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If you were trying to use your MoviePass subscription to check out Mission: Impossible - Fallout last night and found the app not working, you weren't alone. On Thursday MoviePass experienced a service interruption that made it impossible for subscribers to access the service. This morning MoviePass parent company Helios and Matheson Analytics revealed that it had to borrow $5 million to make some necessary payments. Essentially, MoviePass went down because it ran out of money.
Specifically, the required payments MoviePass needed to make were to merchant and fulfillment processors, or the companies that process MoviePass transactions. Without payment, those transactions stop and nobody can use the MoviePass debit card that purchases the tickets. This makes that payment pretty important since the entire business model shuts down without it.
While it seems that the MoviePass app is now up and running for some, there are still some reports of the app not working this morning, so you may still run into issues if you're planning on hitting the theater today.
This is certainly not good news as it indicated that MoviePass is in a pretty bad financial position at the moment. If it cant make these fairly standard payments through the normal course of business then MoviePass clearly isn't making enough money. While over a million people are currently MoviePass subscribers, the fact is that unless a majority of them don't use the service, MoviePass losses money on those customers that do. This was expected, as Helios and Matheson Analytics is a data company and it was expected that the real value in MoviePass was in its customer data, but it seems that even that hasn't been as lucrative as it was supposed to be.
This is just the latest piece of bad business news for MoviePass and its parent company. Business Insider points out that the company recently initiated a reverse stock split as a way of bringing its share price up from the $.09 that it was up to $14 per share. However, from there shares have continued to drop and they started the morning at $6 a share. It's unlikely this news is going to do anything to instill investor confidence.
It's anybody's guess what happens from here. While the $5 million loan will hopefully keep the company going for a while, if nothing changes MoviePass will simply spend that money while continuing to see not enough come in. Perhaps this was just a stop-gap measure while MoviePass waited to see enough revenue come from new policies like the new surge pricing to make up the difference. If not, expect to see MoviePass make some major changes in the short term as they continue to look for ways to make the low price subscription model work.