Shares of Helios and Matheson Analytics, owner of film subscription service MoviePass, cratered 15% Tuesday to close at 25 cents and are now down more than 99% from their all-time high. Tuesday’s drop came after a Business Insider report saying Muralikrishna Gadiyaram, a current Helios and Matheson board member and CEO of its former Indian parent company, had his bank accounts frozen in India amid fraud allegations.
But Helios and Matheson, whose business is essentially MoviePass, has bigger problems than that. MoviePass offers its 3 million subscribers up to one movie a day for $9.95 a month, which costs Helios and Matheson $45 million a month. The company just raised $164 million in convertible notes for some ready cash and is trying to avoid getting delisted from the Nasdaq.
At the same time, MoviePass’ demonstrated demand for a theatrical subscription product has it facing competition from new services like AMC Theatres’ just-launched A-List program. AMC’s service is twice as expensive for just three films a week, but includes premium formats like Imax and 3D. And unlike MoviePass, AMC can sell high-margin concessions to bigger crowds to make up for a lower one on tickets. MoviePass’ already tough road to survival just keeps getting more perilous.