earlier this month.

MoviePass CEO Mitch Lowe told Quartz in April that he saw MoviePass’s partnerships with movie studios as one of the company’s biggest avenues for revenue growth. Movie studios and distributors pay MoviePass to promote titles through email, social media, and popups or placement within its app. Helios and Matheson generated $1.4 million in revenue during its first quarter of 2018 from marketing and promotional services from MoviePass, which also earns revenue from other promotions including theaters paying for placement on the platform.

The latest move comes less than a month after Helios and Matheson revealed in a filing that it had $15.5 million in cash on hand at the end of April and another $27.9 million on deposit, but had burned $21.7 million a month on average from October through April. It said it managed to reduce that by 35% during the first week of May, but the news still sent the company’s stock spiraling to an all-time closing low of $0.41 on May 25. The company had a $300 million line of credit available as well, Farnsworth told Variety.

MoviePass Films plans to produce movies to be released in theaters, as well as other platforms like streaming-video services. The production company will pay MoviePass to market its movies. MoviePass Films will own and control the other revenue streams, like theatrical distribution, domestic and foreign distribution rights, streaming, retail, and on-demand and DVD sales.

Helios and Matheson also has another division called MoviePass Ventures that co-finances acquisitions of films, and markets movies like American Animals and Gotti, which was also produced by EFO Films. That business focuses on independent films.

Lowe told Quartz that MoviePass generally doubles and triples the amount of tickets it buys for films when it partners with the studios to promote those titles to its members. The company, which grew from around 25,000 subscribers to more than 1.5 million subscribers in 2017, said in a statement in February that it bought $110 million worth of tickets that year. MoviePass pays full price for the tickets its subscribers get at a discount.

Shares of Helios and Matheson closed down around 2% on Wednesday at $0.46. The stock rose earlier this week after Citadel Securities said in a filing on May 25 that it had taken a 5.4% stake in the company. That makes it Helios and Matheson’s third largest stakeholder, after Verizon, which took a stake when it sold Moviefone to the company, and Farnsworth, Sentieo data show.


Read next: MoviePass, desperate to prove itself, is adding a bunch of new features

home our picks popular latest obsessions search