MoviePass lights are dimming as losses and subscribers mount
Time is running out for MoviePass and its money-burning subscription service.
There is "substantial doubt" about whether MoviePass parent Helios & Matheson Analytics can go on as a growing concern for another year without raising more financing, it said Tuesday in a filing.
Additionally, Helios & Matheson reported an operating loss of $126.6 million in the three-month period ending June 30, versus a $2.74 million loss in the year-ago quarter, underlining its uphill battle in turning the business around.
Wall Street has largely pulled the plug on the company, which in late July attempted to increase its price and avert being delisted from the Nasdaq with a reverse 250-to-1 stock split. Still, the plunge continues, with shares at midday Wednesday down 6 percent at 5 cents.
The company, started in 2011, had a mere 15,000 subscribers when Helios & Matheson purchased it one year ago.
MoviePass, which has said it expects 5 million customers by the end of 2018, is it a victim of its own success, as it pays theaters full price for each admission, making its business model heavily reliant upon more people paying for its service than actually go to theaters.
To that end, MoviePass, which had promoted its "unlimited" service, this month replaced its $9.95-a-month movie-a-day offer with one that lets customers attend three films a month for the same fee. The company declared the new pricing to be part of a "sustainable business model," in a news release on Wednesday.
"Measured by number of movie tickets sold, we are the fourth largest theater chain in the country without any brick and mortar locations, or screens," MoviePass CEO Mitch Lowe said in the statement.
Prior moves to curb use of its service and remain solvent included a short-lived price hike and peak pricing.
MoviePass customers had a front-row view of the company's troubles when the subscription service stopped functioning last month until Helios & Matheson obtained a short-term loan to pay its processors.
