MoviePass is hot, and on Thursday, the platform announced that it now has more than 2 million members. Growth is accelerating for the service since it slashed its price to $9.95 a month in mid-August. It took MoviePass and majority stakeholder Helios and Matheson Analytics (NASDAQ:HMNY) four months to hit a million members, and now it has doubled its base in less than two months. 

The appeal of MoviePass is obvious. Members pay $9.95 a month for the right to watch a traditional screening a day at most movie theaters. The value can certainly add up. Industry tracker Box Office Mojo estimates that the average admission for a film clocked in at $8.97 in 2017, but that includes cheaper tickets for kids and senior citizens as well as discounted matinees. If you have a MoviePass debit card, you're not going to box yourself into making sound economic decisions on behalf of Helios and Matheson. Leading exhibitor AMC Entertainment (NYSE:AMC) was receiving an average of $11.88 per ticket from MoviePass during the third quarter of last year. An extreme case of someone catching a film every single day last month -- using that math -- would be hitting up MoviePass for more than $368 in exchange for that $9.95.

MoviePass is great for film buffs, and theater chains have to reluctantly admit that it's what is saving the multiplex industry right now. The problem for Helios and Matheson is that the current model just doesn't work for MoviePass, and that makes heady subscriber growth a dangerous proposition.

MoviePass signup screen from last month showing it was acceptable at any theater.

Image source: MoviePass.

Screen test 

Helios and Matheson insists that the MoviePass model will work. MoviePass is already making money from studios promoting some of their indie releases. Data is being collected that Helios and Matheson feels will be valuable to various potential buyers of insight. However, at the end of the day, this is a company that just two weeks ago filed to offer $400 million of a variety of its securities over the next three years. Earlier this week, stockholders approved a board amendment to increase the number of shares fivefold, a precursor to more dilutive stock offerings or a reverse stock split.

MoviePass is also trying to get theaters to share the burden of marking down the movie-going experience. It has reportedly talked some smaller chains into accepting $3 less per ticket, or a cut of the high-margin concessions revenue. AMC Entertainment balked when approached, and MoviePass responded by blocking use of the pass at 10 of the busiest AMC locations. It remains to be seen if the move will hurt AMC Entertainment or MoviePass more. 

Going from 20,000 accounts to more than 2 million in less than six months is impressive, but the real feat would be doing so with a sustainably profitable model. MoviePass isn't there yet, and it may never get there. Hitting milestones so quickly makes headlines, but given the limitations of the current model, it's also expensive.

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