Helios and Matheson Analytics Inc (NASDAQ:HMNY) shares are taking a nearly 4% slide today, following the news that its majority-owned subsidiary MoviePass has removed about a dozen AMC movie theaters from its platform. The AMC theaters are in high profile and high priced cities like New York, Los Angeles and Boston.
Read more: MoviePass Is Pulling the Trigger on Movie Theater Market Share, Analyst Expects “Considerable Impact” Ahead
Yet, the HMNY team is firing back by crunching the numbers- making a point to highlight that a mere 10 AMC theaters have been scrubbed, which does not even add up to a slight 2%.
Helios and Matheson CEO Ted Farnsworth explains his company’s business move, writing, “When HMNY acquired the majority stake in MoviePass, we made the strategic decision to reduce monthly subscription fees to $9.95 a month to get movie fans back into the theaters. As we’ve grown our subscriber base, we’ve seen a dramatic increase in movie theater attendance among our subscribers, which proves to us that MoviePass is working to revitalize a declining industry. Other theater companies have seen this attendance resurgence and have approached MoviePass to collaborate. Since the get-go, AMC has not been interested in collaborating with MoviePass – a move that is not in the interest of our subscribers and AMC theater-goers.”
“We know that we currently represent approximately 62% of AMC’s operating income, assuming that AMC is flat year over year. This equates to $34.4 million of gross profits to AMC in the upcoming quarter. On an annualized run rate basis, that’s over $135 million to AMC’s gross profits – which doesn’t include concession sales from MoviePass subscribers. In publicly disclosed 2017 financial documents, AMC claimed each customer spends $4.88 on concessions each visit – meaning MoviePass subscribers could bring an additional $17.1 million in AMC concession revenues for Q1 of 2018, which on an annual run rate means $68.4 million more — an annualized run rate going forward of over $203.4 million revenue from MoviePass subscribers.”
“We’ve pulled 10 AMC theaters — less than 2% of theaters. We already know in past testing that MoviePass subscribers are not theater-loyal; they’re happy to drive by a theater that may be closer to a theater that will accept MoviePass -because of the MoviePass value.”
“From day one, MoviePass has been 100% for our subscribers – they are the most loyal fans we’ve ever seen and we’re honored to remove a price barrier than had been preventing the average movie-lover from going to the movies. We’re here for them and will fight battle for them every day of the week.”
Mitch Lowe CEO of MoviePass concludes with further commentary: “As of today, you’ll find a small handful of theaters are no longer available on our platform. Our number one goal as a company is to provide an accessible price-point for people to enjoy films the way they’re meant to be seen: on the big screen. Many exhibitors have been receptive to this mission, and we’re excited to keep working with theater chains that are closely aligned with our customer service values.”
“As we continue to strive for mutually-beneficial relationships with theaters, the list of theaters we work with is subject to change. We advise customers to always double check the MoviePass app for the most up-to-date list of participating theaters.”