MoviePass Faces Temporary Outage After Running Out of Cash

Jul. 28, 2018

The reason for this temporary outage was thatMoviePass ran out of money and defaulted on paymentsto merchants. In order to resume its services, ithad to borrow $5 millionfrom hedge fund Hudson Bay.

Last year, the company was acquired by Helios and Matheson Analytics, which reduced the price of MoviePass’ services to $10 per month. This allowed the company to rake up several million new customers but has also pushed it to the edge of bankruptcy.

MoviePass informed about the service outage using Twitter. While it did not disclose the real problem to its customers,Business Insidercaught the nerve of the issue through a filing in the Securities and Exchange Commision.

However, that hasn’t saved the grace for MoviePass which is now suffering from a cash crunch and might soon face another outage if it continues to operate in the same way. This is partially also because the company is trying to ace at more than a single thing at once – competing with traditional theatres andOTT video services, and monetizing user data – and its efforts might end in a sudden collapse which might not be very easy to recover from.