While we are all sitting around on pins and needles wondering what HMNY CEO Ted Farnsworth meant with his teaser quote in Variety when speaking of a”major acquisition, Farnsworth said, “It’s going to be substantial,” said Farnsworth. “People are going to go, ‘Hmm how did they pull it off?’”
I am becoming increasingly optimistic that the acquisition is going to be Atom Films. Which I think is a perfect fit for MoviePass, and for Atom films. It is a synergistic combination, that will take both companies to a totally new level.
Why I would love this merger:
- MoviePass has built an incredible brand with massive momentum. Consumers love it and it is spreading with WOM in a fast viral way. MoviePass is getting people back into theaters.
- Atom Tickets has built terrific infrastructure and a very innovative social movie ticketing app and website and is now accepted at more than 19,000 screens across the US. Including AMC, Regal and Showcase Cinemas. Atom has created a “cool” frictionless way to go to the movies and has integrated concessions purchasing into the app, where consumers can pre-order concessions and have them ready and waiting at the theater.
- MoviePass needs more ways to make money and needs a way to secure discounts on tickets purchased at the major theaters. Atom Tickets can provide both of those things.
- Atom Tickets needs more consumers, they have the Theaters signed up, but they have an audience problem. Building that audience is expensive and hard. MoviePass has audience, and they have incredible momentum building more audience. Atom really can’t afford to go it on their own in this incredibly expensive space, they need a horse to ride to get their solution into more consumers hands.
- MoviePass knows that they have a big Halo effect on getting people to the movies, but they have no way to monetize that – Atom Tickets could make that happen.
- Atom Tickets has already started doing merchandising deals with Studios. For example, they ran a “Legends Never Die” promotion, where Atom Tickets U.S. app users purchased advance tickets to see the Tupac Shakur biopic and could upgrade their order with a $25 limited edition merchandise bundle that included an official All Eyez On Me T-shirt, bandana. MoviePass could bring a much bigger and more enthusiastic audience to these types of promotions.
Here is why I think it may just be possible.
- Atom tickets CEO and Co-Founder Amesh Paleja left the company to take the CTO Job at Starz – and Atom has not named his replacement. Believe me when I tell you, if things were taking off like a rocket ship at Atom, Amesh would not be leaving to take another job. When a founding CEO leaves a company after a series C round, it means that the waters are rough for the company, and they are trying to find a way out of the storm.
- Some have speculated that it would be too hard to pull off this acquisition given the serious amount of financing Atom Tickets has pulled in and from big names including Fidelity Investments, Lionsgate, Disney and 21st Century Fox . They have raked in a total of $125 Million, with the last round being $60 Million. In their last round they said the money was to be used for Marketing campaigns and to continue to build out features of the service. This is where it gets interesting, yes there is a lot of money dumped into Atom so far- and the $60 million was just back in early March. Now I don’t know about you, but I have not seen much at all in the way of Marketing from Atom, in fact I have seen way more marketing from Fandango than Atom. Here’s the issue. Atom has a neat idea, and some cool technology. The theaters are cool with them, because they see no real threat, and maybe a little upside to the way they do things now. The problem for Atom is, they are just not that interesting to consumers. Not compared to MoviePass, and they have to compete for consumers with the theaters themselves and with all the other ticket options. As a standalone play, Atom is just not that compelling. They can’t generate the WOM that MoviePass does, and while they have a fair chunk of change, it’s not enough to get them anyplace big. Certainly not to an IPO.
- So I think Atom is willing to deal, and I think the backers of Atom would be thrilled to find a way to get into bed with MoviePass, even if they have to take an initial small valuation haircut to do it. Being acquired by MoviePass takes away a headache for the VC’s here, and it also works to the advantage of the studios – as ultimately they want what MoviePass and Atom want, to get more people to the movies.
Finally, I have one last reason why I think this may be happening, and it has a lot more to do with what I don’t know, than what I do know, so to speak. Read – this is NOT inside information! I happened to have a contact at one of these companies where we could chat about these kinds of ideas and these things. That contact has gone totally dark on me. It may be that this person now knows that I write this blog and doesn’t want to talk anymore for any reason anyway. Or any other number of reasons that this person doesn’t want to talk. But I have a hunch this person is protecting me and (she/he) to make 100% sure that no insider trading accusations could possibly be made.
It is just a hunch – and I could be wrong. But I sure hope this is the news and acquisition Ted is teasing. Time will tell!