The movie subscription service – MoviePass was predicted to be unsustainable for a while now. But recently on Thursday, it finally came to a halt. A few days earlier, the subscribers were unable to check in to films since MoviePass appeared unavailable. The company reacted to the situation in such a vague manner that confusion arose everywhere.
The official Twitter account for the company instructed the users to remain patient as they tried to figure the problem out. It further recommended that since booking was unavailable, subscribers should wait for updates before actually heading towards theaters.
The deal with MoviePass is that it allows subscribers to see new movies in cinemas when they come out. But instead of purchasing a ticket each time, people avail this service at a monthly flat fee. Apparently, reports and critics have long argued that the offer is too good to be profitable. That’s exactly what happened recently when MoviePass stopped abruptly.
According to a report filed by the parent company behind MoviePass, it ran out of money. A
nd to the extent that it could not pay its partners to keep the app running. According to the report filed, it was declared that,
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., which would cause a MoviePass service interruption. Such a service interruption occurred on July 26, 2018.
In order to rectify the damage before the customers got further agitated, MoviePass had to secure an emergency loan. It took $6.3 million in order to restore its services which included a $5 million cash payout. But it does not look like this was a permanent solution. The company only has time till 5th August to repay the entire loan value. MoviePass has been facing so much losses that it seems impossible for them to clear this loan on time. Recently, the company had to do a stock-split to prevent being taken off the lists at Nasdaq. Considering the falling shares in the market, it has been a genuine risk.
The service is still nonfunctional for some users and to worsen the situation, there are concerns of heavy pricing of tickets even in empty theaters.
Consumers stay loyal to the company considering that MoviePass allows them to watch new movies in cinemas at a rate lesser than the price of one real ticket. But lately, the error has caused a lot of frustration in subscribers.
It looks like it has been a bad month for service providers. Even Netflix has experienced falling stocks and huge number of users unsubscribing. Let’s just wait and see for how long can MoviePass survive all the mess.
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