Stacy Spikes spent most of the last decade introducing the concept of a universal cinema subscription plan to the US market. The co-founder and CEO of MoviePass remained at the helm after it was acquired by Helios & Matheson, a data analytics firm, until a contentious debate over the plan’s unsustainable pricing plan got him fired from the company he co-founded. MoviePass spiraled into bankruptcy in the ensuing months, paving the way for other circuits to launch their own subscription service in the process. Spikes wasn’t done with the concept, however, and bought MoviePass back from bankruptcy during the pandemic with plans to relaunch the service. Boxoffice Pro spoke with Spikes as the service expanded the beta testing of its revamped subscription plan nationwide ahead of its formal launch this summer—covering everything exhibitors and moviegoers are looking to find out about the new MoviePass.
MoviePass is one of the most immediately recognizable brands when we talk about moviegoing today. For many right reasons, and for some wrong reasons. Stacy, you co-founded the company in the early 2010s. In the process, you introduced the concept of a cinema subscription to the United States, had pilot programs with major circuits…and then in 2017 were acquired by a tech company. MoviePass grows—and grows quickly—under the new ownership before you get fired from your own company as everything goes down in flames—leaving moviegoers and exhibitors burned in the process. In your own words, what exactly happened back there?
That’s a great lead-up to where we are now. Me and my co-founder, Hamet Watt, founded the company in 2011. We got funded in 2012 and after five years of grinding it out, making things happen, and building a brand, we got a buy offer from a private equity group called HMNY. The board approved the acquisition, and part of the acquisition was that they wanted to announce the merger by dropping the price of a MoviePass subscription to $10 a month for a period of time. When I was CEO, it was $30 a month. They wanted to add another 100,000 subscribers, thinking it would maybe take a couple of months.
So the $10 a month MoviePass offer was initially launched as a limited-time offer?
Yes, a limited-time offer meant to announce the acquisition. We went ahead with it, hit 100,000 new subscribers in less than 48 hours, and then I said, “Turn it off, turn it off now—quickly.” They saw how fast we were growing and asked, “Isn’t this exciting?” I said, “You cannot make money at $10 a month when you are allowing people to go to the movies every day. They said no, we got this—we know what we are doing.” Roll ahead a few months, and we are climbing up to around a quarter of a million new subscribers every month. We were coming up on December, having these really contentious board meetings. I insisted we had to turn off the offer. They thought about it over the holidays and sent me an email during the first week of January, thanking and informing me my services were no longer needed. I got fired and kicked off the board of my own company, and that launched the next chapter of the story: they got up to around 3 million subscribers, losing a ton of money on everything, and went out of business. A year and a half goes by, COVID hits, I am licking my wounds, I started another business—and long story short, I went back and bought MoviePass out of bankruptcy and now we’re relaunching the service.
You just released a book that’s available in bookstores now called “Black Founder: The Hidden Power of Being an Outsider.” Being an entrepreneur is a big part of your identity. You know how difficult it is to get funding, especially as an African American man working in an industry like cinema. How did that drive lead you back to MoviePass?
Thank you for mentioning the book, I wrote it because I really believe that I wanted to inspire young people who are maybe looking at me as an example in order to say, “you can do this too.” When I was in high school, I was reading Richard Branson’s “Virgin King” and David Geffen’s “The Rise and Rise of David Geffen,” and those entrepreneurs inspired me in my world. I also remember reading Sumner Redstone ‘s book, “A Passion to Win.” Another great one is Sam Spiegel’s book, who was the executive producer of Lawrence of Arabia. These were the books I was reading in high school. To your point, there are not a lot of people of color who are either at the helm of movie theaters, studios, or green lighting. You run into that challenge in this country where only around one to three percent of all venture capital goest to founders who are people of color or women. Part of the reason we ran into trouble and had to get outside capital was that we could not get the funding we needed, even though MoviePass had built a brand and was very successful. Those guys who came in were able to raise nearly a quarter of a billion dollars on the same company just a couple of months later. It just shows you the disparity that was there but being an entrepreneur, you persevere and just keep going no matter what. You build something great because you believe in it and I believe in movie-going as the highest form of entertainment that human beings have ever created.
You have an opportunity that a lot of founders would love to have: creating something, helping turn it into a brand, and after things go south, being able to come back and give it another shot. MoviePass still has a positive brand association from moviegoers. Exhibitors, however, may have some reservations about MoviePass how things ended. What would you say to those exhibitors who remain apprehensive about this service?
I did a listening tour when we looked to buy MoviePass back. I went to the Independent Cinema Alliance, I went to NATO, I called everyone I could. We are an open door, we are here to help, and we are here to work with everybody. We believe that cinema needs a software upgrade and there are some advantages we can lean into. I think people never had a problem with me and my co-founder; they largely had a problem with the management team that replaced us how they behaved. Those guys are gone and we are back. Consumers had a great experience, studios had a great experience,[but the theaters got the short end of the stick with the pior team. But now I am back at the helm and giving exhibitors my guarantee that those things are not going to happen here.
What have been some of the main questions and concerns that you have been getting from exhibitors in this launch process?
The biggest concerns back then revolved around customer service—making sure customers were taken care of and responded to—and that the theaters wouldn’t be left holding the bag. They were running a business model that was not financially stable and could not be supported, so they left some people hanging. The other aspect was just knowing how we would interact with exhibitors, if they would be able to play a role in what the service is going to look like. That is why this time around, MoviePass is much more of a marketplace—where there is a lot more interactivity. We are trying to build it so that partner exhibitors have dashboards where they can control the levers. A big difference between this iteration of MoviePass and the previous one is that we used to have a one-price-for-all model. It made it hard for the smaller players to compete with the big circuits. This time around, we have instituted a credits system where independent exhibitors can price their tickets competitively on MoviePass. That way, whenever a movie is or it is slow in the theater, they can drive more traffic through dynamic pricing.
Can you go into more detail on how this new version of MoviePass will work?
The old version was one price and one plan. The new version is tiered into four plans, all at different price points. Moviegoers get an allotment of credits within their tier and can buy individual tickets through those credits. We allow our partner theaters to control the cost of tickets per credits, so if a theater does not want to lower the number of credits on a Friday or Saturday night on opening weekend, they do not have to. But if during the middle of the week they want to drive traffic, they have the ability to do that by lowering their price. You could not do that last time. The tiered systems give us dynamic pricing capability. Think of us as an Airbnb or an Expedia for this industry. Whether you are running a hotel or a bed and breakfast, those companies provide a software layer that allows you to communicate with the customer. Think of the movie as the tourist destination and your theater as the hotel, you’re reaching consumers who are shopping on where to spend their money for that experience. For non-partner theaters, the consumer has to go to the theater, check-in, and magnetically swipe a card. For our partner theaters, we connect to their Point-of-Sales so the customer can select and purchase their seat directly from the app. We have already seen that our partner theaters have a 30 percent higher conversion rate versus non-partners. There is no cost to becoming a partner theater—and there is no cost difference to the exhibitor. We just activate and plug them into our system at no cost.
Are there any partner circuits you can announce at this stage?
Studio Movie Grill, Look Cinemas, Cinépolis USA, Goodrich Quality Theaters, and B&B Theatres to name a few. Excluding majors like AMC, Regal, and Cinemark, we are approaching 40 percent of the remaining market. We are running as fast as we can to get everybody hooked up to our system and we are thrilled—this was not the way things played out in 2017. We have found that our users are deciding their tehater and showtime at the last minute, there is not a heavy amount of long-range planning; it is usually day of. Most consumers want a universal option where they can go to any theater, and with Moviepass they can still get loyalty points for their favorite cinemas.
It sounds a lot more like a FinTech solution instead of a siloed subscription plan that exists to bolster a loyalty program.
Absolutely. If you can only go to one chain, that is just a loyalty program. If you can go anywhere in the ecosystem, then you actually have a real subscription platform that services at least a large portion, if not 100 percent, of all theaters.
In 2017, when MoviePass broke into the American zeitgeist, cinema subscription plans were not commonplace in the United States. Today, each of the top four exhibitors in the country has their own plan. How are you navigating that competitive landscape? Does it make sense for consumers to subscribe to more than one plan?
We did a lot of research around coming back and the fundamental difference is if you want to go multiple places—if the prices are the same, and that is important to you—you are going to pick MoviePass. If you are in a rural area where you only have one theater near your house, you will pick one of the big four. In our research, we found that the average moviegoer goes to three different types of theaters. There is what I will call the very large format: big event pictures where they want to see movies like Avatar: The Way of Water or Top Gun: Maverick. Then in the middle you have the folks that don’t really care about premium experiences, they just want to go see something in a theater. Then you have the local arthouse, with the uniquye curation and programming that comes with it. You will not get all those choices with a single player, and we know people love having all those options and variety when going to the movies. If you are a power user and you are going to premium screenings a couple of times a month, then subscriptions from AMC or Regal might be what you would prefer. That’s the difference in what we offer. We ran a national poll and found that 75 percent of moviegoers said they would prefer a universal plan versus one that was single-operated.
As you relaunch the service, you have also made a concerted effort in not going too fast too quickly. I think that is a mistake that happened last time. This time around you relaunched with only three test markets: Dallas, Kansas City, and Chicago—important demographic areas. Whether it’s a coincidence or not, all of them in close proximity to the headquarters of three of the four major circuits in this country. What were the principal learnings from this beta launch?
The way those markets came up was from a data perspective. We had two criteria, one based on the waitlist, where people actually signed up for the waitlist, the second one was to overlap that with where we actually saw the theater partners that signed up with us. We had over 800,000 people sign up for the waitlist in just over four days. When we looked at the list, we looked at it per capita and we weighed demand in each market. Then we looked at where we started to see partner circuits lining up and how fast we could get them integrated. One of the first ones was B&B Theatres, headquartered in Kansas City. MoviePass covers 50 to 60 percent of the Kansas City market with partner theaters, so it made sense to launch a beta program there.
You mentioned you had conversations with all the major players in the industry during your listening tour ahead of relaunching MoviePass. How are exhibitor relations with the majors?
I always had an open-door policy when Gerry Lopez was running AMC. I made regular trips to Regal to meet with Amy Miles. I have always made a point to make sure that I went to see people. Then when HMNY took over, they had a very adversarial relationship which we never had. When I knew that I was buying MoviePass back, I gave Adam Aron a call, I gave Mooky Greidinger a call. I gave Mark Zoradi, who was sitting in the chair at the time, a call. I talked to some of them, but not all—but it’s not because we didn’t make the effort to reach out. I never want an exhibitor to say we never reached out to them, that we never tried to speak with them. It is different if they do not want to work with us. We are a software company, we are not a competitor. We are not in the theater business. Our only job is to help drive traffic to their theaters. I look at it very similar to the way ticketing companies like Fandango and Atom Tickets operate.
Customer service became a big contention point during HMNY’s time running the company. How is this version of MoviePass working to ensure the same mistakes don’t happen again?
Customer service comes first. On Christmas Day, I was in the chat rooms answering live customer service questions. It is part of our company culture, we have everybody spend time there to understand that that is the most important thing. That has always been the way that we operated. I think that is what made the brand so strong. Once HMNY came in, they really threw that playbook out and made it very difficult to contact the company and do things like that. That is not the culture we practice and we pride ourselves on being able to deliver the best-in-class service out there.
Another big shift in exhibition today compared to where things were five years ago has to do with pricing. Today we are seeing dynamic pricing really taking off, whether it’s a discount day or as it relates to seating sections in specific auditoriums. This industry went from having a standard ticket price to having multiple price points in different auditoriums within the same complex. How has MoviePass handled this situation? Are premium formats part of the credit system?
We have that road mapped, it was an early priority that the exhibitors had mentioned to us during our listening tour. Exhibitors that work with us can charge a different number of credits for each screening, and that’s where premium formats come in. For moviegoers, they will be able to buy more credits mid-month if that’s something they want. That is on the roadmap and will be coming. We wanted to first get the 2D system back up and running—which is what the old system was—before starting to add new features like premium formats.
Do you have a timeline on when you will finish beta testing and formally relaunch the service?
The goal is to be 100 percent open before the summer. We wanted to go through Christmas in a small group of markets as our first stress test. We didn’t know if we would get crushed by Black Panther: Wakanda Forever and Avatar: The Way of Water. We went through both of those pretty smoothly and found some things we needed to work on. By the time we go nationwide, we will have already beta tested for a month or two in all major markets before the summer movie season starts.
It is a little ironic since in the last iteration of MoviePass, it was the release of Mission: Impossible- Fallout in the summer of 2018 that put it in a death spiral. Tom Cruise killed that version of MoviePass. You have ot another Mission Impossible coming up at the end of this summer man—and Tom Cruise is bigger than ever—but you’re still confident you can withstand those high-demand periods?
We just went through Avatar: The Way of Water, one of the most successful movies of all-time at the box office. Believe me, the demise of that old model had nothing to do with Tom Cruise—it had to do with a $10 ticket price that just was not sustainable. Tom did not need to work hard to put the old MoviePass out of business.