MoviePass Acquires Moviefone, Plans Recommendation Engine

The disruptive movie subscription company MoviePass plans to build a recommendation engine to rival Rotten Tomatoes, which, say its executives, is too general and too critical for its client base. MoviePass subscribers pay a flat monthly fee to see one showing per day in participating theaters. According to MoviePass chief executive Mitch Lowe, subscribers want to be able to review movies on its site and say they would prefer to read reviews by fellow subscribers. MoviePass is also buying Moviefone from its owner, Verizon Communications’ Oath.

Quartz reports that, by purchasing Moviefone, Helios and Matheson Analytics, MoviePass’ parent company, got a “running start” on customer reviews. Moviefone, “best known for an automated service that offered movie showtimes by phone before that information was easily available on the Internet,” has evolved into a website with “movie news, showtimes, and ticketing information, as well as ratings and reviews powered by Metacritic.”

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Moviefone, which receives more than six million unique visitors per month, will retain its brand. “The idea is that our customers want to be able to talk to each other more than they do now,” said Lowe. “People really want recommendations from people they think like movies like they do and have the same tastes.”

Rotten Tomatoes has been criticized in Hollywood “because its method of review aggregation truncates the nuance of film criticism into a score that shows what share of people thought a movie was good,” and because “bad scores … can depress a film’s performance.” MoviePass’ “about two million” subscribers … tend to rate movies more positively in surveys than the general Rotten Tomatoes score suggests.” That’s because, suggested Lowe, the cost is “baked into their subscription fee” so viewers are less likely to have buyer’s remorse.

The Wall Street Journal reports that, to acquire Moviefone, “Helios is paying Oath $1 million in cash and 2.55 million shares, worth $7.45 million at their [recent] price of $2.92, according to a regulatory filing.” Helios also “agreed to issue warrants for the purchase of up to 2.55 million of its shares at an exercise price of $5.50 each, exercisable over five years.”

The purchase is Helios’ first deal since buying MoviePass last August. Helios chief executive Ted Farnsworth predicted that MoviePass would have “more than five million subscribers by the end of the year.” Because MoviePass loses money on “heavy users,” it has adapted to making money by selling ads to studios that want to reach its subscribers; Moviefone will become part of the ad packages.