MoviePass took a tumble after running out cash and stopped users from being able to use the service. According to USA Today, MoviePass borrowed $5 million to pay merchants and processors to restore service, following the interruption. MoviePass borrowed the money from hedge fund giant Hudson Bay.
Business Insider reported that id the company can't make the required payments to its merchant and fulfillment processors, the merchant and fulfillment processors may stop payment processing for MoviePass. This would result in a service interruption that subscribers just experienced on Thursday.
MoviePass claiming it was just a technical glitch
MoviePass released an official statement attempting to shift the blame for the interruption on a technology glitch. They ended up saying that they fixed the system and that the app is now up and running at 100 percent.
MoviePass is a subscription-based service that allows subscribers to pay a monthly fee to see multiple movies. MoviePass currently offers a $9.95 plan that allows moviegoers the ability to watch a movie a day, and also the ability to cancel their membership at any time. MoviePass is best described as the middleman between the theater and moviegoer. MoviePass has to spend large amounts of money, especially when popular films are released such as "Mission Impossible: Fallout."
MoviePass looking for ways to stay afloat
MoviePass is attempting to stop the bleeding by reshaping their service.
The company has added restrictions, no longer allowing customers the ability to re-watch movies. They continue to find ways to bring in more money, including surge pricing. MoviePass continues to struggle, as it spends nearly $21 million per month.
The company has been faced with outages before and the last one happened in July.
The stock began to drop drastically in May after MoviePass parent company, Helios and Matheson, admitted that they only had $15.5 million in the bank. Last week, stock prices fell 50 percent. A previous company report filed by an auditor revealed that current revenue streams are not adequate to cover or exceed the costs of retaining subscribers.
MoviePass also faces strong competition from other established theater chains that have launched their own subscription-based services, including AMC. Business insiders believe this latest outage could mark the end of the popular MoviePass.
