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MoviePass, the fast growing but challenging subscription service that offers moviegoers a variety of discounted packages to watch movies, announced Friday the closing of the company.
The company, which has become a cultural phenomenon for its all-you-can-eat buffet but has struggled to find a business model that works, said in a letter to its subscribers that it would close its doors Saturday morning due Recapitalization efforts of the company "have not succeeded so far."
MoviePass has been a victim of its own success in many ways.
Founded in 2011, the company only took off in 2017; it was headed by Mitch Lowe, former leader of Netflix and Redbox, and Theodore Farnsworth, managing director of Helios + Matheson, the publicly traded company that acquired MoviePass that year.
The MoviePass model was paying the full price for movie theaters, with the expectation of making money, because in the traditional subscription savings, more people would sign up for a service they used. But this model exploded in 2017 when new leaders, Mr. Lowe and Mr. Farnsworth, reduced fees to $ 10 a month. This low price gave members the right to watch a film every day in the movie theaters, including new releases.
Three million people joined the service and started going to the movies, quickly pushing MoviePass to the brink. Largely because of MoviePass, Helios + Matheson's net loss soared to $ 150.8 million in 2017, up from $ 7.4 million in 2016, according to security deposits.
In response, MoviePass began to reduce the number of movies that subscribers could watch and limit the movies. But his efforts to find a business model that worked failed because his losses continued to increase and he spent money.
His stock has collapsed. He has faced numerous lawsuits, including from angry clients who accused him of a bait ploy while they could not see the movies that were going on. #################################################################################### They had been promised.
And the New York Attorney General's Office opened an investigation to determine whether Helios + Matheson misled investors about its financial data. This year, citing accounting errors, the company restated its financial results for 2018, bringing its net losses in the first three quarters to $ 256.4 million, compared with $ 246.9 million previously.
However, while moviegoers will no longer be able to use the subscription service, MoviePass has indicated that he is still considering his options.
Helios + Matheson said Friday evening that it has formed a strategic review committee to explore "strategic and financial alternatives," including a potential sale of the company in its entirety, a sale of some of its assets, or a reorganization.
"We continue to believe strongly in the need for the MoviePass service in the market, to maintain affordable access to theaters and to give moviegoers the choice of where to go to the movies," the company wrote to subscribers. But, he adds, "we are not able to predict if or when the MoviePass service will be maintained."
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