MoviePass went down this week because the coffers ran dry
The disruptive cinema subscription app MoviePass suffered a lengthy outage this week because, it has emerged, the company behind it ran out of money.
MoviePass’ outage prevented subscribers from using it to attend screenings on Thursday night because the parent company wasn’t able to make payments to partner movie theatres and facilitators.
To resolve the issue, it had to borrow $5 million in emergency funds, Business Insider reports. In an SEC filing the app’s owners Helios and Matheson Analytics basically outlining that if the company can’t pay its bills it won’t be able to offer the service.
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It reads: “The $5.0 million cash proceeds received from the Demand Note will be used by the Company to pay the Company’s merchant and fulfillment processors.
“If the Company is unable to make required payments to its merchant and fulfilment processors, the merchant and fulfilment processors may cease processing payments for MoviePass, Inc. (‘MoviePass’), which would cause a MoviePass service interruption. Such a service interruption occurred on July 26, 2018.”
The admission comes after the app’s Twitter account put the outage down to a technical issue with the card-based check-in process.
The company’s financial problems are unlikely to be resolved by this bailout from the hedge fund. While the service has gained millions of subscribers by dropping prices to just $9.95 in the United States, it has struggled to meet the cost of providing the service.
The base subscription enables customers to watch one movie per day using the subscription at most movie theatres across the US. It seems too good to be true. It’s starting to look that way. If it’s having to borrow emergency funds to get the lights turned back on, that’s probably not a good sign.
Do you think MoviePass can be sustained as a going concern? Let us know @TrustedReviews on Twitter.