MoviePass, the fast-growing but troubled subscription service that offered movie buffs a variety of low-cost plans to watch movies, said Friday it was closing.
The company, which became a cultural phenomenon for the whole You can eat movie buffets, but struggled with investors to find a working business model, said in a letter to subscribers that it would shut down Saturday morning because the work to recapitalize the business "does not has been successful to date. ”
In many ways, MoviePass was a victim of its own success.
The company was founded in 201
MoviePass & # 39; s model paid the movie theaters full price for each admission, with expectations of making money because in traditional subscription economics, more people sign up for a service than use it. But that model burst into 2017 when the new leaders, Mr. Lowe and Mr. Farnsworth, set the fee at $ 10 a month. The low price entitles members to watch a movie every day in theaters, including new releases.
Three million people signed up for the service and started going to the movies, quickly pushing MoviePass to the brink. Largely because of MoviePass, Helios + Matheson's net loss exploded to $ 150.8 million in 2017 from $ 7.4 million in 2016, according to security filings.
In response, MoviePass began to reduce the number of movies that subscribers could watch and restrict movies. But its attempt to find a business model that worked failed as losses continued to grow and it burned through cash.
Its stock collapsed. It faced many lawsuits, including some from angry customers who accused it of a bait-and-exchange scheme when they couldn't see the movies they said they had been promised.
And the New York attorney's office started an investigation into whether Helios + Matheson had misled investors about the economy. This year, citing accounting errors, the company restated its 2018 financial statements, increasing its net loss for the first three quarters to $ 256.4 million from the previously reported $ 246.9 million.
But while moviegoers will no longer be able to use the subscription service, MoviePass said it is still considering the options.
Helios + Matheson said late Friday that it had formed a strategic review committee to explore "strategic and financial alternatives", including a possible sale of the company as a whole, a sale of some of its assets or a reorganization.
"We still believe deeply in the need for the MoviePass service in the market, to maintain affordable access to cinemas and give movie lovers the choice of where to go to the cinema," the company wrote to subscribers. But, it said, "at this time we cannot predict whether or when the MoviePass service will continue."