The difference between the end of a movie and a MoviePass income statement is that only one of those fades to black. Things continue to be rocky for MoviePass and its publicly traded parent company Helios and Matheson Analytics (NASDAQ:HMNY). The flawed model continues to bleed red ink, and social media continues to fume about recent changes to the former multiplex-buffet operator.

Helios and Matheson has been managing dissatisfaction since taking a controlling stake in MoviePass last summer, but at least its initial problems were beyond its control. Helios and Matheson's decision to slash MoviePass' monthly rate to $9.95 -- giving folks the ability to see a movie a day for less than the price of a single screening in many markets -- turned heads. MoviePass couldn't keep up with demand, taking weeks, and in some cases months, to get the debit cards out to new members. 

The biggest problems in the first couple of months under Helios and Matheson's watch were the glitchy app and the inability to reach someone at customer service when things went wrong. It's a different ballgame now. The cash-strapped company's latest wave of inconveniences are all about weaning its more active users off its platform and slowing down the usage for everybody else.

MoviePass promo highlighting the movies Searching, Happytime Murders, and Crazy Rich Asians.

Image source: MoviePass.  

Waiting for the sequel

The problem with third-party platforms including MoviePass and Sinemia is that you can't give away more than you take in forever. Creditors get fed up subsidizing theater binges of penny-pinching moviegoers. The model only works if you can offset the expenses, and there's no clear path to making that happen no matter how many ads you sell, data-selling deals you strike, or corporate tie-ins you square away. You need to be in a position to control costs and own the concessions that profit from an increase in traffic, and that's why AMC Entertainment (NYSE:AMC) has seen its AMC Stubs A-List platform go from zero to 260,000 members

MoviePass and Sinemia will probably die educating the market. AMC and smaller multiplex operators will reap the benefits of subscription-hungry film buffs. 

MoviePass is doing its best -- or its worst -- to get its subscriber base to watch fewer movies on its dime. The three-movie-a-month limit it placed on its monthly subscribers is now trickling to many annual subscribers, reportedly those who were going to town the most on the unlimited model. MoviePass is also limiting the movies that it will pay for to just a couple of mainstream titles a day -- and even then only at some of the available showtimes in some cases. 

In its current state, MoviePass is a tolerance test: How much will a subscriber put up with before cancelling the service? MoviePass had roughly 3.2 million subscribers a year ago, and that number is likely shrinking at a heady pace. MoviePass will very likely get what it wants, keeping the folks who don't mind keeping up with a perpetually changing obstacle course of hoops to jump through, or those who don't use the platform at all but can't be bothered to cancel the subscription. 

This doesn't have to be the end for MoviePass, at least not in its current form. It wouldn't be a surprise to see a theater chain or streaming video specialist scoop up the brand and the remaining membership list after the apparently inevitable bankruptcy reorganization to use as the springboard for a more sustainable platform. It's also possible that MoviePass survives on its own merit, as whittling away its most burdensome subscribers woos creditors back into bankrolling the service for a few more months until it hits on a model where more money is coming in than going out. Everybody that loved MoviePass last summer seems to be hating it, but it was only a matter of time before reality caught up to the model's fantasy.

Rick Munarriz owns shares of Helios and Matheson Analytics. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.