MoviePass, the subscription service that lets you watch unlimited movies in theaters for less than a Netflix subscription, lost $40 million in the month of May, and things are only getting worse as more and more subscribers join. Parent company Helios and Matheson Analytics said in an SEC filing that it may require a new capital injection of over $1.2 billion to stay afloat, which may be a tough ask for a company that shows no sign of ever generating a profit.

From some perspectives, MoviePass is like any other early-stage Silicon Valley startup: it’s losing money but driving extreme subscriber growth, and undercutting the existing market while doing so. But since MoviePass doesn’t get any kind of deal from movie theaters — it buys tickets for its users at standard box-office prices — the more subscribers it adds, the more money it will lose. There’s some kind of vague plan in the future to monetize data about its users or to use its subscriber base to negotiate deals with movie chains, but the business plan will have to be particularly excellent to turn MoviePass’s dire financials around.

The SEC filing leaves little to the imagination when it comes to Helios and Matheson’s rapidly increasing losses:

Our average monthly cash deficit has been approximately $25.0 million per month from September 30, 2017 to May 31, 2018 inclusive of our processor deposits. From May 1, 2018 through June 15, 2018, we acquired approximately 545,000 new paying subscribers. Due to our greater than anticipated subscriber growth in May 2018, our cash deficit for the month of May 2018 was approximately $40.0 million and we anticipate our cash deficit for the month of June 2018 will be at least $45.0 million due to significant subscriber growth and strong box office results of recently released films. As the MoviePass subscriber base increases rapidly, and as we increase our investments in movies through MoviePass Ventures and MoviePass Films, and make other acquisitions, our monthly cash deficit will continue to increase in the coming months.

MoviePass’s continued existence is reliant on future revenues, which in turn relies on the company getting big enough, which relies on burning more cash right now:

We expect MoviePass’ continued growth will continue to create new revenue opportunities from marketing the movies of others, from partnerships with exhibitors and from our own movie content businesses including participation in box office and home entertainment revenues from our own movies, which we believe we can maximize by marketing our films through the MoviePass subscription service. To maintain our growth and continue to fundamentally transform the movie industry, for the benefit of the entire movie ecosystem, we will continue to incur a significant monthly cash deficit, until or unless we achieve positive cash flow or profitability, of which there is no assurance.

It’s not a unique business model: Uber, which is also losing money, is predicated on the same idea that burning cash short-run is worth it to acquire a customer base. Once the company has a virtual monopoly, so the theory goes, prices can be ramped up, discounts can be negotiated, and a profit will be generated.

The biggest threat to MoviePass, therefore, is competition. If competitors can spring up and prevent MoviePass from totally dominating the movie theater industry, it will never achieve the size it needs to turn a profit, and MoviePass will be forced to rapidly increase prices or fold. That might be part of the reason why movie chain AMC just announced its own subscription, AMC Stubs A-List, which offers better perks than MoviePass, but for $20 a month rather than $10. At that price, it’s not going to steal customers from MoviePass, but AMC doesn’t need to — it just has to force MoviePass to keep burning cash until it goes under.

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