NEW YORK (CelebrityAccess) — In a sign of just how precarious the financial position of MoviePass has become, the service abruptly shut down on Thursday night until the company was able to arrange a short-term loan.
In a filing with the Securities & Exchange Commission on Friday, MoviePass’s parent company Helios and Matheson that the company had been forced to borrow $6.2 million from Hudson Bay “to pay the Company’s merchant and fulfillment processors.”
The company restored service on Friday, with MoviePass CEO Mitch Lowe issuing a statement about the incident: “First, we sincerely apologize for the inconvenience caused from the temporary outage in the app over the past day. We have handled the issues on the back-end, and our app is now up-and-running with stability at 100%. We thank you for your patience and your ongoing support.”
Moviepass is a subscription-based movie ticketing service that gives subscribers a movie ticket a day in exchange for a monthly subscription fee of $9.95 a month. Subscribers to MoviePass are provided with a branded prepaid debit card.
Using the MoviePass mobile app, users check-in at a supported cinema, and select a film and showtime occurring within the next 30 minutes; the card is automatically loaded with the amount of money needed to purchase a single ticket from the cinema for that film.
However, since the service launched, it has faced resistance from cinema, with major chains such as AMC seeking ways to opt out of the program. As well, AMC
As well, the company’s business model has been called into question. Moviepass does not receive a discount for movie tickets from cinemas and instead relies on more people paying the monthly fee for the service than actually using their moviepass.
In May, the company hinted that its days may be numbered when it revealed that it had a cash deficit of $40 million and expected to be short at least $45 million in June. Earlier this month, Moviepass also added dynamic pricing, meaning that customers hoping to see popular movies may face extra charges.