The movie subscription service MoviePass suffered a service outage and its majority owner took out an expensive short-term loan to pay the vendors to restore full operation.
The failure that caused customer ticketing problems on Thursday and Friday adds to the difficulties that the company's share price fell short of last year.
Movie Pass majority owner
Helios & Matheson Analytics
received $ 5 million from a loan from a Hudson Bay Capital Management mutual fund to pay for trader and fulfillment processors who made the film -Abo Service, the (19659007) customers who tried to access the MoviePass app on Friday saw a message that there were "technical issues with our card-based check-in process" involving tickets from a kiosk Help of a special debit card. The app noted that it is still possible to purchase e-tickets from theaters with which MoviePass has a deal that lowers costs, including several small chains.
A tweet from the MoviePass Twitter account on Friday said the technical problem was "not with our card processing partners." MoviePass apologized in its tweets directly to customers about service issues.
MoviePass said the service is back online until Friday afternoon "with stability at 100%". Along with the restoration of the service, MoviePass has introduced new terms that limit the ability of subscribers to watch certain popular movies. The app no longer allowed subscribers to watch the newly released "Mission: Impossible Fallout," except at the theaters with which the company has made a special deal.
A spokeswoman for Hudson Bay declined to comment.
Helios & Matheson shares fell 71% to $ 2 on Friday. The stock has dropped from its October high of $ 32.90 to 8 cents this week. Earlier this week, the company introduced a reverse stock split of 1 to 250.
MoviePass has been very popular with clients, but analysts and industry leaders have questioned the sustainability of their business model. With this service, subscribers can pay a monthly fee of currently around $ 10 per month to watch up to one movie per day. MoviePass introduced "price tiering" earlier this month and introduced a fee for customers to watch certain movies when demand is high.
Theater chains like
AMC Entertainment Holdings
The largest cinema chain in the US has also launched movie subscription programs for customers.
Helios & Matheson said in mid-June that the MoviePass has more than 3 million subscribers. It has also said that not only is MoviePass profitable for subscribers, but that its user data can help sell advertising and generate movie revenue that MoviePass can achieve through contracts with studios and cinemas. For the quarter ended March 31, MoviePass lost $ 98.3 million on revenue of $ 48.6 million, according to the submissions.
The short-term loan from Helios & Matheson contains unusual conditions that the lender prefers. New York-based Hudson Bay may require payment of half of the loan amount on August 1, with the remainder due on August 5. The MoviePass parent company also agreed to pay late fees of 15% of the annualized interest after a default and repay the debt at a repurchase price of 130% if certain payments are more than 48 hours overdue. Because of a discount on the loan Helios & Matheson received $ 5 million in cash of $ 6.2 million, they had borrowed.
-Ben Fritz contributed to this article.