MoviePass Parent Calls It Quits with Chapter 7 Bankruptcy Filing

Company claims to have $1-10 million in assets and more than $60 million in debts.

MoviePass Parent Calls It Quits with Chapter 7 Bankruptcy Filing

Source: Helios and Matheson

Last week, MoviePass parent Helios and Matheson Analytics finally called it quits, filing for Chapter 7 bankruptcy, reports Variety. In a Chapter 7 bankruptcy, the company is dissolved and what remains of its assets are sold to repay its debts. According to the filing in the U.S. Bankruptcy Court for the Southern District of New York, Helios and Matheson had assets between $1 million and $10 million and more than $60 million in debts. The company called itself a “big data company,” and it hoped that a movie subscription service – MoviePass – would be a way to leverage customer data for sale to advertisers.

MoviePass Parent Calls It Quits with Chapter 7 Bankruptcy Filing

Source: MoviePass

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For the last several years, MoviePass has made headlines, first as an innovative subscription service and then as a company who couldn’t find its way. The company constantly struggled with its business model, its pricing, and the execution of day-to-day operations. In September, the final curtain fell for MoviePass, who failed to recapitalize and revamp the company. At that time, MoviePass officially called it a service disruption, but few thought the subscription service could make a comeback.

“Subscribers will not be charged during the service interruption. At this point, we are unable to predict if or when the MoviePass service will continue,” CEO Mitch Lowe wrote in a message to subscribers.

The service disruption notice still appears on the MoviePass website.

MoviePass Parent Calls It Quits with Chapter 7 Bankruptcy Filing

Source: MoviePass

MoviePass Parent Calls It Quits with Chapter 7 Bankruptcy Filing

Source: MoviePass

MoviePass the original movie ticket subscription service, and the concept behind the subscription was a good deal for subscribers. Unfortunately, MoviePass’s mission to sell consumer data wasn’t viable financially, and the subscription fees did not cover the company’s costs. As a result, MoviePass constantly changed its offerings. It went from unlimited movies each month for a set price, to limited movies each month at a different price. The service was then plagued with technological problems, payment processing difficulties, and security breaches, causing periodic service shutdowns.

Building on the MoviePass idea, Sinemia also tried a movie ticket subscription service. It couldn’t make a go of it either. In 2018, class action lawsuits were filed against Sinemia for “bait-and-switch” schemes to lure consumes to subscriber. Later that year, Sinemia filed for Chapter 7.

Movie ticket subscription services weren’t doomed forever. Three other companies have developed their own version of movie subscriptions – AMC Theatres, Regal Cinemas and Cinemark. AMC Theatres has arguably been the most successful. In June 2018, AMC Theatres launched AMC Stubs A-List, a VIP tier of its loyalty program. For $19.95 a month, subscribers can see up to three movies per week. In addition to offering a more realistic model, AMC set reasonable goals for itself, and it vowed transparency to its subscribers, something MoviePass never got quite right. MoviePass has changed its pricing since launch, moving to three-tiered pricing in 2019, but the service remains successful, exceeding company subscriber goals. In November, the company announced it had more than 900,000 members.

Last summer, Regal Cinemas announced it was working on an unlimited movie subscription service. It, too, has three-tiered pricing, ranging from $18 to $24 a month, depending on the location of the cinema. Like Stubs A-List, the Regal movie subscription is intended to complement the company’s loyalty program.

In December 2017, Cinemark launched its movie club to compete against Movie Pass. Though it has fewer benefits than the other services, it is still viable. In a Seattle zip code, a Movie Club subscription costs $9.99 per month plus tax. It includes one ticket per month, with unused tickets rolling offer. It also offers 20% off concession fees, waived online fees, and member pricing for additional tickets.

Insider Take:

It was hard to watch Helios and Matheson and MoviePass struggle so much to build a viable subscription service. This is finally the end of the road for them, and we don’t expect to see either of the companies back in the movie headlines. They leave a cautionary tale behind – start small, understand your product and your audience, price it right, don’t overpromise and underdeliver, be transparent, and test, test, and test again before going to market.