Another shoe just dropped at troubled movie ticketing service MoviePass.
Carl Schramm, a member of the board of directors for MoviePass' parent company Helios and Matheson Analytics, has resigned citing concerns about corporate management.
It's the latest issue for the once-trendy movie ticket subscription service, which revamped its subscription model recently to offset its cash burn. The ticketing service grew to more than 3 million subscribers when it began letting members see one movie each day for a $9.95 flat monthly fee. But two weeks ago, it reduced that to three movies a month.
"We believe this new business model will immediately reduce our burn so we can refocus our efforts where they belong: making a permanent and positive change in this industry by creating an amazing theater-going experience and building a company that continues to benefit our nationwide community,” Ted Farnsworth, chairman and CEO of Helios and Matheson Analytics, said at the time.
Schramm cites concerns about how Helios and Matheson Analytics' corporate strategy in a letter to Farnsworth dated Aug. 25.
"I have objected to the manner in which a number of business decisions have been presented to the Board of Directors by management, without sufficient time for the Board to examine complex documents, to review significant transactions, or to discuss how the proposed actions fit into the Company's strategic plan," Schramm says in a letter, a copy of which was filed with the Securities and Exchange Commission.
His concerns have escalated over the last two months, Schramm says, "as management apparently has made a number of important corporate decisions and executed significant transactions either without Board knowledge or approval, or in Board meetings initiated with only a few hours of advance notice by email."
At least one meeting ended before he knew it had been called, Schramm says in the letter. "Just last week, I learned that management withheld material information from the Board for several months," he said.
Earlier this month, MoviePass opted not to raise its price to $14.95, as planned, but did reduce the number of movies subscribers can see, saying the revamped plan focuses on the majority of subscribers who see three movies or less monthly.
Last month, the company applied for an emergency $5 million loan, which it has since repaid, when it ran out of cash. The MoviePass app suffered technical difficulties that weekend, and the company issued an apology over Twitter.
The concerns and changes in the subscription plan, which is accepted by more than 90 percent of theaters, has left an opening for competitors. Two months ago, AMC launched its own Stubs A-List $19.95 monthly service, which lets moviegoers attend up to three movies a week, including special theater screenings such as 3D and IMAX showings – a perk MoviePass does not allow.
Another competitor, Sinemia has a range of movie ticketing subscription plans starting at $3.99 monthly, including two $9.99 monthly plans – one for three movies monthly with no blackout dates and another for two movies monthly including IMAX and 3D showings. Its membership plans range from $3.99 monthly (for one 2D movie a month) to $14.99 for three movies each month. It also has family plans starting at $7.99 for two tickets to a film each month.
Sinemia's $7.99 monthly subscription for two movies at any theater was highly rated in a National Research Group survey released this week, with 41 percent of the 1,558 moviegoers surveyed saying they would be "very likely to subscribe" to such a plan.
MoviePass has lost some clout in brand perception, NRG says. Satisfaction in MoviePass has fallen over the past five months, the research group says, and 50 percent of those who have cancelled the service have done so within the past month. Only 37 percent of current MoviePass subscribers in the survey said they planned to stay with the service "for a long time," a decline from 62 percent in March.
Some subscribers are giving MoviePass the benefit of the doubt. Justin Kangas, of Waldoboro, Maine, said he is not bothered by the new monthly limit. He sees three movies or less a month, which MoviePass has said is typical for 85 percent of its members. He is disappointed, however, by the company’s “inability to communicate clearly, provide adequate customer service and rapid-fire changes.”
“Hopefully they figure things out because at the end of the day, we need a more affordable way for your average consumer to see movies at the theater if theaters are going to survive,” said Kangas, a school principal who has been a subscriber for a year.
Despite MoviePass’s recent problems, consumers sill have a "healthy appetite for movie ticket subscription services," NRG said in the survey, with 39 percent of moviegoers "expressing definite interest in a vibrant subscription-based plan."
Helios and Matheson Analytics (HMNY) shares have fallen from a share price of more than $2 in January to two cents Thursday, despite a reverse stock split last month. In June, NASDAQ notified the company that its shares could be delisted from the exchange if it does not return to $1 per share or more by Dec. 18.
Losses of $104 million during April-June period, primarily due to operating expenses of MoviePass, led HMNY to report a net loss of $83.7 million for the quarter ending June 30, 2018.
Amid all its problems, MoviePass has launched a contest to "celebrate" the first anniversary of dropping its monthly fee to $9.95. The prizes in the "Ultimate MoviePass Getaway" contest, which runs through Friday, include a Los Angeles trip for two, annual MoviePass passes and other swag worth $4,000.