MoviePass shuts down after burning through $68.7 million of investors’ money
We all love to read startup success stories. But as we all know, the reality is a different story. The startup failure rate is at a staggering 90 percent. Only one out of 10 startups survives. Profitability is a different story for a lot of startups. It is estimated that hundreds of thousands of startups are launched every year. Using this estimate, coupled with startup failure rate, it is safe to say that at least hundreds if not thousands of startups, go out of business every day. Unfortunately, the stories of the failed startups go unreported.
Today, we are sad to report the story another failed startup. This time around, it is the story of a startup we all love, MoviePass, a subscription service that allows customers the freedom to see a movie every single day for the cost of $9.95 a month. Founded in 2011 by Hamet Watt and Stacy Spikes, MoviePass employs location-based technologies to allow individuals to watch movies at local theaters for a fixed monthly price. MoviePass’s parent company, Helios and Matheson Analytics, notified MoviePass subscribers on Friday that it would be interrupting the service effective Saturday, September 14, 2019. Before shutting down, MoviePass raised a total of $68.7M in funding over 3 rounds. Their latest funding was raised on Oct 3, 2018 from a Series B round.
Back in 2017, we also wrote about the struggling startup when spun off from parent company, Helios and Matheson. MoviePass was going through a lot of struggles at the time had repeatedly adjusted its movie subscription plans and took out hefty loans to cover massive losses that is over $100 million in the second quarter of 2018 alone.
In a message on its website, MoviePass co-founder Mitch Lowe wrote: “Over the past several months, MoviePass™ worked hard to relaunch its groundbreaking subscription service and recapitalize the company. While we were able to relaunch the service for some of our subscribers with an improved technology platform, our efforts to recapitalize the company have not been successful to date. As a result, it pains us to inform you that effective at 8 a.m. E.T. on September 14, 2019, we must interrupt service for all current MoviePass™ subscribers. MoviePass™ will be providing subscribers with appropriate refunds for their period of service already paid for. Subscribers will not need to request a refund or contact MoviePass™ customer service to receive a refund. Subscribers will not be charged during the service interruption. At this point, we are unable to predict if or when the MoviePass™ service will continue.”
Below is a screenshot of his entire message to MoviePass subscribers.