It’s over. Helios and Matheson Analytics (HMNY), the parent company of MoviePass, announced today that they’re pulling the plug on the famed monthly movie ticket subscription service which offered unlimited tickets for $9.95 a month.
HMNY today said that it formed a strategic review committee comprised of independent directors, to identify, review and explore all strategic and financial alternatives for the company. Options include a sale of the company in its entirety, a sale of company assets like MoviePass, Moviefone and MoviePass Films. Today, MoviePass notified its subscribers that it would be “interrupting the MoviePass service” effective September 14 because its efforts to recapitalize MoviePass have not been successful.
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In July, the company had suspended the service to work on what it said were technical improvements as well as an effort to recapitalize the operation, which at its peak had burned through tens of millions of dollars a month.
“The company is unable to predict if or when the MoviePass service will continue,” HMNY said in a press release. “The company is continuing its efforts to seek financing to fund its operations. There can be no assurance that any such financing will be obtained or available on terms acceptable to the committee.”
Where to begin to regale the tales of MoviePass? Created in 2011 by Stacy Spikes and Hamet Watt, the flat-price subscription movie ticket service looked to have a renaissance when tech company Helios and Matheson Analytics took a huge stake in the service in August 2017. CEO Mitch Lowe (who had worked at Netflix) spearheaded a Netflix-esque all-you-can-eat pricing model for moviegoing, something that was commonplace in Europe but previously all but unknown to U.S. exhibition.
How the company would become profitable was an immediate question in the distribution and exhibition sectors. Neither studios nor theaters wanted to give up any share of their box office to this third-party firm, which said it would ultimately profit through the use of data. Lowe and HMNY boss Ted Farnsworth believed that rapid subscriber growth would deepen its data pool and give it leverage in Hollywood. For a time, the stock market agreed, and Helios stock traded at nearly $30 a share by late-2017. The theory was that the percentage of members actually going to the movies each month would be a minority, meaning the company would not have to fork over cash for tickets to fulfill orders. (Many compared this setup to the way many health clubs work.)
That ratio of active users to total members didn’t fall into place. Instead, the company found itself having to run up huge deficits because it had promised access to any movie and was on the hook to provide tickets and fulfill its promise. Finally, in July 2018, during the opening weekend of Mission: Impossible – Fallout, MoviePass officially blacked out. At one point MoviePass had bragged it had nearly 3M subscribers. The once-high-flying HMNY stock took a swan dive and never recovered. Following the Mission: Impossible debacle, MoviePass decided it would no longer cover big studio tentpoles on their opening weekends, instead allowing only indies and holdovers. Subscriber levels dropped to 225K as of last April.
HMNY stock, which has traded over the counter since being delisted by the Nasdaq in February, closed Friday at .93 of a cent, essentially where it has been for the past few months.
Getting delisted — often a fatal setback for companies with HMNY’s ambitions — was far from the only blemish in the checkered record of MoviePass, which became a real-time case study in mismanagement. In just the past year alone, it elicited a fraud investigation by the state of New York; restated its financial results due to accounting errors; parted ways with its CFO and top operational executive; executed unusual (and unsuccessful) reverse-splits of its stock; and doubled down on investments in film production and financing. A month before the Fallout fallout that would sink the company, a MoviePass-backed film became of the worst-reviewed titles of 2018: the John Travolta mob biopic Gotti.
As MoviePass peaked and blew up, AMC and Regal eyed it warily and, in the case of AMC’s outspoken CEO, Adam Aron, took public shots at it. Over time, each circuit started their own successful monthly subscription movie ticket programs, which were able to feed concession sales and enhance their existing data-mining operations. AMC’s put a cap on the amount of tickets for $20 per month for any kind of film. Regal, like Cinemark, restricted theirs to 2-D films.
In late December 2017, MoviePass celebrated passing 1M subs in four months. Netflix reached that milestone in 39 months. To celebrate, Lowe and Farnsworth took a photo outside AMC’s Empire 25 in New York, laughing at the No. 1 chain in the world. AMC tried to sue the service and shut them down. Now, AMC has the last laugh.
Despite its demise, MoviePass leaves a legacy, serving as a disruptive force that pushed entrenched theater circuits to change their ways. Imax CEO Rich Gelfond, speaking at an investor conference earlier this week, said AMC opted for the see-anything approach with its Stubs A-List subscription program “largely because MoviePass came on the landscape. I think it was largely a defensive move on their part.”