MoviePass was a movie ticket subscription service founded in 2011 by Stacy Spikes and Hamet Watt.39 The company shut down its service on September 14, 2019, after failing to recapitalize.1235 Former executives Theodore Farnsworth and J. Mitchell Lowe pleaded guilty to securities fraud charges related to misleading investors about MoviePass's business.1011131418
Timeline
| Date | Event | Source |
|---|---|---|
| 2011 | MoviePass was founded by Stacy Spikes and Hamet Watt. | 39 |
| 2011-06 | MoviePass first tested its services in San Francisco. | 3 |
| 2014-12 | AMC announced a collaboration with MoviePass. | 3 |
| 2016 | Mitch Lowe was appointed as the new CEO of MoviePass. | 39 |
| 2017-08 | Helios and Matheson Analytics bought a majority stake in MoviePass and slashed subscription prices to $9.95 per month. | 3917 |
| 2017-12 | MoviePass reached one million subscribers. | 3 |
| 2018-02 | MoviePass reached two million subscribers. | 3 |
| 2018-06 | MoviePass reached three million subscribers. | 3 |
| 2018-06 | MoviePass's expenses exceeded its revenue by $40 million. | 3 |
| 2019-07 | MoviePass suspended service for all subscribers. | 3 |
| 2019-09-14 | MoviePass shut down its service. | 1235 |
| 2020-01-28 | MoviePass and Helios and Matheson Analytics filed for Chapter 7 bankruptcy. | 16 |
| 2021-11 | A bankruptcy judge approved the sale of MoviePass back to co-founder Stacy Spikes. | 3 |
| 2022-09-26 | The SEC filed a complaint against Theodore Farnsworth and two other former MoviePass executives. | 10 |
| 2022-11-02 | A grand jury indicted Theodore Farnsworth on securities fraud and wire fraud charges. | 10 |
| 2024-09-16 | J. Mitchell Lowe pleaded guilty to one count of conspiracy to commit securities fraud. | 11 |
| 2025-01-07 | Theodore Farnsworth pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud. | 1011131418 |
Money raised
MoviePass's monthly subscriptions initially ranged between $29 to $34 depending on the location.3 In August 2017, Helios and Matheson Analytics slashed subscription prices to $9.95 per month for unlimited movies.3917 HMNY raised approximately $97 million through the issuance of new notes to acquire MoviePass in November 2017.10 HMNY reported an operating loss of $126.6 million for the quarter ending June 30, 2018.17 HMNY's average monthly cash deficit was approximately $21.7 million from September 30, 2017 to April 30, 2018.17 After the bankruptcy, MoviePass's co-founder bought the brand back for $140,000.17
Investors named in the sources: Helios and Matheson Analytics3910, AOL9, William Morris Endeavor9.
What happened
MoviePass was a subscription service that allowed users to regularly visit the cinema at a fixed monthly rate.3 It was founded by Stacy Spikes and Hamet Watt in 2011.39 Spikes and Watt wanted to use the declining movie theater attendance to their advantage.3 MoviePass first tested its services in San Francisco in June 2011.3 Subscribers had the option of watching one movie per day while making it billable on a monthly basis.3
MoviePass' monthly subscriptions ranged between $29 to $34 depending on the location.3 Initially, the services required the users to print vouchers according to the number of movie tickets.3 The company decided to replace the voucher system with an app and a prepaid card.3 MoviePass' revenue model was based on something called 'Breakage'.3 The Breakage model is a revenue model that is dependent on consumers not using the product or the service they've purchased.3
Many major theater chains opted out of the collaboration and disassociated with the service.3 A year in, MoviePass amassed around 30,000 subscribers.3 Theaters paid MoviePass for consumer data.3 In return, MoviePass paid full price for the tickets, which they sold at a subsidized rate to its subscribers.3 In December 2014, AMC announced a collaboration with MoviePass.3
In 2016, there was a change in management.3 Former Netflix executive Mitch Lowe was appointed as the new CEO.39 Lowe began his tenure by experimenting with different subscription models.3 The new subscription plans were unveiled in July 2016.3 The strategy worked and the subscribers' list skyrocketed up to 20,000 with almost $10 million in yearly revenue.3
AMC decided to break off its partnership with MoviePass.3 In August 2017, MoviePass became a subsidiary of analytics firm Helios and Matheson, when the latter bought a majority stake in the former.39 Helios and Matheson decided to switch up the strategy and slash subscription prices.3 When the new, reduced prices were announced, the company's website went down due to the increase in traffic.3 By the end of 2017, the service had a million subscribers.3
In February 2018, the service hit 2 million subscribers.3 Four months later, the service had three million paying subscribers.3 By mid-June 2018, MoviePass' expenses exceeded its revenue by $40 million USD.3 The company kept haemorrhaging cash and its stock kept crashing.3 They were losing money on every new consumer.3
The company started becoming restless and they slashed their prices further.3 With a surge in its users, MoviePass' technology couldn't keep up.3 MasterCard could only ship a limited number of cards a week.3 This caused a backlog in the service.3 Sometimes people received their card months after they made a payment to the service.3
The MoviePass app also faced regular crashes and collapsed.3 MoviePass failed to create reservations in their app.3 A few screenings of the show used to disappear from the app unannounced.3 Some shows had no seats available in the app, when infact, the theater was empty.3 Many users complained that their cards were charged to a new subscription plan despite cancelling the service.3
The company was left with no other option than to limit the subscribers to choosing between just two films a day.3 The company made multiple plans and efforts in retaining users.3 They did not return to their flagship unlimited plan.3 They introduced new plans with restrictions like limiting users to a certain number of movies per month.3 A report was filed stating that if the company fails to pay back its merchant loans there would be a service interruption due to unprocessed payments.3
During this period, users struggled to opt out and complaints started piling up.3 In July 2019, the company had to suspend the service for all of its subscribers.3 The company had to write a parting letter to its subscribers on September 14, 2019.3 The letter stated that their 'efforts to recapitalize MoviePass have not been successful to date.'3 MoviePass' assets and related businesses were offered to a co-aquisition unit.3
On January 28, 2020, MoviePass, Inc. and Helios and Matheson Analytics, Inc. filed voluntary petitions for relief under Chapter 7 of the Bankruptcy Code.16 In November 2021, a bankruptcy judge approved the sale of the company back to one of the original owners: Stacy Spikes.3 Stacy Spikes made MoviePass' original website live and is currently exploring a relaunch of the company.3 In 2022, former cofounder Stacy Spikes announced a relaunch, but the service no longer allows unlimited visits to a movie theater.13
Legal outcomes
- filedThe SEC filed a complaint against Theodore Farnsworth and two other former MoviePass executives on September 26, 2022, alleging they made misleading statements concerning key aspects of the company's business.10
- chargedA grand jury returned an indictment against Theodore Farnsworth on November 2, 2022, charging him with one count of securities fraud and three counts of wire fraud.10
- pleadedOn September 16, 2024, J. Mitchell Lowe pleaded guilty to one count of conspiracy to commit securities fraud.11
- pleadedOn January 7, 2025, Theodore Farnsworth pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud.1011131418
Where the founders are now
Stacy Spikes bought back MoviePass in bankruptcy in November 2021 and relaunched the service in 2022.313
Lessons, as others put them
"MoviePass’ all-you-can-watch movie theater membership always seemed too good to be true."TechCrunch2
Sources
- MoviePass Shuts Down, NPR, 2019-09-16
- MoviePass will shut down on September 14th | TechCrunch, TechCrunch, 2019-09-13
- What happened to MoviePass? Does MoviePass still work?, buildd
- Shocker: MoviePass was shady, thehustle.co, Jun 17, 20
- MoviePass: The $9.95 Miracle That Burned Through $200 ..., thebigcollapse.medium.com
- MyWallSt | Expert Investment Research and Stock Picking Services, mywallst.com, May 27, 20
- Former MoviePass Executive Consents and Pleads Guilty in Parallel SEC and DOJ Cases | Insights | Holland & Knight, hklaw.com, Mar 6, 202
- United States v. Theodore Farnsworth and J. Michell Lowe, justice.gov, 2022-11-09
- Former CEO of MoviePass’ parent company faces up to 25 years in prison, WBAL, 2025-01-08
- , justice.gov, Jan 7, 202
- Agreement Containing Consent Order, ftc.gov
- Federal Court Says MoviePass Knew Its $9.95 Math Was a Lie and Used It to Pump a Stock | Stratrix, Stratrix, Jul 17, 20
- Former CEO of Moviepass' parent company pleads guilty to ..., reuters.com, Jan 7, 202
How this case file was put together
Every statement on this page carries a numbered note, and every note points to a court record, a regulatory filing or a named publication in the list of sources. Each statement was checked against the text of the sources it cites before it was published: a figure, a date or a name the cited source does not contain was cut rather than kept. Allegations are shown as allegations, with their status at the time of the source (filed, charged, convicted, pleaded, settled, dismissed or pending). Quoted lessons are the words of the person or publication named with them, copied from the cited source; nothing here is our own opinion of why the company failed.
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