DJ MoviePass Wraps Up Its Theater Subscription Service
By Ethan Millman and R.T. Watson
MoviePass is finally fading out.
The service, which made a splash with a too-good-to-be true subscription service that let customers watch up to a movie a day in theaters for less than $10 a month, said it planned to shut down as of Saturday. MoviePass's parent, Helios & Matheson Analytics Inc., said Friday it was exploring all options, including a sale of the entire company.
MoviePass gained popularity and attention for attempting to bring a Netflix-style subscription approach to out-of-home entertainment. But it rapidly became a massive disappointment for shareholders as it burned through cash trying to prop up its costly business model. Its shares were nearly worthless when the market closed Friday, after hovering around a penny a share for much of the year.
Starting in 2017, MoviePass let subscribers see a movie a day for a flat fee of $9.99. That low price proved unsustainable, since the company reimbursed theaters for the full ticket price, hoping it could make up the difference by selling user data. That plan never gained traction, however, and the company was forced to tweak its offering a year later.
In the summer of 2018, with a monthly cash deficit of $45 million, MoviePass hiked its price to $14.95 a month and borrowed at steep interest rates to try to plug leaks in its balance sheet. Then it restricted the number of movies users could see to three a month -- a roughly 90% cut from the theoretical maximum of 30 or 31. Eventually the company allowed its customers to use the service to see only a limited number of titles at any given time.
Those changes did little to stanch the red ink, but confused and angered users who had been promised a seamless, digital-age moviegoing experience.
Helios said it is "unable to predict if or when" MoviePass might return, saying efforts to recapitalize the company have been unsuccessful to date.
The company's brief history was riddled with awkward moments. In August 2018 Helios performed the first of many reverse stock splits in an attempt to keep its share price above $1 and avoid being delisted from the Nasdaq. Unable to clear even that low bar, it was delisted in February, trading over-the-counter since.
In July, MoviePass said it would temporarily interrupt its operations as it improved its mobile app. In August, the company experienced a massive data breach, according to TechCrunch, exposing the credit- and debit-card details of thousands of customers.
The company acknowledged "a potential security vulnerability" but said the servers were immediately secured and reported no customer data being compromised.
While MoviePass appears to be dead, the concept it popularized continues. Movie-theater operator AMC Entertainment Holdings Inc., for instance, last year launched a subscription service. AMC's offering was much more conservative, however, at $19.99 for three movies a month -- and it works only at AMC's own theaters.
(END) Dow Jones Newswires
September 14, 2019 09:00 ET (13:00 GMT)
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