In October, MoviePass parent company Helios & Matheson Analytics Inc. (NASDAQ: HMNY) announced that it would spin off its struggling movie subscription service, MoviePass. That idea is now a reality. The company made the announcement in a January 17 news release, advising that it has filed a confidential S-1 registration statement with the Securities and Exchange Commission to create MoviePass Entertainment Holdings Inc.
The new company, which would be listed on the NASDAQ, would be a wholly-owned subsidiary of Helios & Matheson, and the parent company would retain controlling interest in MoviePass Entertainment. The company would distribute some MoviePass shares as a dividend to shareholders on a yet-to-be-determined date of record. The number of shares to be distributed has not been disclosed. With stock valued at less than $0.02 per share, offering shares as a dividend doesn’t seem like much of a bonus.
We’ve been reporting on MoviePass for the last several years, and the company continues to be plagued with problems, including everything from technology issues to failing to find the right pricing model. Among MoviePass’s bigger problems is being sued by its shareholders. According to an August report by Bloomberg, shareholders have filed two class-action lawsuits in Manhattan, claiming Helios & Matheson failed to disclose material financial information.
In July, because the company wasn’t making timely merchant payments, the MoviePass movie subscription service was interrupted, and subscribers couldn’t use the service. After that interruption, company stock fell 99.8 percent to less than $0.05 per share. As of 10 a.m. EST yesterday, HMNY stock was valued at less than $0.02 per share. This time last year – January 22, 2018 – HMNY stock was valued at $2,067.50.
As a result of its financial difficulties, MoviePass has adjusted its pricing and business model numerous times. The latest change took place in December when MoviePass announced its new three-tier pricing, which went into effect January 1. Prices range from $9.95 to $19.95 a month with each of three plans offering something a little different.
- SELECT: Subscribers can see up to three movies a month, selected by a special “showtime- driven inventory model, starting at $9.95 a month.
- ALL ACCESS: Subscribers can see any three 2D movies of their choosing each month, including opening weekends, starting at $14.95 a month.
- RED CARPET: Subscribers can see any three movies of their choosing each month, including opening weekends, and one of those movies can be in IMAX 2D, IMAX 3D or supported premium large format screens, starting at $19.95 a month.
MoviePass’s latest plans are based on geographic zones. For example, if you are in the Seattle area, which is in Zone 2, the Select plan is $12.95 a month, All Access is $17.95 a month and the Red Carpet plan is $21.95 a month.
“Change is necessary. We won the hearts of millions of moviegoers, now we need to win back their confidence,” explains Mitch Lowe, CEO of MoviePass, in the December 6 announcement. “We realize that the past year brought our subscribers many modifications and even some surprises, some of which weren’t well-received; but we listened, we reassessed, and we believe we are primed to offer the American consumer the absolute best offering across America in 2019 and beyond.”
Lowe is referring to the company’s lack of transparency, its frequent pricing and business model changes, the service interruptions and resubscribing customers who had cancelled subscriptions – without their knowledge or permission.
If you go to SubscriptionInsider.com and type “moviepass” into the search bar, you’ll find two pages of stories about the movie subscription service over the last year-and-a-half. The company has changed its pricing and business model so many times they have lost their customers’ faith in them. More than anything, the company’s lack of transparency and full disclosures have really hurt them, driving customers away and into the theatre seats of competitors like AMC Theatres and Sinemia. This latest move seems like an attempt by the parent company to distance itself from MoviePass, so they don’t take the whole company down with them.