Monthly movie subscription provider MoviePass looks to be nearing death, after a complete loss of money caused its service to stop working. Last summer, MoviePass shocked consumers by drastically cutting the monthly cost of its service to $9.95. Considering that the cost of even a single matinee movie ticket in most U.S. areas is around $10 – and prices in big cities can get a lot higher than that – millions of movie lovers naturally jumped at the opportunity to hop aboard the MoviePass train.
At this point, MoviePass boasts over 3 million subscribers. The problem is that the service hemorrhages money, and is not even close to profitable. Even with the current restrictions of being allowed to see only one 2D screening per calendar day and not being able to see the same movie twice, MoviePass is constantly losing money, due to the fact that they still pay theaters the full ticket cost via users’ MoviePass-branded MasterCard. The idea seemed to be to try and sell subscribers’ data to make money – or perhaps use their high subscriber count to exert leverage over theaters in order to make more favorable ticket pricing arrangements – but that strategy doesn’t seem to have worked much at all so far.
Last night, MoviePass’ customers were surprised to find out that they couldn’t use the service. At all. Anywhere. Well, with the exception of the few small theater chains that partner with MoviePass to offer e-ticketing, and most subscribers don’t live near one of those. Many initially assumed it was an issue with MasterCard, as had taken place a few weeks back, and was sorted out in a matter of hours. This time though, things appear to be much more dire. As revealed by an SEC filing this morning (reported on by Variety), MoviePass literally ran out of money last night, and thus could not pay for tickets via MoviePass cards.
The timing of the outage made things even worse, as last night saw the theatrical debut of highly anticipated blockbuster sequel Mission: Impossible – Fallout. It should be noted that despite MoviePass claiming in their SEC filing that the outage was “temporary” and that the company had borrowed $5 million today to get things back up and running, the service STILL isn’t working. As of this writing, MoviePass users have been unable to use their cards to see a movie for nearly 24 hours, and the company last offered public comment to its quite angry subscribers about 16 hours ago. Thus, lots of people are jumping to the conclusion that MoviePass is either dead, or will be within a matter of days.
While the company did just raise $5 million, it’s important to note that most of that money is set to go to the payment processors that MoviePass had fallen behind on paying, thus leading to last night’s outage. Plus, the $5 million loan came with extremely unfavorable terms, necessitating that it be paid back in full to MoviePass’ new creditor by August 1. With those facts in mind, it does indeed seem like MoviePass is soon to meet the reaper, unless a large cash infusion materializes by the middle of next week. The only real competing service at present is AMC’s A-List, which allows subscribers to see 3 movies per week, for a flat $20 per month fee. Still, for those without an AMC theater near them – and a desire to pay twice what MoviePass cost them per month – it may not be a realistic alternative. Here’s hoping someone else comes along soon with a plan more akin to MoviePass, but with a more viable long-term strategy for success.