In what is probably the least surprising news of the week, semi-popular service MoviePass is in financial trouble. The news broke on Thursday when the service unexpectedly shut down entirely, preventing people from purchasing tickets for movies through the platform. After discovering the issue, an SEC filing from the same day was uncovered, showing that the company had completely run out of cash. Because of the lack of money, the company was unable to purchase tickets from theaters, making the service entirely useless.
While it was a surprise at the moment, especially for those who had arrived at a movie theater expecting to use a service that they had paid for, it is not a surprise for anyone who has been following the company's story. The service allows people to pay a set monthly fee and get a movie per day in the theater. In general, the service costs about the same as a single movie in most theaters nationwide, meaning that you get around 30 free movies per month.
In retail, there is an expression, "If you sell dollar bills for 90 cents you'll have a lot of customers, but eventually, the dollar bills will run out." The expression was commonly applied to budget cellular service MetroPCS, which eventually ran out of dollar bills and sold the company to T-Mobile. In this case, MoviePass is already owned by a parent company: Helios + Matheson. That means that there is no last-ditch effort move left. Their only choice was to borrow more money, a total of $5 million cash and $1.2 million in original issue discount from Hudson Bay Capital Management.
This, however, is only a temporary stopgap measure. The company needs to figure out how to stop losing money and actually turn a profit. If they don't, they likely will not make it out of the summer alive. If that happens, most users may only lose a couple of dollars. The real victims would be those who believed in the concept enough to buy a full year up-front, as there is very little chance that it could be honored once the cash dries up. If you want out now, you can go to your Account settings in the app, find Plan & Billing and look for the little Cancel button.