MoviePass app down after parent company runs low on cash
Financial woes afflicting its parent company could spoil the show for MoviePass. Customers were being barred from theaters after the subscription movie service stopped functioning on Thursday because of glitches with its card-based check-in process, the company explained in a tweet.
MoviePass' owner, tech services company Helios & Matheson, said in a Friday regulatory filing that "if the company is unable to make required payments to its merchant and fulfillment processors, the merchant and fulfillment processors may cease processing payments for MoviePass, which would cause a MoviePass service interruption."
Helios & Matheson added that it would use $5 million of a roughly $6 million short-term loan to pay its processors and resume operations.
MoviePass subscribers pay $9.95 a month to watch a film daily in a theater. So far, that has proved a money-losing proposition. Earlier this month, MoviePass started charging its more than 3 million subscribers extra for especially crowd-pleasing movies and desirable showtimes in an attempt to stop hemorrhaging cash.
Helios & Matheson in May reported the company had a cash deficit of $40 million and expected to be short at least $45 million in June. Saying it would "require a significant amount of additional capital" to continue, the company reported plans to issue convertible notes worth $164 million and issue 20,500 shares of preferred stock.
MoviePass started in 2011 and expects 5 million customers by the end of the year. It pays theaters full price for every admission, making its business model reliant on more people paying for its service than actually going to theaters.
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