MoviePass said a new strategy for working with theaters would boost revenue, but its finances show otherwise

Hollis Johnson/Business Insider

• Earlier this month, MoviePass CEO Mitch Lowe told Business Insider that charging theaters and studios more for marketing was a way to generate revenue that fit with industry norms.
• However, the company earned less revenue from marketing and promotions in the second quarter of the year compared to the first, according to the latest quarterly report from MoviePass' owner, Helios and Matheson Analytics.

As MoviePass scrambles to keep the lights on, it seems one of its new plans to earn more revenue hasn't worked out as advertised.

When the movie-ticket subscription service announced its most recent change - going from subscribers being allowed to see one movie per day to three movies per month - CEO Mitch Lowe told Business Insider that one of the plans going forward was to capitalize on the popularity of the service by arranging marketing deals with movie theaters and studios that would benefit MoviePass.

"We are just about to roll out to exhibitors that we'll continue to pay full price [for movie tickets], but we want to negotiate with them a fair marketing fee," Lowe said earlier this month.

Lowe admitted that the initial strategy of trying to get a discount on the millions of movie tickets it buys wasn't working. But he said he was confident that getting more for marketing titles on its app, the web, and social media made more sense.

"We think we now have a way to do this that fits in with how business is done," he said.

However, when MoviePass' owner Helios and Matheson Analytics (HMNY) released its quarterly report to the SEC on Tuesday, it showed that so far, marketing revenue has not been on the rise. In fact, it's been falling.

For the second quarter of 2018, Helios snagged revenue of $935,488 from marketing and promotional services. That's over $500,000 less than what it earned in the first quarter ($1,440,910).

And it's not because fewer people are becoming members of the service. Subscription revenue spiked in the second quarter to $72.4 million (in the first quarter it was $47.1 million). But for MoviePass, that subscription growth only means more full-price tickets it has to pay for.

Despite MoviePass' claim that it's responsible for 6% of the box office this year, it looks from its financials that it hasn't been able to capitalize yet on turning that popularity into marketing dollars.

MoviePass was not immediately available for comment to Business Insider.