MoviePass to shut down Saturday after failing to raise capital
MoviePass, the long-beleaguered cinema subscription service that rewrote the rules for going to the movies, will shut down Saturday.
Its New York-based parent company Helios & Matheson Analytics Inc. on Friday said that it would be “interrupting” MoviePass’ service for all its subscribers, citing failed efforts to raise capital for the money-hemorrhaging business.
“The company is unable to predict if or when the MoviePass service will continue,” the company said in a statement.
Helios & Matheson, the data company that bought a majority stake in MoviePass in 2017, said it has formed a committee of independent directors to explore “strategic and financial alternatives” for the company, including a sale of the firm as a whole, or a sale of all its assets, including MoviePass.
MoviePass was founded in 2011. It gained a large following in 2017 when Helios & Matheson reduced its price, allowing subscribers to see virtually unlimited movies at theaters for a monthly fee of $9.95. Previously, MoviePass had charged subscribers $30 to $50 a month.
The service, led by Chief Executive Mitch Lowe, quickly grew to 3 million subscribers from a mere 20,000, sending Helios and Matheson’s stock soaring above $30 a share. But its business model of subsidizing moviegoing proved unsustainable. At a price of less than $10 a month, MoviePass’ fee was less than the price of an average multiplex ticket in Los Angeles and many other places.
Helios and Matheson took numerous steps to slow down the bonfire of cash, including limiting the number of movies users could see and blocking the most popular films in theaters. Nonetheless, the business continued to struggle and the stock lost almost all of its value.
The apparent death spiral sparked shareholder lawsuits and an investigation by the New York attorney general’s office. The company was delisted from the Nasdaq stock exchange earlier this year after the stock traded below $1 a share for months, even after a reverse stock split. Subscribers, fed up with frequent changes to the service and poor customer relations, canceled rapidly.
In its brief existence, MoviePass managed to have a major influence on the theatrical movie business, which has long resisted the idea of discounting tickets. MoviePass began in part as a response to rising ticket prices at theaters amid long-term stagnation in attendance.
Critics, including movie theater operators, said MoviePass’ low pricing would devalue the moviegoing experience and lead to declines in attendance when the service eventually went away.
Yet last year, AMC Theatres, one of MoviePass’ most vocal critics, unveiled a subscription plan that would allow people to see up to three movies a week at its cinemas for as little as $19.95 a month. The service, called AMC Stubs A-List, costs $23.95 in California and other states. Leawood, Kan.-based AMC, the world’s largest theater owner, in July said the program had 860,000 members.
Exhibitors including Alamo Drafthouse and Regal Cinemas have unveiled their own versions of MoviePass-like subscription offerings. Plano, Texas-based Cinemark Theatres last year announced a new $8.99-a-month program called Movie Club, which offers a ticket credit each month at its theaters, plus discounts on snacks.
Lowe acknowledged the rising competition in a letter to subscribers that was also posted on the company’s website.
“In the course of this industry transformation, MoviePass has experienced setbacks and challenges that are well known,” Lowe wrote. “Nevertheless, MoviePass remained committed to leading and competing in an industry that is resistant to outside competition and change.”
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