It could be curtains for Helios and Matheson Analytics' (NASDAQ:HMNY) MoviePass. The trailblazing subscription movie service is suspending its service on Thursday. It claims to be spending the next few weeks working on improvements on the app, but it's also being frank about the need to recapitalize the company and beef up its cost-cutting initiatives.

It's probably not a coincidence that MoviePass is at least temporarily shutting down its business on one of the busiest movie holidays of the year. Helios and Matheson's fledgling multiplex ticketing service is a flawed model that loses money if it's actually used by members. It also rolled out subscriber-crushing initiatives last year ahead of blockbuster releases. MoviePass outlived Sinemia, the smaller third-party platform that threw in the towel for its stateside operations three months ago, but it was never going to be able to compete against AMC Entertainment (NYSE:AMC) and its peers.

MoviePass ad with a MoviePass card at a theater with popcorn kernels.

Image source: Helios and Matheson Analytics.

Screen test

If MoviePass fades to black -- or red, its auditor's color of choice -- it will be remembered as a disruptor that ultimately got disrupted. At its peak last summer, there were more than 3 million subscribers paying $9.95 a month for access to the app that offered film buffs discounted access to theatrical standard screenings.

Multiplex operators initially bashed MoviePass, arguing that it was devaluing the filmgoing experience. The original model offered daily screenings for less than $0.35 a day. However, when AMC Entertainment launched AMC Stubs A-List last summer, it was signaling its willingness to disrupt the disruptor. A-List may cost twice as much as MoviePass, but it offered easy access to square away as many as three movies a week, including showings on most premium platforms.

Helios and Matheson Analytics lost money the moment a subscriber saw a single movie. AMC -- armed with the ability to sacrifice ticketing revenue for the sake of high-margin concession sales -- had a sustainable approach. In just a year, AMC has grown its A-List membership base to 860,000 members. Helios and Matheson haven't provided an updated membership count for MoviePass lately, but its active members likely consist mostly of gluttons for punishment.

This doesn't have to be the end for MoviePass. Maybe it will tweak its model, coming back later this summer with a more sustainable model and fresh financial backers that see it that way. However, with all of the goodwill that the MoviePass brand has squandered on the way down, it wouldn't surprise anyone if this is the end of the service, which was misunderstood before its business was eventually embraced by a growing number of exhibitors.

The MoviePass model was never going to work for a third-party provider. Paying retail pricing for tickets and negotiating with multiplex operators that have no reason to offer price breaks or a piece of concession stand sales was never going to work. It's time for theater owners to follow AMC in improving on the MoviePass model. If that doesn't work, they can band together to put the value-blurring subscription platform to rest.

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