7 ms·

I’m bullish on HMNY and moviepass. A few things many people overlook, this article included - 1/ MoviePass does not reimburse 100% of the ticket price to all t

by teej 8y ago

I’m bullish on HMNY and moviepass. A few things many people overlook, this article included - 1/ MoviePass does not reimburse 100% of the ticket price to all theaters. In at least 1,000 theaters they are getting $3 back or 25% of concessions. This number will continue to increase as moviepass proves they can drive demand. 2/ HMNY literally specializes in packaging and selling data. I think it’s a mistake to treat them as if they don’t know what they’re doing. 3/ There are not a lot of options to deploy performance marketing dollars for movies. Instead, most of the spend goes towards broad-reach, hard to track, media. They can offer studios a way to spend marketing that is not only trackable, but measurably incremental. I cannot overstate how juicy that sounds to a person in charge of spending an $X0,00,000 marketing budget. I feel confident they can get to $5-$10 per subscriber per month in revenue on the backend. If they can hit that, maintain solid churn numbers, and manage fraud, they will have a very healthy subscription business on their hands.

anilshanbhag 8y ago
There is close to 0 percentage this company survives. The stock has fallen 40% each day for past few days. AMC head says they don't discount tickets and average moviepass holder watches 3 movies a month paying average $12 per ticket. They burn 21M a month and less than that in the bank. Plus they took money from many consumers for annual passes which will get them sued for fraud.
- jack9 8y ago
  Now they can't watch more than 4 (select) movies per month and no repeat viewings. Moviepass hasn't changed anything because people generally are being termed out of the original breakneck deals.
  - laken 8y ago
    Moviepass brought back the unlimited plan 2 weeks ago.
  - teej 8y ago
    The one movie a day subscription plan is back as of this month.
- teej 8y ago
  I’m not sure where you came up with 3/month @ $12 each. The actual numbers could be wildly different, I don’t think it’s safe to speculate so broadly. Also, while AMC is large, they aren’t the only game in town. They only control ~8k of the 40k screens in the US. You can bet that if moviepass is able to drive demand away from AMC they will cave eventually.
  - aslkdjaslkdj 8y ago
    It's a quote from the CEO of AMC from their recent investor call. "Fast forward to today, in March and April, MoviePass paid AMC $12.02 per ticket on hundreds and hundreds and hundreds of thousands of tickets each month, hundreds of thousands of their subscribers came through AMC theaters to enjoy our product. They did so at a frequency of 2.62 times in March and 2.75 times in April. Now, I took the calculator out and I multiplied 2.75 times $12.02, and I got to a number that was considerably larger than 995. So just as we were hearing that -- the MoviePass price point was unsustainable in August, we have the same questions today. And apparently we’re not alone in that view. Our doubts are now shared and articulated by MoviePass's orders." https://seekingalpha.com/article/4170917-amc-entertainment-holdings-amc-ceo-adam-aron-q1-2018-results-earnings-call-transcript?part=single https://seekingalpha.com/article/4170917-amc-entertainment-h...
- charlesdm 8y ago
  Well, the stock sure seems valued like that. I haven't done much research into the numbers (only popped up on my radar a while ago) but the CEO said they have access to $300m worth of capital (i.e. debt) + the service would be profitable at 5m users. Burn was supposedly reduced by 30% since introducing that recent change. Which would give them approx. 15-20 months to execute their strategy in the best case. On the off chance this one does work out, this will likely be a 100 bagger.
  - imustbeevil 8y ago
    > On the off chance this one does work out, this will likely be a 100 bagger. This company will likely go bankrupt. On the off chance it doesn't go bankrupt it will likely not increase in value 10,000%. Movie theaters already have access to what movies people are seeing. They also have control over the ticket serving infrastructure. Moviepass literally exists because movie theaters don't want to waste their own money finding a profitable balance for subscriptions. So they'll let Moviepass burn 300 million validating the idea. Worst case scenario, it's a bad idea and movie theaters lose nothing, best case scenario its a good idea and they offer the service themselves.
organicmultiloc 8y ago
"There are not a lot of options to deploy performance marketing dollars for movies" This is 100% false in every conceivable way possible, in fact marketing something like a movie is probably the easiest example you walk through then you first start learning how to market.
deleted 8y ago
[deleted]
optionsguy 8y ago
I’ll sell you as many $1 strike 1/2020 HMNY LEAPs as you can afford, you in? HMNY will be diluted into the ground before then. Care to take me up on this bet?
- steelframe 8y ago
  > $1 strike 1/2020 HMNY LEAPs This is pure gibberish to me, and I intend for that to always be the case.
eganist 8y ago
> 1/ MoviePass does not reimburse 100% of the ticket price to all theaters. In at least 1,000 theaters they are getting $3 back or 25% of concessions. This number will continue to increase as moviepass proves they can drive demand. https://www.wired.com/story/moviepass-second-act/ https://www.wired.com/story/moviepass-second-act/ > It pays theaters full price for each ticket, whether a member visits once or 31 times a month. Do you have a source for your claim that "In at least 1,000 theaters they are getting $3 back or 25% of concessions"?
cm2012 8y ago
People say the data matters, but I don't see it - data from people who want to watch movies cheaply is worth pretty close to nothing. I say this as someone who uses data a lot to manage millions of dollars in marketing spend.
- arbie 8y ago
  Movie theaters will have their Spotify moment: When their modus operandi results in rock-bottom financials and studios have to establish a controlling stake in theaters and switch over to a subscription model. That is, if Netflix doesn't beat them to it.
  - charlesdm 8y ago
    It's odd, because this model would likely work outside of the US. I sat down with the head of marketing of a large cinema chain for something completely unrelated (bumped into the guy at an event) and they have corporate plans where tickets are significantly discounted (i.e. a normal ticket is €12,95 and corporates pay €3-5 if they buy 100s in bulk). I guess the incentive is there, because they mostly make their profits from food / candy / nachos etc that are sold to people visiting the movie theatre.
twostorytower 8y ago
They're out of cash in two months. They say they can raise up to $300M but their market cap is almost sub $50M so they won't be able to get much for the equity. And as for debt, well we'll see how much they can actually get.
duxup 8y ago
"There are not a lot of options to deploy performance marketing dollars for movies. Instead, most of the spend goes towards broad-reach, hard to track, media. They can offer studios a way to spend marketing that is not only trackable, but measurably incremental. I cannot overstate how juicy that sounds to a person in charge of spending an $X0,00,000 marketing budget." Help me out here as I don't understand this one. Basically when I go to a theater before the trailers I get ads. Then I get ads for nearly every movie ever..... that go on forever. What else could they possibly do? Use that data to show me ads they're already showing me?
- kirillseva 8y ago
  Use that data to understand what movies you enjoy, cross-referenced with data that you leave in web searches and social media. This makes the job of "design a movie that would appeal to X demographic" much easier
- toast0 8y ago
  MoviePass can show you ads in the app (or wherever) and then if you use the app to buy a ticket to tman advertised movie, they can claim the ad was responsible. Advertisers like ads where they can see results more than just impression based ads.
pg_bot 8y ago
Or they could be bankrupt by July. Everyone points to data as manna from heaven, but other people need to find your data valuable. Who is going to buy moviepass data? Studios are drowning in data and still can't predict hits reliably. I'm generally an optimistic person and I don't see the silver lining here, I would be shocked if they could turn this ship around before going bankrupt.
tschwimmer 8y ago
Consider a hypothetical scenario where Moviepass has 100 customers. Let's say the net revenue per month for 60% (60 customers) is $10 (i.e. 60% subscribe to moviepass but never see a movie). That's $1000 a month in profit to 'play with'. If the average movie ticket is $10, that means they have 100 movie tickets of budget to spread among the remaining 40 users to break even. Divided out, that means each user can only see 2.5 movies a month before Moviepass starts losing money. There are a couple takeaways from this (admittedly simplistic) analysis: 1. Moviepass seems to need a very high percentage of user not use the service in order to have any chance of profitability. There's just too much 'downside risk' from heavy users otherwise. That's a bit of a 'product smell' to me; you generally want o have usage of your product to have some positive correlation to your profitability. 2. Even if they strike deals with the theater chains, they're going to need to negotiate fairly steep discounts. Even if Moviepass only has to pay $5 per movie, that still only lets users see 3 movies a month, which is less than one a week. Are theaters inclined to reduce the price of a ticket to $0? It might work then, but I don't see why theaters would torpedo their average selling price (ASP). 3. Wrt performance marketing, moviepass better be selling ads to mesothelioma lawyers (~$300 cpc). I can't think of any organization that would pay enough to offset the potentially massive loss per customer. Moviepass screams of selling $10 bills for $5. That in itself isn't necessarily bad, but to me it doesn't look like they have a way to bootstrap themselves out of this model.
- listenallyall 8y ago
  If they have 100 customers at $10 each, they have $1000 in revenue with which to purchase movie tickets, not $600.
  - tschwimmer 8y ago
    I'm sorry, you're right. Let me redo the above analysis.

by teej 8y ago

anilshanbhag 8y ago

There is close to 0 percentage this company survives. The stock has fallen 40% each day for past few days. AMC head says they don't discount tickets and average moviepass holder watches 3 movies a month paying average $12 per ticket. They burn 21M a month and less than that in the bank. Plus they took money from many consumers for annual passes which will get them sued for fraud.

jack9 8y ago
Now they can't watch more than 4 (select) movies per month and no repeat viewings. Moviepass hasn't changed anything because people generally are being termed out of the original breakneck deals.
- laken 8y ago
  Moviepass brought back the unlimited plan 2 weeks ago.
- teej 8y ago
  The one movie a day subscription plan is back as of this month.
teej 8y ago
I’m not sure where you came up with 3/month @ $12 each. The actual numbers could be wildly different, I don’t think it’s safe to speculate so broadly. Also, while AMC is large, they aren’t the only game in town. They only control ~8k of the 40k screens in the US. You can bet that if moviepass is able to drive demand away from AMC they will cave eventually.
- aslkdjaslkdj 8y ago
  It's a quote from the CEO of AMC from their recent investor call. "Fast forward to today, in March and April, MoviePass paid AMC $12.02 per ticket on hundreds and hundreds and hundreds of thousands of tickets each month, hundreds of thousands of their subscribers came through AMC theaters to enjoy our product. They did so at a frequency of 2.62 times in March and 2.75 times in April. Now, I took the calculator out and I multiplied 2.75 times $12.02, and I got to a number that was considerably larger than 995. So just as we were hearing that -- the MoviePass price point was unsustainable in August, we have the same questions today. And apparently we’re not alone in that view. Our doubts are now shared and articulated by MoviePass's orders." https://seekingalpha.com/article/4170917-amc-entertainment-holdings-amc-ceo-adam-aron-q1-2018-results-earnings-call-transcript?part=single https://seekingalpha.com/article/4170917-amc-entertainment-h...
charlesdm 8y ago
Well, the stock sure seems valued like that. I haven't done much research into the numbers (only popped up on my radar a while ago) but the CEO said they have access to $300m worth of capital (i.e. debt) + the service would be profitable at 5m users. Burn was supposedly reduced by 30% since introducing that recent change. Which would give them approx. 15-20 months to execute their strategy in the best case. On the off chance this one does work out, this will likely be a 100 bagger.
- imustbeevil 8y ago
  > On the off chance this one does work out, this will likely be a 100 bagger. This company will likely go bankrupt. On the off chance it doesn't go bankrupt it will likely not increase in value 10,000%. Movie theaters already have access to what movies people are seeing. They also have control over the ticket serving infrastructure. Moviepass literally exists because movie theaters don't want to waste their own money finding a profitable balance for subscriptions. So they'll let Moviepass burn 300 million validating the idea. Worst case scenario, it's a bad idea and movie theaters lose nothing, best case scenario its a good idea and they offer the service themselves.

organicmultiloc 8y ago

"There are not a lot of options to deploy performance marketing dollars for movies" This is 100% false in every conceivable way possible, in fact marketing something like a movie is probably the easiest example you walk through then you first start learning how to market.

deleted 8y ago

[deleted]

optionsguy 8y ago

I’ll sell you as many $1 strike 1/2020 HMNY LEAPs as you can afford, you in? HMNY will be diluted into the ground before then. Care to take me up on this bet?

steelframe 8y ago
> $1 strike 1/2020 HMNY LEAPs This is pure gibberish to me, and I intend for that to always be the case.

eganist 8y ago

> 1/ MoviePass does not reimburse 100% of the ticket price to all theaters. In at least 1,000 theaters they are getting $3 back or 25% of concessions. This number will continue to increase as moviepass proves they can drive demand. https://www.wired.com/story/moviepass-second-act/ https://www.wired.com/story/moviepass-second-act/ > It pays theaters full price for each ticket, whether a member visits once or 31 times a month. Do you have a source for your claim that "In at least 1,000 theaters they are getting $3 back or 25% of concessions"?

cm2012 8y ago

People say the data matters, but I don't see it - data from people who want to watch movies cheaply is worth pretty close to nothing. I say this as someone who uses data a lot to manage millions of dollars in marketing spend.

arbie 8y ago
Movie theaters will have their Spotify moment: When their modus operandi results in rock-bottom financials and studios have to establish a controlling stake in theaters and switch over to a subscription model. That is, if Netflix doesn't beat them to it.
- charlesdm 8y ago
  It's odd, because this model would likely work outside of the US. I sat down with the head of marketing of a large cinema chain for something completely unrelated (bumped into the guy at an event) and they have corporate plans where tickets are significantly discounted (i.e. a normal ticket is €12,95 and corporates pay €3-5 if they buy 100s in bulk). I guess the incentive is there, because they mostly make their profits from food / candy / nachos etc that are sold to people visiting the movie theatre.

twostorytower 8y ago

They're out of cash in two months. They say they can raise up to $300M but their market cap is almost sub $50M so they won't be able to get much for the equity. And as for debt, well we'll see how much they can actually get.

duxup 8y ago

"There are not a lot of options to deploy performance marketing dollars for movies. Instead, most of the spend goes towards broad-reach, hard to track, media. They can offer studios a way to spend marketing that is not only trackable, but measurably incremental. I cannot overstate how juicy that sounds to a person in charge of spending an $X0,00,000 marketing budget." Help me out here as I don't understand this one. Basically when I go to a theater before the trailers I get ads. Then I get ads for nearly every movie ever..... that go on forever. What else could they possibly do? Use that data to show me ads they're already showing me?

kirillseva 8y ago
Use that data to understand what movies you enjoy, cross-referenced with data that you leave in web searches and social media. This makes the job of "design a movie that would appeal to X demographic" much easier
toast0 8y ago
MoviePass can show you ads in the app (or wherever) and then if you use the app to buy a ticket to tman advertised movie, they can claim the ad was responsible. Advertisers like ads where they can see results more than just impression based ads.

pg_bot 8y ago

Or they could be bankrupt by July. Everyone points to data as manna from heaven, but other people need to find your data valuable. Who is going to buy moviepass data? Studios are drowning in data and still can't predict hits reliably. I'm generally an optimistic person and I don't see the silver lining here, I would be shocked if they could turn this ship around before going bankrupt.

tschwimmer 8y ago

Consider a hypothetical scenario where Moviepass has 100 customers. Let's say the net revenue per month for 60% (60 customers) is $10 (i.e. 60% subscribe to moviepass but never see a movie). That's $1000 a month in profit to 'play with'. If the average movie ticket is $10, that means they have 100 movie tickets of budget to spread among the remaining 40 users to break even. Divided out, that means each user can only see 2.5 movies a month before Moviepass starts losing money. There are a couple takeaways from this (admittedly simplistic) analysis: 1. Moviepass seems to need a very high percentage of user not use the service in order to have any chance of profitability. There's just too much 'downside risk' from heavy users otherwise. That's a bit of a 'product smell' to me; you generally want o have usage of your product to have some positive correlation to your profitability. 2. Even if they strike deals with the theater chains, they're going to need to negotiate fairly steep discounts. Even if Moviepass only has to pay $5 per movie, that still only lets users see 3 movies a month, which is less than one a week. Are theaters inclined to reduce the price of a ticket to $0? It might work then, but I don't see why theaters would torpedo their average selling price (ASP). 3. Wrt performance marketing, moviepass better be selling ads to mesothelioma lawyers (~$300 cpc). I can't think of any organization that would pay enough to offset the potentially massive loss per customer. Moviepass screams of selling $10 bills for $5. That in itself isn't necessarily bad, but to me it doesn't look like they have a way to bootstrap themselves out of this model.

listenallyall 8y ago
If they have 100 customers at $10 each, they have $1000 in revenue with which to purchase movie tickets, not $600.
- tschwimmer 8y ago
  I'm sorry, you're right. Let me redo the above analysis.