MoviePass had everything going for it—except economics | Quartz

In March, MoviePass started asking members to take pictures of their ticket stubs so it knew they weren’t giving away the tickets. Members were then barred from seeing titles more than once. MoviePass introduced surge pricing next. And the app later blocked access to blockbusters altogether. Now, the company is planning to raise prices. Customers are starting to look for the exit.

The movie-ticket subscription service had nearly everything going for it—an industry-altering concept, a CEO with ties to Hollywood and Silicon Valley, financial backing from its parent Helios and Matheson Analytics, and fiercely loyal customers who bought into its vision for cheap movies. But the underlying economics of MoviePass never made sense. Its members went to the theaters too often and MoviePass was charging too little to stay in business at its current pace. Its other revenue streams, like advertising and investing in films, weren’t growing quickly enough to close the gap.

On Thursday, the company issued a press release to show people it was “still standing” after Helios and Matheson shares plummeted about 92% to $0.14 this week. (That was after a 1-for-250 reverse stock split that adjusted the price from $0.09 to $21.25 on July 24.)

MoviePass existed long before its parent company became the apple of short-sellers’s eyes. Launched in 2011, by two entrepreneurs, Stacy Spikes and Hamet Watts, the company set out to bring Netflix’s all-you-can-watch model to movie theaters and revive moviegoing, which has declined over the last decade (pdf). The idea was to charge subscribers a flat monthly rate—$50 per month back then—and pay theaters for the tickets they used from the revenue it made on subscriptions and partnering with studios to promote titles within the app.

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MoviePass had everything going for it—except economics — Quartz.