MoviePass users apparently hit the exits en masse after it scaled back the number of movies users could see each month: The flailing cinema-subscription provider has seen its subscriber rolls plunge from a peak of more than 3 million to just 225,000 in under a year, according to a new report.
In June 2018, MoviePass claimed it had signed up more than 3 million subscribers for its $9.95 monthly plan, which let customers see one movie every single day. But that proved unsustainable, and MoviePass was forced to change that to a three-movies-per-month plan. In August 2018, MoviePass Inc. began to convert subscribers on annual subscription plans to the three-movies-per-month subscription plan, by giving annual subscribers the option to either cancel or refund their annual subscription or continue on the new three-movies-per-month subscription plan.
Evidently, over 90% of MoviePass’ previous subscribers didn’t care to continue paying for the service given the dramatically scaled-backed terms.
Last month, MoviePass introduced a refashioned “unlimited” plan, dubbed Uncapped, priced at $14.95 per month (or $119.4 per year), to again allow customers to see one movie daily. But it comes with big caveats, described by MoviePass like this: “Your movie choices may be restricted due to excessive individual usage which negatively impacts system-wide capacity.” According to the BI report, MoviePass has signed up only about 13,000 new subscribers Uncapped launched in mid-March.
As of March 21, 2019, Helios & Matheson Analytics (MoviePass’ parent company) said it had cash on hand of about $2.8 million and approximately $13.1 million on deposit with its merchant and fulfillment processors related to subscription revenues.
Last month, Helios and Matheson said it raised a $6 million new round of financing from “certain institutional investors,” which closed March 25. The company said it would use the $5.56 million net proceeds (after placement-agent fees) “to accelerate MoviePass’ product development, fine tune its subscription technology, and increase MoviePass Films’ investment in new films.”
Helios & Matheson last filed financial results for the September 2018 quarter. Last month, it restated results for the first nine months of 2018 — saying it had a net loss of $256.4 million (versus $246.9 million previously) and an operating loss of $327.4 million (versus $320 million before). The company’s revenue for the first three quarters of 2018 was restated as $198.3 million (compared with $204.9 million).
HMNY said those misstatements were the result of “the erroneous recognition of up to approximately $5.9 million of revenue from certain MoviePass subscriptions that were in a suspended state due to changes made to the MoviePass subscription service that had not yet been consented to by the applicable subscribers.” The company also included $700,000 in revenue from the sale of subscriptions by Costco, but those subscriptions were refunded and MoviePass didn’t factor that into its earnings.
Last fall, the New York Attorney General opened a securities-fraud probe into whether Helios and Matheson misled investors. Among other legal woes, MoviePass also is the target of a class-action lawsuit by subscribers claiming the change in the “unlimited” plan was a deceptive “bait-and-switch” tactic.
Separately, MoviePass is suing rival Sinemia, alleging patent infringement. A judge earlier this month allowed MoviePass’ lawsuit to proceed.