MoviePass stopped working because it ran out of money

Subscription movie service MoviePass made a name for itself by practically handing out money. The popular service, owned by parent company Helios and Matheson, charges $9.95 a month to see up to one regular 2D movie in theaters a day—including in markets like New York, where a single ticket can easily top $10. MoviePass pays the theaters full price for each ticket.

How fast has the money gone? In May, MoviePass reported spending $40 million more in cash than it brought in. For June, it expected that gap to increase to $45 million. In July, the cash finally ran out.

“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, Inc. (“MoviePass”), which would cause a MoviePass service interruption,” Helios and Matheson reported in a securities filing on July 27. “Such a service interruption occurred on July 26, 2018.”

To translate that financial-legal jargon, MoviePass knew that if it ran out of the money needed to get its payments processed, the service could simply stop working. That’s what happened yesterday, when the company warned customers of “technical issues with our card-based check-in process.”

The “technical issues” were continuing as of publishing time, according to my own MoviePass app, which greeted me with a pop-up message on the matter when I opened it this afternoon and assured me that MoviePass was “diligently working to resolve the issue.”

If you think this sounds like bad news for MoviePass, Helios and Matheson agrees. “Such service interruptions could have a material adverse effect on MoviePass’ ability to retain its subscribers,” it warned in the July 27 filing. “This would have an adverse effect on the Company’s financial position and results of operations.”

On the other hand, for a rosier perspective on MoviePass’s business, look no further than “Is MoviePass doing alright?”, a question included under the “general information” tab in the “help” section of the MoviePass app. “MoviePass has all the resources necessary to continue our business operations for the foreseeable future,” reads the answer to the question. “And we hope you remain an enthusiastic member of the MoviePass community.”