MoviePass, a popular app that let users see a movie per day for a low monthly subscription fee, is currently falling short of its promise.
The company's executives announced that their subscribers will not be able to view the anticipated upcoming releases "Christopher Robin" and "The Meg." Customers had also recently been unable to see the recently released box office hit "Mission Impossible: Fallout." In an open letter to subscribers, MoviePass CEO Mitch Lowe said "As we continue to evolve the service, certain movies may not always be available in every theater on our platform."
The company has cut off customers from big releases in order to keep costs down. MoviePass must pay the full price per ticket for its subscribers - which ultimately means that costs have exceeded total revenue received from subscriber costs. According to analysts, MoviePass paid for approximately 1.15 million tickets as of mid-July on the movie "Avengers: Infinity War." Increasing ticket prices have also contributed to MoviePass' inability to sustain itself.
In fact, MoviePass recently completely ran out of funds, leading to a day-long service outage. Near the end of July, the company filed for a loan of $5 million to follow through on "required payments" to its merchants, leaving its 3 million subscribers unable to watch movies for a day. Research analysts have since concluded that the service outage was a harbinger for the company's end. Box office analyst Jeff Bock notes that despite receiving the loan, MoviePass' future is cloudy since they still do "everything backwards." Bock further stated that "if they survive...it will be a valuable learning tool on how 'not' to do business." Analysts also note that MoviePass' lack of clarity concerning service changes, disruptions, and long delays for the arrival of its membership cards has further contributed to its financial woes.
Although MoviePass' parent company, Helios and Matheson Analytics (HMNY), completed a reverse stock split that temporarily rose its shares to $14 from $0.09 in July, the service outage caused its stock to close at $2. Recently, the stock has fallen down again to $0.10 at a loss of approximately 99%. In response to the stock's fall and rising public doubt, MoviePass has commented that the "talk of our demise is greatly exaggerated" - a response that is short on details and not exactly confidence-inspiring. In order to offset costs, the price of a MoviePass subscription is reportedly due to rise from its monthly price of $9.99 to $15.
Whether or not MoviePass survives, its impact on the movie world has not gone unnoticed. Past partner and current competitor AMC (NYSE: AMC) has recently announced its own movie subscription service at a monthly rate of $20. Cinemark (NYSE: CNK), another movie theater, has also released a subscription service as well.