What just happened? MoviePass has been on its way out for months now following a number of service restrictions and massive reported losses on the part of parent company Helios and Matheson (H&M), but H&M's problems have gotten much worse. New York's Attorney General has opened up an investigation into the company for potentially misleading its investors.
We've reported on MoviePass' downward spiral several times in the past. The company gained popularity initially by offering users a "too good to be true" deal of unlimited movie viewings per month, all for a single $9.95/month fee.
Despite the company's claims that it could remain financially viable by selling consumer viewing information to advertisers and other third parties, it seems MoviePass was unable to make its business model work. Throughout 2018, the service was forced to implement surge pricing and later take out an emergency loan just to keep the lights on.
Unfortunately for the company, it gets worse. In July, the movie ticket platform limited users to three viewings per month, while also allegedly re-subscribing users who had previously canceled their subscription. Naturally, all of these issues have been pretty unfortunate for MoviePass' parent company, Helios and Matheson (H&M). Indeed, a mere two months after the company's investors filed suit following massive reported losses, New York Attorney General Barbara Underwood is now investigating H&M for potentially misleading its shareholders.
H&M, for its part, has denied any wrongdoing.
"We are aware of the New York Attorney General’s inquiry and are fully cooperating," a company spokesperson said in a statement to CNBC. "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."
It's unclear whether or not Underwood's investigation will turn up any concerning or actionable information, but we'll keep you posted if we learn anything more.
Image courtesy Darron Cummings via USA Today