Why MoviePass' co-founder bought back the brand

·8 min read

News broke yesterday that MoviePass co-founder Stacy Spikes purchased ownership of the beleaguered brand for an undisclosed sum. The transaction follows one of the more spectacular tech flameouts in recent memory. The service was plagued by ever-changing price tiers, blowback from the country’s biggest theater chain and major issues with its app.

Spikes tells TechCrunch that he was fired from the service he helped launch in 2018, after voicing concern over the price of its $10/month subscription service. It was one of a number of factors under the leadership of Helios and Matheson that ultimately led to the company’s protracted undoing.

This April, Spikes announced the launch of PreShow Interactive, which we described as, “a new way [for gamers to] earn in-game currency in exchange for watching ads.” In a conversation with TechCrunch, Spikes says that PreShow may live on in a different form, as part of a revamped MoviePass set to launch at some point next year.

All of this still sounds very much up in the air. First up on the company’s checklist is getting access to the defunct service’s code and other assets. Spikes also plans to test the waters and determine whether there is enough demand to warrant MoviePass’s return. With an industry struggling to bring back audiences after a seemingly endless global pandemic, is it possible that this is the right moment for a more thoughtful return of movie ticket subscriptions?

TC: You had experience in the music industry that may have prepped you for the changes the movie industry has undergone over the past several years. It was a canary in the coal mine for a major part of the entertainment industry essentially imploding.

SS: With subscription, you saw Napster, Pandora, Spotify, Rhapsody -- all of this stuff on the horizon. You’re absolutely right, the music industry went first. Netflix was on the back end of a lot of those music subscription plays getting up and on their feet and making its digital transition out of DVDs and into digital. That was where digital really took hold first, and you saw it transforming the landscape.

When you had the idea for MoviePass, was there a sense that someone needed to disrupt theaters the way these services disrupted music?

Being one of the few executives of color, I started Urban World Film Festival, to try and help filmmakers of color have a place. Ava DuVernay came out of that festival, Malcolm Lee, Tim Story, Lee Daniels. All this talent came up out of Urban World. Our initial thought was, their films were having a tough time getting into mainstream theaters and getting traction.

What I was going to do is create a circuit that they would play 10 markets, we had a subscriber group, we would four-wall the theaters, and it would make the circuit. We were trying to figure out what technology we would use. Who's a member? How do you get to the theater? How do you just walk in? As we were building that someone said, “well, why don't you just use it to help all independent movies?” And then it kept bubbling up from there.

How different was your view of what MoviePass would be from the model that Helios and Matheson ultimately put in place?

At the end of the day, when I was CEO, we price tested $15 up to $90. We were A-B testing these things all day long. What you are trying to do is find the vector point between what's a profitable business price and what's too expensive for people and you cut out the ability to grow, and what's too cheap that you never, you're never going to make money. We knew going below a certain point, financially, you couldn’t float the boat. There was no way. I think the big difference was we already knew that. When they came in with the idea that they know better, they fired me. They said, “you don't agree with our view of the world.” Within four or five months of the deal, I was let go and kicked off the board.

What are the primary reasons MoviePass failed?

At the end of the day as a business, that price wasn't sustainable. That's a simple truth. It doesn’t get more complicated.

There was the technical aspect of it, too. Shutdowns and other things were extremely frustrating for users.

That wasn’t technical, because it was intentional. When I was CEO, the MoviePass app worked great. It functioned. Peopled loved the ease of service. I can go wherever I want, I can walk up to any theater. We had a larger footprint than Fandango and Movie Tickets combined. In any theater, probably except for drive-ins or cash-only, you could use MoviePass. So that ease of use and simplicity was perfect. We worked a lot of years to get that that right. Everything that transpired after that was intentional. Those weren't technical issues. Them deciding to pull AMC Theaters, or your app not working fully were not technical issues.

[Editor’s note: As noted in this piece, the FTC accused MoviePass of going to, “great lengths to deny consumers access to the service they paid for while also failing to secure their personal information.” MoviePass settled with the FTC last month.]

You mentioned AMC. Do you think you will try to court some of these larger theater chains?

My goal is to help Hollywood return, help movie-going return. I think there is a place in the universe for "only sign up to one exhibitor," and that's the only one you go to. That’s your subscription plan, you only go there. I think there's a place in the universe for people who want to go be able to go multiple places, and they may pay a little more for that. I think there's room in the ecosystem for that, and I and our team have always only been driven to help drive movie going. We think that subscription can be a really big benefit for the industry.

Do you feel there's enough goodwill left in the name MoviePass? Is it smart to return under that banner?

I guess the question is, is the consensus that the buying company was MoviePass, or the five years of the brand leading up to that was MoviePass? My experience, and I'm seeing, is people who signed up prior to 2017 know the difference. I think that there was a brand there. They knew what we were trying to do. We were the underdog. And we were trying to build something unique in our space.

Why does it make sense specifically to return to the brand versus starting from scratch?

When I look at Apple after Steve Jobs left, and I look at Dell computers after Michael Dell left. And you know, when founders get forced out of companies, there's a lot of cases where those founders came back. And they fought for that thing that they work years to give birth to. I started working on MoviePass in 2005. And so it's 16 years. And so I think there's an affinity to when you build something that you just believe in. And so do we do a name change? I don't know. I mean, we'll find out. I think there's going to be a listening tour. We're going to hear people, get feedback, but that's what I'm here to do. But I think there's something there that we want to try for.

Some of the records referred to third or fourth fiscal quarter 2022 as a relaunch time frame. Does that sound right?

There’s a lot of things that have to come together. When I was asked, I said we’re going to explore. I think if the industry is not going to support it, I think if consumers don't like the idea of it, I think if studios aren't interested in it, as well, you know, I would probably go “okay, I paid a little bit for this, we talked to a lot of people, everybody thinks movie subscription is a dumb idea. We just all need to keep paying more prices, and people need to keep going to the theaters less, let's just let this ship keep going where it's going.” If you get that overwhelming sense, then we'll just kind of keep moving. But if there is a sense that the stakeholders do want to lean into something that can help the industry overall, how do we get out of our ivory towers that are built, that are only designed for that circuit?

The PreShow site lists the service as launching summer 2021. We’re in autumn right now. What's the time frame there?

The thought was, there's a possibility of combining. I think PreShow needs a home, it needs a place to launch from. The thought was, is there a way to pull in some of what PreShow was trying to build. Maybe there's a way to reduce the cost inside of MoviePass, to offset some of that. I don't know is that a freemium model? I don't know is that at a supplementary model? I don't know if that's a select as you go, your own choice. I think those things would have to get tested and figured out.

So PreShow won’t exist in the form it was initially envisioned.

I think it still can, but I think the advertisers need an audience that's specific, that they can tap into. We thought we could just launch it and the audience would be there, but you have to either build that audience or buy that audience. MoviePass might give it that audience that so many brands want to be in front of.

It's possible that some of that could subsidize the cost of movie tickets.

It could be. Or it might be something that reduces a person's monthly charge that they pay, versus completely subsidizing.

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