MoviePass outage caused by company running out of money
MoviePass, the popular service that lets viewers see a movie every day for less than $10 a month, crashed temporarily this week because it ran out of money.
Customers began complaining on Twitter on Thursday night that they couldn't redeem tickets using their MoviePass cards. The company at first said it was having “technical issues” with their card-based check-in process, and urged subscribers to utilise e-ticketing.
Later, however, the company said that the problem was not with their card processor partners at all, and said they would be working through the night to solve the problem.
An SEC filing on Friday revealed the cause of all the commotion: Helios and Matheson, Movie Pass’s parent company, missed a payment to one of its fulfilment processors, causing them to temporarily refuse to process payments.
Helios and Matheson was forced to borrow $5m in cash on Friday to keep the lights on at MoviePass.
“The $5m cash proceeds received from the Demand Note will be used by the Company to pay the Company’s merchant and fulfilment processors,” the company said in the SEC filing.
It added: “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."
The company also noted that such interruptions could have an “adverse effect” on MoviePass’s ability to retain subscribers, and could hurt the company’s financial position.
The latter proved true on Friday morning, when Helios and Matheson stock plummeted from nearly $7 at market open to $3.58, according to CNN.
The fall came just days after the company made a list-ditch attempt to stay on the Nasdaq stock exchange, executing a reverse stock split that raised the cost of shares to $21. The cost of shares has dropped steadily since then.
The incident also comes amid a rash of changes in MoviePass’s pricing scheme, in an attempt to make the company profitable.
While the company’s promise of unlimited movies for just $9.95 per month gained them millions of subscribers, they’ve also been ploughing through roughly $21m per month, according to Bloomberg. The company recently introduced a surge pricing scheme, in which viewers pay a surcharge for more popular movies and show times.
The changes and outages have caused at least some MoviePass customers to abandon the service altogether.
“i know you guys gotta make money too but i don’t pay $10 a month for nothing and that’s exactly what i’ve been getting,” one user tweeted on Thursday. “i liked moviepass a lot but i’m gonna cancel it :/”
