MoviePass users were unhappy this past weekend, as troubles plagued the movie subscription service and left many eager movie-goers high and dry.
After a service outage on Thursday night, which MoviePass parent company Helios and Matheson Analytics Inc. HMNY, -60.00% said in a Friday securities filing was due to an inability to make “required payments to its merchant and fulfillment processors,” users complained of further problems throughout Saturday and Sunday.
MoviePass apologized to its customers on Twitter on Thursday and on Friday said it had resolved any service issues. But on the weekend, users experienced problems again, flooding the company’s Twitter account with complaints about their e-ticketing and check-in troubles.
Still wasn’t able to check in this morning. 🙁
— Beatrice (@bchow210) July 29, 2018
— Healthy Goals Now (@berniealic) July 29, 2018
I’m here with my daughter and can’t check in. If I pay for a ticket are you going to reimburse me?
— Rick Bray (@AceMcKilty) July 29, 2018
Users were especially incensed about being unable to watch “Mission: Impossible — Fallout,” which was released this past weekend. According to MoviePass, “Fallout” was only available at partnered e-ticketing theaters, which are few and far between.
As we continue to evolve the service, certain movies may not always be available in every theater on our platform right away. Mission Impossible will remain available in our e-ticketing theaters.
— MoviePass (@MoviePass) July 30, 2018
For many, the weekend service issues coupled with surcharges for several popular movies were the last straw. Users threatened to cancel their subscriptions and go elsewhere, some specifically citing AMC’s AMC, -2.23% Stubs A-List, a pricier option that allows subscribers to watch up to three movies a week for $19.95, but does not charge peak pricing surcharges.
— Austin Reynolds (@ReynoldsAustin) July 29, 2018
Time to switch to amc alist
— Adam Zawacki (@zawexcell) July 30, 2018
A Helios and Matheson spokesperson declined to comment on the issues experienced by subscribers over the weekend.
MoviePass launched “peak pricing” earlier this month, where users would be charged an additional fee for popular movies and show times. “You can avoid the surcharge by selecting a different showtime or movie,” MoviePass wrote in its initial announcement to users.
Peak pricing is MoviePass’s attempt to break even, said research analyst Michael Pachter of Wedbush Securities, but users are not happy with it.
Like what is even the point pic.twitter.com/wbxlTpMVau
— Veronica Ulicny (@veronicaulicny) July 29, 2018
@MoviePass for what one users opinion is worth, peak/surge pricing is ridiculous. Not what I was promised when I signed up.
— lara coleman (@larational) July 30, 2018
Shareholders are unhappy, too. Helios and Matheson’s stock has fallen 100% in the past year, and it implemented a 1-for-250 reverse stock split last Tuesday at market close, which adjusted the company’s share price to $21.25 from 8 cents. Analysts saw the move as a way to keep the company from being delisted, as a company is in danger of being delisted if it trades below $1 for 30 consecutive days, according to Nasdaq rules. But by Monday, the stock was grazing just above that, at $1.06 a share.
Helios and Matheson has been struggling this past year to stay afloat, and the company is turning to increasingly expensive borrowing in order to secure cash. On Friday, the MoviePass parent took out a pricey $6.2 million loan from Hudson Bay Capital Management, under which it paid $1.2 million to receive $5 million in cash. Helios and Matheson also agreed to pay late fees of 15% annualized interest after any default and to pay back the debt at a steep 130% redemption price. The terms of the loan are stringent; Hudson Bay can demand payment of half of the loan amount on August 1, and the rest on August 5.
But investors are not convinced the loan will make a difference in the company’s fortunes. “How long can that last?” said Pachter, referring to the borrowed cash. In an April filing, the company said its average cash deficient was $21.7 million per month from last September to April. In a June filing, the company said it had just $18.5 million in available cash at the end of May, and that its monthly cash deficit was growing.