Ted Farnsworth still believes that MoviePass, the high-flying subscription service that crashed to Earth in spectacular fashion, can soar again. The former head of Helios and Matheson Analytics, the data company that bought MoviePass in 2017 and turned it into a phenomenon by allowing customers to see a movie per day for $9.99 a month, has submitted a bid to buy back the shuttered company.
“We made the company a household name in two years and we disrupted the industry,” Farnsworth said in an interview with Variety. “We put hundreds of millions of dollars into the company, and I don’t want to just cut our losses.”
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He added, “It’s something that we can reshape and rebuild. It will take time, but I think we can revitalize the whole brand.”
At its height, MoviePass attracted some 3 million subscribers, but its low prices left it struggling to make money. It experimented with different pricing models and attempted a relaunch, but the company was plagued by a plunging stock price, data breaches, and technological problems. MoviePass lost tens of millions of dollars a month, and Helios and Matheson’s net loss more than doubled in 2018 to $329.3 million, according to its most recent financial filing. Last Friday, the company announced it was shutting down and would explore a sale.
Even though the math seemingly never worked, Farnsworth insists that the $9.95 pricing wasn’t the company’s big problem. It was fraud on the part of its subscribers, who used the app to buy tickets that they later resold or who shared their subscription with friends and family members, according to the exec.
“I don’t think the pricing was wrong,” he said. “We would have been fine if people hadn’t gamed the system, shared passwords, and engaged in consumer fraud.”
Farnsworth has stepped down as the chairman of Helios and Matheson while the board weighs his bid. He wouldn’t reveal how much he was bidding, nor would he disclose his investment group, citing nondisclosure agreements. He was blunt, however, when asked why he was the right person to revitalize MoviePass after leading the company into insolvency.
“Maybe I’m not the right one to revive it, but I’m willing to put in more money,” said Farnsworth. “I wouldn’t do that if I didn’t believe in it.”
If Farnsworth does succeed in relaunching MoviePass, he faces increased competition. Since MoviePass became a phenomenon, other theater chains have followed suit. AMC, Regal, and Cinemark are just a few of the exhibition chains that have unveiled their own subscription services in recent months.
“There’s an opportunity,” said Farnsworth. “They’re coming in with higher price models, and I don’t think people want to have to use an AMC card here or a Regal card there. They want one subscription and the freedom to go to any theater that they choose.”
Farnsworth said that if he is successful he will invest in improving the technology and will hire people to help relaunch the brand.
“We were a lot like Uber and what it did to the taxis,” said Farnsworth. “They broke the system even as they were losing billions. Our institutional investors, they see the potential for what we can do. We just ran out of time and capital along the way. But an investment like this, by its very nature, holds the potential to win and win big.”
Farnsworth is right. Uber did revolutionize the transportation industry, but, like MoviePass, it has failed to establish a sustainable business model. Last quarter, the company reported $5 billion in losses and it is losing money at a rate of $1 billion a month.
MoviePass is a disruptor, but it’s unclear if it can evolve into a viable business regardless of who wins the bid.