On Friday the CEO of Moviepass discussed his business prospects with CNBC, laying out how his company will make money. Essentially, he intends to burn through cash until he can gain leverage over theaters and force them to share concession revenues. Also, he’s going to sell your data and recommend “preferred theaters” to his members.
I am long HMNY and will never sell it.
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That makes total sense. Buy movie tickets close to full price, turn around and sell them pennies on the dollar to subscribers, lose all shareholders’ money and go out of business.
Ever heard of Tesla? $60 bln market cap
I can’t comment on the trade, except hope it works out for you. I wonder about the psychology and demographics of the theater business. Isn’t growth in movie theater business expected to come from people who are willing to pay up for a better viewing experience? Why should this demo care about membership and a card? For example if I am the type to spend $75 on dinner for just me on a random night, I really don’t care about the early bird special or a membership card.
I worked in the Jersey City and Jersey Gardens movie theaters as a teen many moons ago. They would sooner stop charging admission than give a nickel from concessions. I can’t see this as anything other than a greater fool trade.
Theaters are already getting squeezed by the content owners. There’s not a whole lot of margin left to squeeze out of them
There is one trend that everyone likely agrees with, and that is that no one goes to the movies anymore. Or to hedge myself, they go less. I don’t need to go into all the millennial trends, nflx, but I think you get the picture. I initially thought $hmny was going up because it was going to bring new movies / releases to mobile devices, but it is just a subscription service for going to the movies, which is a dying trend. Too much good content from the usual suspects, Hulu , Alan, YouTube etc. aside from another Matt Damon / mark walberg/ Ben afflict movie or Star Wars movie, this is a dying trend. Got a
Let’s assume he has 10 bazillion members and he’s losing bazillions every month, where is his leverage over the theaters coming from?
What does he control that allows him to effectively dictate to the theaters that they must give up margin on concessions?
I don’t see it.
It’s a zero sum equation so if the moviegoers are paying less, he expects the theaters to cover that as well as his profits?
Maybe the stock goes to the moon but from a going concern perspective, it sounds like a really poorly conceived idea.
Here is a ridiculous business model….
Set up a physical storefront and hand out cash money to people to come in and watch advertisements on your TVs. Charge advertisers more than you give away to people. You will have a million users on the first day. Go public and cash out.
Sound familiar???
There is a chance this is going to be a billion cap, for the exact reason you all mentioned. No one goes anymore. A family of 4 would pay $40 a month and probably go an average of 7 times a year… at best.
Just a possible bull case. I have a private movie room at home so I’m out.
One criticism of your book: your wife doesn’t have nearly enough dialogue.
Groupon didnt work either technically but in my experience it is the forgotten stocks that always outperform. I can list examples but dont feel like it. As for this I am not going to bash it but will watch on the sidelines.
All of the power will come from the app. Theatres and movie companies can advertise directly to thier buyers. When a blockbuster come out they can spend 40-50m in advertising on tv.
This tool could be extremely powerful.