LOS ANGELES (NYTimes) - MoviePass, the subscription-based movie ticket service, was forced last week to borrow US$5 million (S$6.8 million) after it reported it could not pay its bills, raising new questions about the embattled company's viability.
Helios and Matheson Analytics, its parent company, said in a regulatory filing that MoviePass had experienced a "service interruption" because it could not make "required payments to its merchant and fulfilment processors".
In a message to subscribers, the company's chief executive, Mr Mitch Lowe, apologised for the outage, during which some of its three million subscribers could not check in to see movies, and said the service was "up-and-running with stability at 100 per cent".
It is far from the first time MoviePass has dealt with technical glitches and unexpected shifts in service. But after the outage, observers sharpened their criticism of the company, which in 2011 set out to transform the industry amid rising theatre ticket prices and increased competition from movie streaming services.
Mr Michael Pachter, a research analyst at Wedbush Securities, has said the US$10 MoviePass charges its subscribers per month, for which they can see one movie at a participating theatre per day, does not come close to covering its costs.
A movie ticket costs roughly US$10, so if a subscriber saw more than one movie per month, the company would likely lose money, he added.
In April, the company disclosed that it was losing roughly US$20 million per month since September, and that auditors, citing "significant net losses" and problems with capital, doubted its ability to continue.
Movie theatre companies are introducing their own subscription plans.
In June, AMC began offering a plan called AMC Stubs A-list that will allow subscribers to see three movies a week for a monthly fee of US$19.95.