MoviePass has been boosting the box office in 2018, but it's burning $20 million a month to do so
- If the 2018 box office performs better than Wall Street predicted, it might be because of MoviePass.
- The monthly movie ticket subscription company claims to account for 6% of the domestic box office.
- The 2018 box office is up 4.6% from this time last year.
- However, the number of tickets sold isn't spiking - it's the same number as this time last year, which ended up being a 25-year low in the US.
If the movie industry has a solid year at the box office, it might be because of MoviePass.
The monthly movie ticket subscription company boasts that it currently accounts for 6% of the domestic box office, and with the 2018 box office currently up 4.6% from this time last year, one analyst believes it could be partly due to a MoviePass bump.
"We believe that at least some of the better-than-expected 2018 year-to-date box office has been driven by MoviePass," RBC Capital Markets analyst Leo Kulp wrote in a note to clients on Monday.
At the beginning of the year, Wall Street was concerned how the movie business would shape out in 2018, as fewer sequels were scheduled to be released and there isn't a "Star Wars" release in December (as in previous years).
But with massive successes like "Black Panther" and "Avengers: Infinity War" in the first half of the year, there seems to be more hope about 2018. And it seems the popularity of MoviePass should get some credit. But how long will this good thing go on for?
Stock of MoviePass's owner, Helios and Matheson Analytics, dropped over 30% during trading on Tuesday following the company's update on its cash and deposits, and losses. One thing that stood out was that HMNY is averaging a cash deficit of about $21.7 million a month since September, though the company did note that some tweaks to the MoviePass app and service led to a reduction of "more than 35%" in its cash deficit during the first week of May.
However, AMC Theaters chief executive Adam Aron gave a glimpse of how much MoviePass has to dish out each month to pay for the discounted tickets its subscribers order. Aron told analysts on a conference call Monday night that MoviePass, in April, paid an average of $12.02 per ticket to the movie chain. He also revealed that MoviePass users went to the movies an average of 2.75 times.
"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 $9.95," Aron said on the call, referring to MoviePass' monthly subscription cost.
And despite the numerous releases that are breaking box office records so far this year, the estimated number of tickets sold to date compared to this time last year is dead even at 449.5 million, according to the National Association of Theatre Owners. That's not a good sign, as last year ended with ticket sales at a 25-year low in the US.
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