MoviePass, MovieCrash: The Stranger-Than-Fiction Rise and Fall

MoviePass co-founders Stacy Spikes (front) and Hamet Watt (back) at AMC in San Francisco, Calif., on Wednesday, January 29, 2011 (Photo By Liz Hafalia/The San Francisco Chronicle via Getty Images/HBO).

MoviePass, MovieCrash tells the stranger-than-fiction rise and incredible fall of the company that changed the movies with its ticket model.

I often joked that Aaron Sorkin would write the MoviePass film and it would go straight to Netflix. Maybe there’s still a narrative feature in the works but it definitely won’t be launching on Quibi. Quibi was a disaster in and of itself but MoviePass is a different story. It doesn’t take an idiot to know that charging $9.95 a month to see a movie daily was going to be a bad idea. The business model just isn’t sustainable, not when they have to repay theaters for the full cost of the tickets. I mean, it’s great for consumers because movie tickets were already going up in price at this point. But from a business perspective, again, it’s just a bad business model. Ticket averages were $11 a month and they would have to pay in full. With a base of 1 million users, the writing was on the walls.

The day that MoviePass dropped its prices to $9.95 per month is the day that the company was doomed. Everyone wanted to sign up so they were bombarded with new users to where the volume crashed the website. They got 100,000 new subscribers in 48 days and then another 75,000 the following day. Interestingly, they only had 50,000 cards that they could send out. COO Stacy Spikes told CEO Mitch Lowe that it was not going to be sustainable to send out cards every week.

After opening with the founding of MoviePass and its rise in popularity, the documentary then begins to focus on COO Stacy Spikes and his background. He created the Urbanworld Festival in 1977 because of not being satisfied by the Sundance Film Festival’s response to showing more Black films. Cut to 2011, MoviePass was having a tough time finding people to invest. At its founding, it was going to be the largest consumer-going subscription business ever conceived. At their initial $50/month launch, it died a rather quick death because companies like AMC issued a cease-and-desist. They went right back to the drawing board and this when they came up with utilizing location services to verify a purchase. This does not even begin to get into the economics of it all. Chris Kelly’s investment would change things for the company.

Eventually, they would reach out to then-AMC CEO Gerry Lewis. They would work with AMC exclusively and increase moviegoing. Unfortunately, Lewis stepped down but incoming CEO Adam Aron was not on board. Of course, the larger picture is that when it comes to Hollywood, you’re either an insider or outsider. Eventually, Chris reached out to Mitch Lowe and they brought him on as a CEO. Lowe’s arrival would shift power on the board but it would also help with bring in new investments. Unfortunately, race plays a role in whether a business succeeds or fails.

After all the user growth, Spikes knew they would need to change their monthly fee. Lowe and Ted Farnsworth, not so much. They just cared about growing their subscription base. Would AMC discount them on tickets? Another key thing here is selling the data to studios and such…which I’m sure is something that does not sit well with consumers. And then it happened: the MoviePass app went down. After the incredible rise, the company would begin its downward slide. They kicked both co-founders Stacy Spikes and Hamet Watt off the board before ultimately firing Spikes from the company he started up.

Helios and Matheson invested enough capital to where it became the parent company. But again, the whole burning cash on every transaction did not help. They rented what may have been a $50 million mansion during a Sundance Film Festival. Despite their best efforts, this was likely a waste of money. And then they bring on influencers talk about the company on Instagram during Coachella. They already had a name-brand company so why did they need to spend money doing this?!? A film festival makes since but a music festival?!? WHY?!? They lost $30 million a month under Lowe and Farnsworth. Under Spikes, MoviePass did not lose nearly as much per month. A $150 million loss is just devastating. All the while, Farnsworth was trying to start MoviePass Air.

The release of Mission: Impossible – Fallout really showed the financial impact. Customers were upset and rightfully so. One even sent a box of crap to the MoviePass office. Lowe then took a step back while EVP Khalid Itum replaced him with running day-to-day operations. Finally, it became enough that MoviePass failed. The FTC was running an investigation. Documents showed that they knew the FTC would go after them and did it anyway. Meanwhile, Hudson Bay was investing money in HMNY despite the frequent loss of money.

Where do things stand now? Mitch Lowe and Ted Farnsworth would be arrested for securities fraud. They were both indicted on on count of securities fraud and three counts of wire fraud. Both pled not guilty and, as of airing, are awaiting trial. Khalid Itim was found guilty this year of two counts of wire fraud for embezzlement in connection with the Coachella party in 2018. By 2021, Stacy Spikes would regain ownership of the company after H&M filed bankruptcy. If he’s able to turn things around, people might start going back to the movies. Tickets are absurdly expensive and something needs to change.

MoviePass inspired theater chains to start subscription programs like AMC A-List but MoviePass, MovieCrash takes a deep dive into the company’s history before showing how corporate greed and a bad business model would eventually lead to failure.

FEATURING: Stacy Spikes, Hamet Watt, Mitch Lowe, Nathan McAlone, Sydney Weinshel, Emmanuel Freeman, Omar Miscara, Ezekiel Sansing, Chris Kelly, Jason Guerrasio, Mat Levy, Ava Duvernay, Guy Primus, Daymond John, Gerry Lopez, Gabrielle Glore, Mark Gomes, Ben Rabizadeh, James Simermeyer, Jose Rolden, Drew Taylor, Mark Havener, OG Bunny, John Fichthorn, Daniel Kaufman, Kean Gardner

MoviePass, MovieCrash premieres May 29 at 9:00 PM ET/PT on HBO and will be available to stream on Max. Grade: 4/5

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Danielle Solzman

Danielle Solzman is native of Louisville, KY, and holds a BA in Public Relations from Northern Kentucky University and a MA in Media Communications from Webster University. She roots for her beloved Kentucky Wildcats, St. Louis Cardinals, Indianapolis Colts, and Boston Celtics. Living less than a mile away from Wrigley Field in Chicago, she is an active reader (sports/entertainment/history/biographies/select fiction) and involved with the Chicago improv scene. She also sees many movies and reviews them. She has previously written for Redbird Rants, Wildcat Blue Nation, and Hidden Remote/Flicksided. From April 2016 through May 2017, her film reviews can be found on Creators.