MoviePass is so broke it had to borrow $5 million just to keep the lights on
On Thursday evening, MoviePass tweeted that it was “investigating an issue that is preventing users from checking-in to movies…” As the night went on, the problem only seemed to get worse, with tweet after tweet citing unknown “technical issues.” “We've determined this issue is not with our card processor partners and will be continuing to work on a fix throughout this evening and night,” wrote MoviePass around 10PM ET. By the morning, little had been resolved, but the root cause turned out to be that MoviePass forgot to pay its bills.
MoviePass’s parent company, Helios and Matheson Analytics, had to bail it out, issuing the company an emergency loan to the tune of $5 million “to pay the Company's merchant and fulfillment processors,” according to an FEC filing first pointed out by Graham Rapier on Twitter.
It’s not exactly a big surprise that MoviePass is too broke to keep the lights on. Ever since it dropped its monthly all-you-can-see-movie subscription fee from a reasonable $45 to $9.95, the company has been hemorrhaging cash. That’s partially by design, of course, as making a profit off of customers’ monthly payments was never really the goal. MoviePass is in the data business, as evidenced by the fact that its owner is an analytics and IT service management organization. The company was originally supposed to make money by the selling the “enormous amount of information” it collects on its customers, until, of course, MoviePass CEO Mitch Lowe delivered a keynote address called “Data is the New Oil: How Will MoviePass Monetize It?” which sent users running for the hills and MoviePass top brass scrambling.
“We watch how you drive from home to the movies,” said Lowe. “We watch where you go afterwards.”
Though MoviePass quickly backtracked and claimed to disable the app’s location tracking features, the whole affair was far from its sketchiest endeavor. In May, MoviePass announced a partnership with student loan refinancing service Laurel Road...because what goes together like crushing debt and a good movie?
So, for those of you who got in on MoviePass early, maybe even with the knowledge that there was no way this all wouldn’t crash and burn eventually, congrats! You made the right call. (Unless of course Helios and Matheson decide to sell all of your data to the highest bidder when the company officially implodes, but who’s really keeping track of that…)