MoviePass Outage Traced to Latest Cash Crunch

News that the subscription service needed more money decimated shares of parent company Helios and Matheson Analytics.

MoviePass users weren't able to use their subscription cards to purchase tickets Thursday and the parent company hinted in a filing that it's because merchants demanded money owed to them that the service could not pay.

Parent company Helios and Matheson Analytics said in its filing that "the merchant and fulfillment processors may cease processing payments for MoviePass, Inc. (“MoviePass”), which would cause a MoviePass service interruption." Shortly thereafter, a service interruption occurred.

Helios and Matheson, which ultimately wants to raise $1.2 billion to keep MoviePass afloat, announced a demand note of $6.2 million with $5 million in borrowed cash to be used to pay the processors.

The company, though, appears to be in dire straits. To keep its Nasdaq listing, it reverse-split its stock at the rate of one share for every 250 owned, briefly driving the price to $22.50 this week, but two days later, the shares were trading for just $2.56. If they fall below a buck again, Helios and Matheson will again risk delisting.

Meanwhile, MoviePass has introduced surge pricing to stem its losses, meaning that for the more popular movies at the more crowded showtimes, subscribers must pay an additional cost. Customers are complaining that sometimes the surcharge is so high it renders the service practically useless.

Also on Friday, users were complaining they couldn't use MoviePass to see Mission: Impossible — Fallout at all, either with or without a surcharge, at some major chains like AMC, which recently launched a subscription service that competes with MoviePass.

In a message to subscribers, MoviePass CEO Mitch Lowe wrote the following note published on the company's website on Friday:

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.

This month, we introduced demand-based pricing to MoviePass. The first of those features, Peak Pricing, has rolled out nationally. Bring-a-Guest and Premium Features (ie., upgrades IMAX 2D & 3D, RealD, and more) will begin rolling out soon. We will continue to refine Peak Pricing and adjust the algorithm to take into account a lot of the feedback we’ve received in the past couple of weeks, and we thank you for your patience as we continue to evolve MoviePass into the best low-cost option in entertainment. Together, we are reviving moviegoing – and everything that goes along with it.

As we’ve shared with you before, rather than raise the price of the subscription, we’ve decided to enable all of you to have the choice between high value (ability to see up to one movie a day) at a low cost ($9.95) versus the flexibility to see whichever movie you want, wherever and whenever you want to see it. In other words, you can choose to see a movie in high demand on Opening Weekend for a small additional surcharge, or wait to see a popular movie a bit later in its theatrical run at no additional cost.

As we continue to evolve the service, certain movies may not always be available in every theater on our platform. This is no different than other in-home streaming options that often don’t carry the latest shows or movies that may be available on other services. For example, you can’t ever find Game of Thrones on Netflix, nor is Season 4 of Schitt’s Creek available there yet. Here at MoviePass, we have strived to make every movie in theaters available to you as part of your subscription, and Peak Pricing has allowed – and will continue to allow – us to do so.

Some of the feedback we’ve received from you about Peak Pricing is that more of you are using e-ticketing in our app. When you go to a MoviePass e-ticketing theater, you are helping theaters who are actively working with us to ensure that MoviePass remains the best low-cost option. Peak Pricing has also begun driving traffic to weekdays and off-peak hours, which is vital to the entertainment ecosystem and to the health of theaters across the country. Similarly, we are hearing loud and clear from studio and independent distributor partners who support the MoviePass model that our app placements are driving more of you to enjoy their films over others in the marketplace.

We share all of this with you as we believe in explaining to you, our customer, why we are doing what we are doing. We ask for your understanding and vocal support during this time, as we continue to fundamentally change an industry that hasn’t evolved much in years. In fact, ticket prices have risen so much that it’s now simply too expensive for many of us to go to the movies.

MoviePass’ mission is to make moviegoing accessible to everyone and to enhance the power of discovery – but we need your support as we refine our model for the long-haul.

Can’t find the movie you want to see on the app? Go to Twitter and let the studio behind it know. Want more e-ticketing theater options in your area, so that the movies you want to see peak less? Let your theater know you want them to partner with MoviePass.

We’re MoviePass and because of you, we are more than three million strong.

Mitch Lowe