The parent company of MoviePass announced Tuesday plans to spin off the troubled subscription service into a separate company.
- MoviePass to become its own company
- The subscription service has struggled to make money
- In recent months, it changed its plans and limited services
The new entity will be called MoviePass Entertainment Holdings, New York-based Helios and Matheson said in a news release. It will be publicly-traded and comprised of the company's film production, marketing and exhibition businesses.
"Since we acquired control of MoviePass in December 2017, HMNY largely has become synonymous with MoviePass in the public's eye, leading us to believe that our shareholders and the market perception of HMNY might benefit from separating our movie-related assets from the rest of our company," Helios and Matheson CEO Ted Farnsworth said in a statement.
MoviePass gained millions of subscribers last year when it offered its subscription service for $9.95 a month. Under the plan, users were able to see one movie per day at theaters nationwide.
In recent months, MoviePass has struggled to make money. In July, the company experience service outages when it ran out of money, which prevented users from buying tickets. MoviePass then borrowed $5 million in cash.
To stay afloat, the company began changing its subscription plans by limiting the number of films users could see, among other things.
MoviePass has also faced competition from other movie theater chains, most notably AMC Theatre's Stubs A-List service.
The New York Attorney General's Office announced last week it was investigating whether Helios and Matheson misled investors.