Subscriptions Are Big Business & Worth BIG Money

Want some further evidence that subscription businesses are capable of nabbing big Money from major players. This week Microsoft bought a somewhat obscure subscription business for $7.5 Billion in stock called GitHub, which is a developer platform for businesses and individual software developers.

It’s a different market, and Microsoft has strategic reasons to be interested in GitHub, but 7.5 Billion was an astounding price to be paid.

GitHub had a Reported Revenue Run Rate of $200 Million Dollars. It had previously raised $250 Million in VC funding. It reached 3 Million users in 2013. The company was not profitable – it lost somewhere near a $100 Million a year in 2016. It had about 800 employees.

It is a great story for the early investors of GitHub, and it will give the VCs who invested a very nice payday.

Now – let’s compare some of those numbers with HMNY and some interesting similarities.

MoviePass has a revenue run rate of at least $300 Million dollars and is growing rapidly. Moviepass does lose money as well, but on a percentage loss against revenue, it is not wildly off from GitHub.

In terms of paying subscribers both companies appear to be in the 3 Million range. Both companies charge a monthly subscription fee. GitHub charges $9 a month for their basic plan. $21 for businesses.

There are some comparisons that are clearly favorable to GitHub, they have sticky business customers, they have had profitable years in the past.

But I see advantages to MoviePass as well. MoviePass is growing way faster, it has a much bigger addressable consumer market. And Moviepass has far fewer employees than GitHub. Moviepass currently has fewer than 100 employees vs. GitHub’s 800 employees. Those pesky employees are expensive!

There are of course many other differences between the two companies. Importantly GitHub had the respect and admiration of Silicon Valley. Where Moviepass has yet to win over that crowd. GitHub also had the buzz of being a cloud company. And GitHub had won in a market that both Microsoft and Google had failed in previously and desperately wanted to be winners in.

Of course the biggest difference between the two companies is one is currently valued under $30 Million dollars, and the other was just bought for $7.5B!!!

Do I think Moviepass is worth $7.5B$. Nope. But nor would I have ever dreamed anyone would pay that for GitHub either.

Suffice to say – I see BIG Upside for Moviepass!

3 Replies to “Subscriptions Are Big Business & Worth BIG Money”

  1. My email to Buffett: let’s get 100’s to him today with subject line: Moviepass

    Mr. Buffett – you missed out on Netflix, don’t miss out on Moviepass. Sure the business model right now is burning cash but just imagine when they get scale, over 20M subscribers and people getting out of their homes to the theaters watching films, drinking your Coca-Cola drinks at theaters, then when leaving, walking around the mall, helping retail boxes. It’s a win-win for all…….your money can help this company survive and when theater chains know that you’re invested, they will cave to Moviepass’ demands, like a piece of action with each ticket sold and percentage of concessions. Just ask your grandsons or granddaughters if they have Moviepass in their wallets, Guaranteed they have it and LOVE IT!!


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