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MoviePass, the beleaguered movie subscription service that rewrote the rules for going to the movies, will be closed on Saturday.
Helios & Matheson Analytics Inc., its New York-based parent company, announced Friday that it would "discontinue" the MoviePass service for all its subscribers, citing unsuccessful fundraising attempts for the haemorrhage industry.
"The company is unable to predict whether or when the MoviePass service will be maintained," the company said in a statement.
Helios & Matheson, the data company that acquired a controlling stake in MoviePass in 2017, said it had formed a committee comprised of independent directors to explore "strategic and financial alternatives" for the company, including a sale of the company as a whole selling all its assets, including MoviePass.
MoviePass was founded in 2011. Helios & Matheson reduced its price in 2017, allowing subscribers to see virtually unlimited movies in movie theaters for a monthly subscription fee of $ 9.95. Previously, MoviePass charged subscribers between $ 30 and $ 50 a month.
The service, headed by chief executive Mitch Lowe, quickly grew from 20,000 to 3 million subscribers, boosting Helios and Matheson's shares to more than $ 30 a share. But his commercial model of subsidizing cinematography has proven unsustainable. At a price of less than $ 10 a month, MoviePass charges were lower than the average multiplex ticket price in Los Angeles and other locations.
Helios and Matheson took a number of steps to slow down the fire, including limiting the number of movies that users could watch and blocking the most popular movies in theaters. Nevertheless, the sector continued to struggle and the title lost almost all its value.
The apparent spiral of death 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 several months, even after a reverse stock split. Subscribers, tired by frequent service changes and poor customer relationships, quickly canceled their bookings.
During its brief existence, MoviePass has had a major influence on the film industry, which has long resisted the idea of ​​discounted tickets. MoviePass was created in part to accommodate rising movie ticket prices and long-term stagnation of attendance.
Critics, including movie theater operators, have said that MoviePass's low prices would devalue the movie's experience and lead to a drop in attendance when the service eventually disappears.
Yet last year, AMC Theaters, one of MoviePass' most critical critics, unveiled a subscription plan that would allow people to see up to three movies a week in its cinemas for just $ 19.95 per month. The service, called AMC Stubs A-List, costs $ 23.95 in California and other states. In July, AMC, the largest theater owner in the world, based in Leawood, Kansas, said the program had 860,000 members.
Exhibitors, including Alamo Drafthouse and Regal Cinemas, unveiled their own versions of MoviePass subscription offers. Last year, Cinemark Theaters in Plano, Texas, announced a new program called Movie Club, with $ 8.99 per month, which offers monthly ticket credit and discounts on snacks.
Lowe acknowledged increasing competition in a letter to subscribers that was also posted on the company's website.
"During this industry transformation, MoviePass has experienced well-known setbacks and challenges," Lowe wrote. "Nevertheless, MoviePass remained determined to lead and compete in a sector that is resistant to competition and external changes."
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