MoviePass Suffers Service Disruption Due To Lack Of Money

MoviePass seemingly ran out of money yesterday which in effect led to a temporary disruption to the service where its customers were unable to purchase tickets to see a movie. This is based on a U.S. Securities and Exchange Commission filing by Helios and Matheson Analytics Inc. -- the company that owns MoviePass among other subsidiaries -- which looked to secure $5 million in funding to end the service disruption that was in effect. The ‘Demand Note’ specifically highlights the borrowed money was for MoviePass and “to pay the company’s merchant and fulfillment processors.” With the filing going on to confirm that failure to pay the merchant and fulfillment processors would lead to a service outage, drawing on one that did occur on July 26 as further evidence. At the same time the company’s Twitter account was sending out messages acknowledging the downed service although the actual details of what has since been made clear in the SEC filing were not disclosed.

This follows on from an increasing number of user reports that have come through in the past few days suggesting MoviePass was abusing its recently launched “Peak Pricing” model. A form of surge pricing, Peak Pricing was announced as a means to try and raise additional revenue by charging customers an additional cost per ticket for movies deemed popular. However, the user reports over the last few days were highlighting how the service was in some cases charging the higher rate regardless of whether a showtime was busy, or a movie was new - the two main caveats understood to be the determining factors on whether surge pricing would be in effect. With some users noting the service was charging the higher rate on all movies being shown at certain locations.

At the moment it remains unclear how long the borrowed $5 million will translate to an operational service, or how MoviePass will stem what seems to be an increasingly precarious financial situation. As even the $5 million borrowed will result in additional debt due to $6.2 now required to be paid back, as per the agreement terms in the SEC filing. Which is all without taking into consideration the increased competition MoviePass is now facing through the emergence of new services that offer a comparable product.

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