Helios and Matheson Analytics Inc. has been hemorrhaging cash the last few months as its subscription-based movie ticketing app MoviePass struggles to identify a sustainable business model. At the same time last year, the company had reported a gross profit of $223,000.
MoviePass, founded in 2011, garnered significant attention over the last year after unveiling an “unlimited” plan that allows customers to see one film a day for $9.95 per month. By October, the offer had reeled in at least 500,000 new subscribers, and at least another 2.5 million by this June.
Customer interest wasn’t a problem for MoviePass ― but financially backing the demand was. The company made headlines in July when the app suffered an outage because Helios and Matheson Analytics Inc. ran out of money to pay for customers’ tickets.
Helios and Matheson Analytics Inc. was forced to take out a $6.25 million loan to pay its contractors in order to fulfill customers’ ticket requests. The company has since paid back the loan, The Wall Street Journal reported.
Since then, MoviePass has tried out different methods for garnering revenue, including raising the subscription fee to $14.95 a month, adding surcharges to certain popular movies, and blocking customers from seeing new movies during their first two weeks of release. The changes prompted a flood of complaints from customers and canceled subscriptions, MoviePass chief executive Mitch Lowe told WSJ.
MoviePass announced earlier this month that it had adjusted its offer once again ― this time to three films a month for $9.95. If the new plan, which went into effect Wednesday, proves to be another failure, the company could quickly blow through its remaining $175.3 million of total assets left on hand, according to CNBC.
As of Wednesday afternoon, MoviePass stock was trading at just 4 cents a share, CNN Money reported.