The encyclopedia · Finance & Accounting · Financial decision · 2017–2019
MoviePass offered unlimited movies for $10/month — and lost money on every ticket
MoviePass had 3M subscribers at $9.95/month, paying $12–15 per ticket. It lost $150M in a quarter. The service shut down in September 2019.
MoviePass · Helios and Matheson · 2017-08
What happened
MoviePass, founded in 2011, offered a subscription service for movie theater tickets. In August 2017, it slashed its price to $9.95 per month for one movie per day — a price below the cost of a single ticket in most markets. Subscriptions exploded from 20,000 to 3 million in months.
The economics were suicidal. MoviePass paid theaters the full ticket price ($12–15) for every movie a subscriber watched, while collecting only $9.95 per month. Heavy users watched 20+ movies a month, costing MoviePass $200+ per subscriber. The company lost $150 million in a single quarter.
MoviePass tried to fix the model by restricting popular films, adding surcharges, and limiting screenings — alienating the subscribers who had signed up for 'unlimited.' Parent company Helios and Matheson burned through $300M+ in cash. MoviePass shut down on 14 September 2019. The service that had 3 million subscribers was dead in two years.
Why it happened
- The $9.95/month price was below the cost of a single ticket — every subscriber was a loss, and heavy users were catastrophic losses.
- The 'unlimited' promise attracted the heaviest users, creating adverse selection: the customers who cost the most were the ones who stayed.
- Restricting the service after launch (blackout dates, surcharges) betrayed the value proposition that had attracted subscribers.
- Helios and Matheson funded the losses with equity dilution, not revenue — the stock went from $40 to under $1.
The lesson
A subscription priced below the cost of a single use is a promotion, not a business. 3M subscribers signed up for a losing deal, and left when the losses stopped.
Aftermath
MoviePass shut down in September 2019. AMC Theatres launched its own subscription service (A-List) in 2018 at $19.95/month — a price that actually covered costs. MoviePass proved the demand for movie subscriptions existed; AMC proved it could be profitable at the right price.
Sources
- MoviePass — Wikipedia (founded 2011; $9.95/month unlimited plan August 2017; 3M subscribers; paid $12–15 per ticket; lost $150M in a quarter; Helios and Matheson burned $300M+; shut down 14 September 2019)
- Variety, 13 September 2019 — MoviePass Shuts Down (service ended 14 September 2019; the $9.95/month plan 'proved to be economically unsustainable'; Helios and Matheson's 2018 net loss $329.3M)
- Complex — The Life, Death, and Potential Rebirth of MoviePass
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