MoviePass, the subscription movie theater service that is far too good to be true, is rapidly running out of money. According to a filing from MoviePass’s parent company Helios & Matheson spotted by Bloomberg, the company had just $15.5 million in cash available at the end of last month. That’s less than the $21.7 million it spends every month, most of which goes to movie theaters.
Shares in Helios & Matheson were down 32 percent, and even the company was unsure about the continued future of MoviePass. “Because the length of time and costs associated with the development of the MoviePass and MoviePass Ventures business model is highly uncertain, we are unable to estimate the actual funds we will require,” the company said in a filing with the SEC. “If we are unable to obtain sufficient amounts of additional capital, whether through our Equity Distribution Agreement or otherwise, we may be required to reduce the scope of our planned growth or otherwise alter our business model, objectives and operations, which could harm our business, financial condition and operating results.”
Currently, MoviePass offers a subscription that costs $9.95, and gets subscribers the ability to see one movie in theaters every day. MoviePass doesn’t have some magical deal with theaters: Instead, it buys tickets on behalf of consumers with no appreciable discount, making it an expensive operation to run. The plan has always been for MoviePass to build up such a loyal and sizeable following that the company could use the data it collects, and also leverage its size to negotiate with movie chains.
In the short run, Helios & Matheson Chief Executive Officer Ted Farnsworth told Bloomberg that the company is cracking down on costs, including fraudulent use of its cards, repeat viewership of the same movie, and sharing of memberships. “I’ve always known that it was going to take a lot of money to put into it, to get it to the other side, to get it to 5 million subscribers and break even,” Farnsworth said in an interview with Bloomberg. Farnsworth said that Moviepass would survive May, June, and July, but a three-month commitment isn’t exactly a resounding vote of confidence.