The owner of MoviePass, the subscription service that offered cinema-goers a deal that appeared to be too good to be true, filed for Chapter 7 bankruptcy Tuesday, according to documents filed with the Securities and Exchange Commission.
"What took them so long? Not a shocker at all," said Michael Pachter, managing director of Wedbush Securities. "They were selling dollars for nickels. It was an unsustainable model."
MoviePass, which was backed by Helios and Matheson Analytics, initially styled itself as a kind of Netflix without the sofa, offering a $9.95 monthly subscription that allowed subscribers to see one movie every day. In markets like New York, where an adult ticket costs $15 to $20, the company appeared to be offering an unbeatable deal.
However, as more people signed up for the service, some theaters began to refuse MoviePass customers.
"Absent some other form of other compensation, MoviePass will be losing money on every subscriber seeing two movies or more in a month," the theater chain AMC said in a statement announcing that it would reject MoviePass customers in August 2017. AMC later launched its own subscription pass.
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As the debacle worsened, MoviePass ran into financial problems, its app suffered a host of technical issues, and the company dramatically reduced the number of movies subscribers could see. Customers were outraged that they could now watch only three movies a month, instead of 30, and the company was pilloried on social media.
MoviePass finally shut down in September — after which some subscribers said they were still being charged a monthly fee, according to some reports.
No one was available at the Helios and Matheson headquarters in New York to answer calls for comment. A public relations company listed on the Helios website, Pollack PR Marketing Group, said it was no longer working for the firm.