MoviePass, the subscription service that spent enormous amounts of venture capitalists’ money subsidizing movie tickets in a bid to upend the theater business model, is officially shutting down on September 14th. The news, announced today via emails to subscribers and separately from a press release issued by parent company Helios and Matheson, marks the end of a tumultuous two-year saga that saw an once-popular platform go to extreme lengths to keep its business running, despite the obvious and fraught financial cost.
Last we heard of MoviePass, the company was laying off huge swaths of its staff, including the team responsible for brokering partnerships with movie theaters, following a sudden, supposedly temporary shutdown of its services in July. The company didn’t say when it would begin operating again, but monthly and annual subscribers were left with a service that was no longer functioning and no timeline regarding its eventual return. Last month, MoviePass was also found to have exposed thousands of its customers’ credit card numbers in plain text online, rounding out a particularly rough few months of bad press.
According to Helios and Matheson, MoviePass was too far gone to save. “On September 13, 2019, MoviePass notified its subscribers that it would be interrupting the MoviePass service for all its subscribers effective September 14, 2019, because its efforts to recapitalize MoviePass have not been successful to date,” reads the release.
The company says it will still seek funding to bring MoviePass back, but it is “unable to predict if or when the MoviePass service will continue.” It also says “there can be no assurance that any such financing will be obtained or available on terms acceptable to the committee.” The committee in question is a new “strategic review committee” made up of Helios and Matheson board directors to “identify, review, and explore all strategic and financial alternative” for salvaging the firm. That includes selling it in its entirety, or a sale of nearly all of its assets including MoviePass, movie listing service Moviefone, and the company’s production arm, MoviePass Films.
MoviePass, although it had been around since 2011, generated national headlines in August 2017 when it lowered the price of its all-you-can-watch movie ticket subscription service to an astounding $9.99 a month. The plan was hatched by CEO Mitch Lowe, a former Netflix executive who joined MoviePass in 2016 with bold plans to take on the traditional theater industry in much more aggressive fashion. The pitch seemed attractive to customers: pay a small, monthly fee for unlimited access to new releases in theaters. In many cases, seeing even one movie per month was enough to cover the cost of the subscription fee in many urban markets. Within months, MoviePass had signed up 1 million new subscribers.
For MoviePass, however, the business model was full of holes. For every ticket a user secured through its mobile app for effectively zero dollars, MoviePass had to cover the cost in full. It did so by issuing independent debit cards to subscribers, which pulled funds directly from a MoviePass-owned bank account. In short order, the subscription revenue MoviePass was generating was dwarfed by its monthly movie ticket costs. Although MoviePass raised nearly $70 million in venture capital, it was not enough to stem the bleeding.