Is MoviePass near failing?
MoviePass, the subscription-based movie ticket service, was forced last week to borrow $5 million after it reported it could not pay its bills, raising questions about the embattled company’s viability.
Helios and Matheson Analytics, its parent company, said in a regulatory filing Friday that MoviePass had experienced a “service interruption” the day before because it could not make “required payments to its merchant and fulfillment processors.”
In a message to subscribers Friday, CEO Mitch Lowe apologized for the outage, during which some of its 3 million subscribers could not check in to see movies, and said the service was “up-and-running with stability at 100 percent.”
It is far from the first time MoviePass has dealt with technical glitches and unexpected shifts in service. But after the outage, observers Sunday sharpened their criticism of the company, which in 2011 set out to transform the industry amid rising theater ticket prices and increased competition from movie streaming services.
Michael Pachter, a research analyst at Wedbush Securities, is one of the critics who has said the $10 MoviePass charges its subscribers per month, for which they can see one movie at a participating theater per day, does not come close to covering its costs.
A movie ticket costs roughly $10, so if a subscriber saw more than one movie per month, the company would likely lose money, he said.
In April, the company disclosed to regulators that it was losing roughly $20 million per month since September, and that auditors, citing “significant net losses” and problems with capital, doubted its ability to continue.
Movie theater companies are introducing their own subscription plans. In June, AMC began offering a plan called AMC Stubs A-list that will allow subscribers to see three movies a week for a monthly fee of $19.95.
Pachter predicted last week’s outage will not be the last to affect MoviePass.
“The $5 million was that last breath of oxygen,” Pachter said Sunday. “And now we’re deciding if we’re going to cut off their oxygen.”