What happened

Shares of Helios and Matheson (HMNY), majority owner of all-you-can-eat movies purveyor MoviePass, are getting rocked this morning -- and you can blame its archenemy, movie theater chain AMC Entertainment (AMC -9.04%) for the trouble.

This morning, AMC announced that it will launch a service to compete with MoviePass. Helios and Matheson investors are panicking, with the stock down 28.9% as of 12:35 p.m. EDT.

People watching a movie in a theater

Viewers cannot tear themselves away from the latest sequel in the MoviePass saga. Image source: Getty Images.

So what

So here are the details as AMC explained them: A "new tier" of AMC's AMC Stubs rewards program is being created on June 26 that will permit subscribers to see "up to three movies per week" for a monthly fee of $19.95 plus tax.

AMC's program isn't nearly as generous as MoviePass' inasmuch as it:

  • Only gets you into three movies a week (MoviePass offers 1-a-day viewing)
  • Only gets you into AMC (MoviePass says "over 91% of theaters" in America accept its cards, including but not limited to AMC theaters)
  • Costs twice as much (MoviePasses retail for $9.95 per month)

However, AMC Stubs also offers a few rewards that MoviePass does not, including free upgrades on popcorn and soda, free refills on large popcorn, express service at the box office and concession stand, and various rewards points depending on how much you spend at the theater.

Now what

On balance, AMC's offer still appears to fall significantly short of MoviePass' as a value proposition (as did an earlier competing offer from Cinemark (CNK -0.73%) last year). So long as MoviePass remains in business, I honestly can't see many moviegoers taking AMC up on its offer.

That being said, the simple fact that AMC didn't feel capable of making a better offer to its customers is further evidence that what MoviePass is providing is unsustainable -- and that MoviePass will not in fact be able to remain in business much longer, or at least not on the terms it's currently offering.

If you're looking for a reason to panic, Helios and Matheson shareholders, I'd suggest you focus on that one.