MoviePass has been down for many users since Thursday. In a tweet, the company acknowledged the problem as a “technical issue.”
However, a Securities and Exchange Commission report filed on Friday shows that the issue may indeed run much deeper than something the IT department can fix. The filing reveals that MoviePass had to secure an emergency $6.2 million dollar loan to the company’s merchant and fulfillment processors (or partners).
The filing reveals that if the company cannot pay these merchant and fulfillment processors, they “may cease processing payments for MoviePass, which would cause a MoviePass service interruption.” The document confirms that “such a service interruption occurred on July 26, 2018.”
Keep in mind that this all is happening during the opening weekend of one of the summer’s most anticipated movies, Tom Cruise’s Mission: Impossible – Fallout.
The subscription movie ticket service has been experiencing financial issues for quite some time now. The business model appears to make little sense: The company buys tickets in bulk at full price and offers them for free to users in exchange for a flat monthly fee. Despite reaching an impressive 2 million subscribers earlier this year, reports of “negative cash flows” have been persistent. They’ve been removing (and then, suddenly, reinstating) signature features and introducing elements like surge pricing, all the while its parent company is attempting to raise more than $1 billion just to keep the service running.