MoviePass Leadership Seeks New Financing Options, Explores Sale of the Company and its Assets
By Daniel Loria and Rebecca Pahle
It looks like the era of MoviePass has come to an end, at least under its current ownership.
It was announced on Friday, September the 13th that Helios & Matheson–parent company of pioneering but long-beleaguered subscription service MoviePass–announced an interruption of service to MoviePass subscribers, to begin the next day. Noted the press release, the interruption comes because Helios & Matheson’s “efforts to recapitalize MoviePass have not been successful to date.”
The news comes concurrent with an announcement that Helios & Matheson’s board is forming a “strategic review committee… to identify, review and explore all strategic and financial alternatives for the Company, including a sale of the Company in its entirety.” That sale would include “substantially all of the Company’s assets,” those being MoviePass, MoviePass Films, and Moviefone, the latter a long-time showtimes provider acquired by Helios & Matheson in April of last year.
The press release, reported widely as signaling the death of MoviePass, left the door open for future activity from the subscription service, noting that “the Company is unable to predict if or when the MoviePass service will continue.” Still, past stumbles from the company do not seem to herald an optimistic outcome.
This appears to be the final in a series of service interruptions that date back to July 2018, when the company underwent a “blackout period” that curiously coincided with the opening weekend of Paramount’s Mission: Impossible – Fallout. Previous blackouts under Helios & Matheson ownership were limited to specific high-performing AMC locations, apparently as a negotiation tactic, that were lifted in April 2018.
The months that followed proved tumultuous for the company; cash shortages, emergency loans, and a plummeting stock price forced a series of unpopular changes to the terms of service. The brand’s reputation was highly damaged entering 2019, leading to key executive departures by March of this year. In July, the company announced it would be suspending service temporarily. According to the company’s latest press release, that suspension could prove to be permanent.
As reported by Boxoffice Pro earlier this year in our overview of the subscription landscape, MoviePass disrupted the North American theatrical exhibition market upon its initial launch in 2011, popularizing a concept that had been tried-and-tested in some European markets dating back to 2000.
The first iteration of MoviePass dates back to a 2011 beta launch in San Francisco. The company tinkered with different prices over the years—from $20 to $50 a month—in its attempts to drive subscriber growth. The company’s transformation came in 2016 with the addition of former Netflix and Redbox executive Mitch Lowe as chief executive officer. Within a year of that change, the company was acquired by data firm Helios & Matheson. The new ownership implemented an aggressive pricing structure in August 2017, lowering the monthly cost to $9.95 for unlimited movies across most cinemas in the United States. Subscriptions skyrocketed. The company reported 3 million subscriptions by June 2018.
As many in the industry feared, however, the model ultimately proved to be unsustainable. The company encountered cash flow problems and was forced to adjust its terms of service, catching existing subscribers by surprise. What was once an unlimited card that provided a daily admission to a 2-D movie became a largely limited offering by year’s end. The low monthly fee might have helped in customer acquisition, but it also created a false expectation among U.S. consumers—many of whom were new to a cinema subscription program.
As MoviePass faltered, rival third-party subscription service Sinemia similarly struggled with its own direct-to-consumer offering. Sinemia’s B2C cinema subscription operation shuttered in April of this year, with the company pivoting to a white-label B2B subscription strategy under the name SubGen.
“The MoviePass effect” raised the profile of subscription services within the industry. The 2017 price drop caught the attention of Tim League of Alamo Drafthouse, which subsequently began the gradual roll-out (still ongoing) of its own in-house subscription plan. In the years since MoviePass’ launch, AMC, Studio Movie Grill, Cinemark, Studio C by Celebration Cinema, Showcase Cinemas, Megaplex, and most recently Regal have launched their own, chain-specific subscription programs.
Helios & Matheson is reportedly looking to offload some of the assets associated with the MoviePass brand, including production arm MoviePass Films and legacy showtime discovery platform Moviefone. The outlook for a positive resolution, however, is bleak. “There can be no assurance that the Committee’s review process will result in any transaction,” notes the company’s latest press release.