Remember the subscription-based movie ticketing service MoviePass that just disappeared? Well, It’s back. Three years after the implosion of the company, its original co-founder, Stacy Spikes, has brought MoviePass back to life.
After selling the company in 2017 and being ousted from the board in 2018, Spikes watched from the sidelines as new owners quickly expanded the company, only to find the cost of all those movie tickets too high to sustain.
Spikes was waiting in the wings for an opportunity to take over Movie Pass. And he got it.
Here are 13 things to know about the rise and fall of Movie Pass and why Spikes is making a comeback.
Launched in 2011, MoviePass allowed subscribers to purchase up to a movie ticket a day for a low monthly fee via a mobile app. Users were able to check in to a movie theater and choose a movie and showtime. The cost of the ticket was then loaded to a prepaid debit card, which was used to purchase the ticket from the movie theater.
It seems Spikes always had ties to the world of entertainment. As a teenager in high school, he worked in a video store in Houston. The Hollywood bug bit and he headed to California with just $300 to his name, landing a job as a production manager at a production company at age 19, Time reported. By age 27, he was vice president of marketing at Miramax. In 1997, he founded the Urbanworld Film Festival, which featured the works of up-and-coming Black filmmakers such as Ava DuVernay and Ryan Coogler.
In 2006, Spikes came up with a system for moviegoers to subscribe to a service and request tickets via text message, Time reported. This would be a first for the U.S.; there were similar services in Europe. He came up against people who didn’t think the concept would be a success, and also the funding issue many Black entrepreneurs face. Black entrepreneurs received about 1% of venture-capital funding back in 2011, the year Spike finally launched MoviePass.
“When you want access to higher capital, there’s a Black tax on you,” Spikes told Time. “It was like I had to run faster, climb higher than these guys who had multiple failed businesses. If you don’t look like Mark Zuckerberg, you don’t fit the mold. I saw a lot of people getting funding for worse business ideas, but they dropped out of Stanford, so they got a shot.”
Spikes told Time he came up against investors not believing he was the founder of MoviePass. He said used to bring an analyst named Geoff Kozma with him to pitch meetings so that Kozma, a young white man, could crunch numbers in real-time.
“So Geoff and I walk into the meeting, and the guy walks over to Geoff, puts his hand out, and goes, ‘Stacy, it’s so nice to meet you,’ and Geoff goes, ‘That’s Stacy.’”
He continued, “But even after that, at that meeting and a lot of other meetings, Geoff would be sitting there, and the VC guys’ attention would start drifting toward him. They’d start asking him questions instead of me. And I was like, “Really?”
Spikes brought on serial founder and investor Hamet Watt as a co-founder in 2011. Together, they raised a combined $1 million from AOL and the venture-capital firm True Ventures. MoviePass launched that year. After five years of operating, the company still wasn’t profitable.
It had more than 3 million members at its peak in the late 2010s. It was charging users a month fee for the chance to see one movie per day at the theater of their choice. There were also 20,000 subscribers who paid $34.95 to $49.95 per month, for different tiers of services. But the company was still losing about $50,000 to $110,000 per month.
According to Spikes, MoviePass increased any one user’s moviegoing somewhere between 100 percent and 144 percent by incentivizing customers to take risks on movies they wouldn’t otherwise see.
In 2017, the data-analytics firm Helios and Matheson bought 51 percent of the company for $25 million. To increase subscribers, Helios and Matheson changed the pricing structure, making it much lower at $9.95 for a limited promotion. In the press, Helios and Matheson, said they hoped MoviePass would “work like a gym membership: plenty of people pay the monthly fee and never go, so the gym turns a profit. Here’s the problem: people don’t like running on a treadmill; they do like going to the movies,” Time reported. Spikes was not a fan of the new pricing structure and the direction the majority shareholders were taking the company. In December 2017, Spikes was removed from the board. In January 2018, he was informed he was no longer needed at the company. And then it all collapsed.
After the prince structure change, Spikes calculated the company was losing $30 per customer per month.
“The math didn’t work,” says Spikes.
In 2018, Helios and Matheson reported an estimated net loss of $329.2 million. In 2020, Helios and Matheson filed for Chapter 7 bankruptcy. MoviePass shuttered in September 2019.
In 2021, Spikes called the bankruptcy trustee, who told him the minimum bid was $250,000. Spikes negotiated him down to $140,000.
MoviePass will no longer offer unlimited movies, instead prices will vary depending on the user’s home market, allowing users to select from three pricing tiers: $10, $20, or $30 per month, Forbes reported. Each user subscription option will issue the user a number of credits to use each month to see movies.
According to MoviePass, it has partnerships with 25 percent of theaters in the U.S. There are 11,874 movie theaters in United States.
Many observers might be questioning Spikes timing in bringing back MoviePass. In addition to stiff competition from home entertainment streaming companies, theaters have to try and lure people back in following the slowdown caused by the covid-29 pandemic. But some experts are optimistic.
“We’re at the point where the industry is willing to try things,” Daniel Loría, editorial director at Boxoffice Pro, told Time. “This is probably the perfect time for MoviePass to come back if it was ever going to come back at all.”
Stacy Spikes, co-founder of MoviePass, outside the Film Forum theater, New York, March 26, 2019. (AP Photo/Richard Drew)