MoviePass, owned by parent company Helios and Matheson, has officially shut down on September 14th. The subscription service is known for spending enormous amounts of venture capitalists’ money for subsidizing movie tickets. Announced through emails to subscribers and separately in a press release, the news marks the end of the company’s tumultuous two-year saga to upend the theater business model.
The once-popular platform was on extreme lengths to keep its business running, despite the obvious and fraught financial cost. The platform had been struggling for more than a year and it was in last March they attempt to get back on track with a revamped version of its unlimited plan. The new scheme allowed its users to watch one movie per day for $9.95 per month. Yet, its subscribers base plummeted from more than 3 million members to about 225,000 by April 2019.
In order to slow its cash burn, the company was forced to restrict users to four movies per month instead of being able to watch one movie per day. In addition to that, the company laid off around seven of its employees last month, bringing the total staff down to 12 people. Helios and Matheson also had to make sizable loans to cover its huge losses.
Though the company was around since 2011, MoviePass got national attention back in August 2017 when it dropped the price for its all-you-can-watch movie ticket subscription service to $9.99 a month. The plan was to take on the traditional theater industry in a much more aggressive fashion and it attracted customers well.
As MoviePass signed in more than 1 million new subscribers in the next few months, their business model was full of holes. The idea was that whenever a user secured a movie ticket through its mobile app for effectively zero dollars, the company had to pay the cost in full. This was covered by independent debit cards issued to subscribers that pulled funds directly from a MoviePass-owned bank account. However, the subscription revenue MoviePass generated dwarfed its monthly movie ticket costs and the company didn’t have any edge left to fight for.
Helios and Matheson Analytics has informed that they will be forming a strategic review committee for finding suitable buyers for all or some of its assets. The company’s assets include MoviePass, Moviefone and MoviePass Films. They will also be reviewing any possibility for an organizational restructuring of the company.