Too Good To Be True: The Rise And Fall Of MoviePass

After a wild eight-year ride, Helios and Matheson Analytics Inc HMNY officially shut down its subscription movie theater service MoviePass last weekend.

In a matter of years, MoviePass went from an unknown startup to a major disruptive force to a financial albatross for parent company Helios.

Here’s a look back at MoviePass’ rise, downfall and lasting impact on the industry.

Humble Beginnings

MoviePass launched back in 2011, charging early customers $40 per month to see one movie per day of the subscriber’s choice at any theater.

When the company’s first test service launched in San Francisco, 19,000 members initially signed up, grabbing the attention of the major theater chains.

In 2012, MoviePass began a national beta test of its service, which ranged in price between $29 and $34 depending on location.

After limited early success, CEO Mitch Lowe joined MoviePass in June 2016. Lowe’s early strategy involved dramatically cutting pricing in an effort to beef up subscriber growth, and the effort worked like a charm.

Helios Takes Control

Helios took a majority stake in MoviePass in August 2017, and MoviePass initially announced it would be cutting its monthly subscription price to just $9.95.

Helios stock took off following news of its stake, skyrocketing from under $3 per share prior to the deal to an intraday high of $38.86 on Oct. 11, 2017.

Less than two weeks later, Helios announced MoviePass’ subscriber count had grown from 20,000 to more than 600,000 in roughly two months' time.

By February 2018, MoviePass’ subscriber count exceeded 2 million users, but the writing may have already been on the wall from a financial standpoint.

Helios stock traded down more than 90% from its peak levels after the company announced a $60-million equity offering priced at $6.50 per share.

Struggling To Survive

Things really started to get bad for MoviePass in April 2018, when Helios disclosed that it had been losing an average of $20 million per month since September 2017.

Helios’ auditor issued a “going concern” statement about the company’s ability to maintain operations for another year, and Helios said it planned to raise more cash by selling shares at a steep discount to market price.

To maintain its Nasdaq listing, Helios announced a 250-to-1 reverse stock split in July 2018. A subsequent MoviePass price hike and a new restriction on new releases triggered a customer backlash, forcing MoviePass to walk back its price hike.

Instead, the company reduced the total number of monthly tickets from 30 to just three.

After reporting another $137-million loss in the third quarter of 2018, Helios and Matheson was delisted from the Nasdaq in February 2019.

Helios finally suspended MoviePass during the peak of summer blockbuster season in July before announcing that the service is shutting down for good on Saturday.

Lasting Impact

MoviePass was a true disruptor in the space, inspiring similar subscription services from companies like AMC Entertainment Holdings Inc AMC and Cinemark Holdings, Inc. CNK.

Helios investors likely take little comfort in the impact MoviePass had on the industry. Helios shares are now trading on the OTC market at less than a penny a share.

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Photo courtesy of MoviePass.