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There might be more drama with MoviePass than on the big screen.
The New York Attorney General’s Office is investigating whether Helios and Matheson, the majority owner of MoviePass, misled investors. The probe was first reported by CNBC.
It’s the latest blow to the beleaguered subscription service, which began implementing various restrictions earlier this year in an effort to save the business. Shares of Helios and Matheson have fallen nearly 100 percent over the past year — from a high of around $4,500 to just two cents on Thursday.
A statement from Helios and Matheson said the company is “fully cooperating” with the investigation.
“We believe our public disclosures have been complete, timely and truthful and we have not misled investors. We look forward to the opportunity to demonstrate that to the New York Attorney General,” the statement said.
It turns out, offering people the chance to see all the movies they want for $9.95 a month is great for attracting more than 3 million subscribers, but was ultimately unsustainable. By August, the company said it was responsible for 6 percent of all movie ticket sales in the United States on any given week.
Earlier this year, MoviePass experimented with charging subscribers peak pricing for popular showtimes. In August, it announced it would raise its fee to $14.95, before it reversed the price increase. The company’s current plan allows subscribers three movies per month and from a limited selection of titles.
As one Twitter user put it: “It’s really impressive how MoviePass made me love going to the movies again and then made me loathe it.”
The company has been bombarded with complaints on Twitter from users who have reported no available showtimes in their area or having problems when they arrive at the theater.
Earlier this month, MoviePass also earned the scorn of some former subscribers, who reported receiving an email informing them that unless they opted out, they would be re-enrolled in the same $9.95, one movie per day plan they had previously signed up for.
While it may have been a last-ditch effort to raise extra cash, MoviePass’ plan never hinged on making money from ticket sales. It was always about finding a way to collect and monetize subscriber data.
“We get an enormous amount of information. Since we mail you the card, we know your home address, of course, we know the makeup of that household, the kids, the age groups, the income,” CEO Mitch Lowe said at the Entertainment Finance Forum in March, according to Seeking Alpha.
“Then because you are being tracked in your GPS by the phone, our patent basically turns on and off our payment system by hooking that card to the device ID on your phone, so we watch how you drive from home to the movies. We watch where you go afterwards, and so we know the movies you watch,” he said. “We know all about you. We don't sell that data. What we do is we use that data to market film.”
With more financially viable movie theater subscription alternatives emerging, including AMC’s Stubs A-List, it seems a happy ending for MoviePass isn’t looking likely.