At a conference in Los Angeles last week, MoviePass Chief Executive Mitch Lowe touted the vast amount of data the company mines from its subscribers, including tracking MoviePass subscribers when they’re not actively using the mobile app.
Lowe corrected course late Monday, saying MoviePass has never tracked subscribers or collected data about their location while the app is inactive.
Shares of MoviePass owner Helios & Matheson Analytics Inc. HMNY, -7.48% fell roughly 8% during intraday trade on Tuesday.
“We get an enormous amount of information,” Lowe said during the Entertainment Finance Forum last week, according to media reports. “We watch how you drive from home to the movies. We watch where you go afterwards.”
MoviePass has made it clear that although it’s focused on disrupting the cinema-going experience, its business model hinges on being able to sell the data it’s able to gather from subscribers.
Lowe has told MarketWatch in previous conversations that the goal is for MoviePass to collect enough data to sell subscribers lifts to the theater via ride-sharing companies, restaurant deals and eventually babysitting services.
MoviePass has already partnered with select Hollywood studios and cinemas, selling them data on ticket use and trends. In an email to subscribers, Lowe said MoviePass never shares subscribers’s personal data.
“I mischaracterized how MoviePass locates our members and I need to fix that,” Lowe wrote. “I would like to eliminate any misconceptions that we’re collecting location-related data. In our recent update with Apple AAPL, +0.25% , we removed the background tracking capabilities. MoviePass does not use and has never used this feature.”
Richard Windsor, of boutique London research firm Radio Free Mobile, argues that maybe MoviePass actually should track subscribers if it wants to survive.
“The company has no choice but to track its users and sell their data to marketers as it needs a revenue stream to offset the losses it is currently incurring,” Windsor wrote in an email. “Selling statistical data back to the movie studios will barely make a dent.
“Unless MoviePass tracks its members and is able to monetize the data they generate, the company is almost certain to go out of business as I think that its model is fundamentally flawed,” he said.
Shares of Helios & Matheson have gained more than 38% in the last 12 months, while the S&P 500 index SPX, -0.10% is up more than 17%.