MoviePass Co-Founder Stacy Spikes Is Relaunching the Company
Stacy Spikes says that no resemblance was intentional to Steve Jobs. Spikes realized that he was already sweating in his jacket and white button-up shirt, just minutes before he took the Lincoln Center stage in New York City in February to announce MoviePass’s resurrection. His slim frame was complemented by dark jeans and sneakers. He wore a black mock turtleneck that is more comfortable. “I didn’t want to be thinking, Are they going to see my sweaty pits?” Spikes, 54, says during an interview in a Manhattan office several weeks later. “When people said, ‘That’s very Steve Jobs,’ I was like, ‘Everybody in New York dresses in all black.’”
Spikes invites the same comparison when he writes his memoir. Black Founder: Being Outsiders’ Hidden Power,Arrives in December. The stark cover was achieved by his wearing a black shirt that looked almost exactly the same as his previous one. Spikes was a founder of a new company only for it to fall apart. Spikes watched the business fall apart from the sidelines, much like Jobs. He will, like Jobs and others, attempt to make a comeback to the company he helped build.
But while Jobs was self-assured to the point of polarizing colleagues and occasionally the public, Spikes charms you into buying his vision of the future—specifically the future of moviegoing. He asks everyone he meets what films they’ve seen lately. He refuses to disparage a movie (to a journalist, anyway), even when I try to goad him into criticizing some of this year’s Oscar contenders. He’s eager to discuss why his friend might have missed the majesty of Dune’s sandy hills by watching the sci-fi epic at home rather than in an IMAX theater. “An adventure should never come with a pause button,” he says. A dramatic metaphor is his favorite: he used a slide showing a phoenix emerging from the ashes during MoviePass 2.0.
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Most people who are familiar with MoviePass—and it had more than 3 million members at its peak in the late 2010s—probably remember it as the company that offered cardholders the chance to see one movie per day at the theater of their choice for just $9.95 a month, and then predictably crashed and burned when the deal proved too good to be true. For Spikes, the story is more complicated—and more personal. He describes a difficult story of trying for funding over many years, which he believes is due at least partially to racial discrimination. Then he was ignored by the company who bought the majority stake in MoviePass, illustrating the implosion with a picture. He showed MoviePass’ implosion during his presentation by showing a photo of it. Hindenburg.
Spikes makes a comeback amid a drastically altered environment for moviegoing. People were scared away by COVID-19, but the rise of streaming has made it easier to stay at home. The 2021 domestic box office, which includes the U.S. and Canada, trailed 2019’s by 60%. “We’re at the point where the industry is willing to try things,” says Daniel Loría, editorial director at Boxoffice Pro. “This is probably the perfect time for MoviePass to come back if it was ever going to come back at all.”
In its heyday, Spikes says, MoviePass increased any one user’s moviegoing somewhere between 100% and 144% by incentivizing customers to take risks on movies they wouldn’t otherwise see. Spikes now believes that he can increase attendance. “We ask, Will anyone go to movies anymore? But we don’t ask that about other events,” he says. “We don’t ask, Is anyone going to go to basketball games anymore? Soccer games? Because you can watch those at home, but the live experience is different.”
Spikes is a magnetic pitchman, but it’s impossible to assess the feasibility of his plan. He is still trying to strike deals with theater chains and won’t even specify a date for the product’s release beyond that he’s targeting summer movie season. Perhaps most salient, while he says there will be a tiered pricing plan, he won’t say what those numbers actually are until launch day. He will say this: “It won’t be $10.”
Spikes tells the stories oftenHow to Blade Runner He convinced himself to leave for Hollywood. He saw the movie at 14 years old, while he was seated between his brother and father. “I kept nudging my dad, who was just snoring, and my brother’s like this.” Spikes fidgets in his seat. “And I’m there thinking, How can I be a part of this world?” Spikes worked in a video store as a high schooler in Houston, left Texas for California with just $300 in his pocket, and got a job as a production manager at a production company at 19. After briefly working in business, Spikes moved to Sony and helped market soundtracks for films. At the age of 27, he had become vice-president for marketing at Miramax.
Illustration by Party of One in TIME
Films like “The Last Jedi” were the best. DumboThis set him on the right path for his professional career. “Do you know This Dumbo song with the crows?” he asks, before singing a few bars of that The song sung and sung in the voice of Jim Crow. Disney has placed a warning sign in front of the movie. “As a kid, I guess it was supposed to be flattering that you were getting seen in something,” says Spikes. “But as I got older and worked in the movie business, I had this whole different view of what I saw in my childhood.”
The Urbanworld Film Festival was founded by him in 1997. This festival featured films of BIPOC filmmakers including Ryan Coogler, Ava DuVernay, and Ryan Coogler, before these were well-known. “I was the Spike Lee of distribution because there was no one of color on that side of the fence,” he says. The festival was the venue for the premier of the thriller in 2004. CollateralStarring Jamie Foxx, Tom Cruise and Jada Pinkett. “I felt like I’d summited Everest, but I needed to find what was next.”
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His 2006 system allowed moviegoers the ability to request tickets through text messages and sign up for a subscription. There were already subscription services at the movie theater chains in Europe, so Spikes was just introducing the concept to the U.S. “Everyone was like, ‘A subscription? That’s stupid,’” he says. “I was laughed out of conference rooms.”
Or worse. His venture was unsuccessful for many years. Black entrepreneurs were only able to receive 1% in venture capital funding the year that he founded the business. (Seven years later, this number has barely risen: Black founders were awarded 1.2% of VC financing in the first quarter of 2021 as startups raised a record-breaking $147billion. “When you want access to higher capital, there’s a Black tax on you,” Spikes says. “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 would bring Geoff Kozma, an analyst from Spikes to present meetings. He used to do the real-time calculations. “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.’” Kozma was a young white man. “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’ obsession with the cinemas made it difficult for his coworkers to reject him. Ryan McManus started his career as an intern with MoviePass. He is currently the head of product at MoviePass 2.0. “I’ve saved every movie-ticket stub going back to 2003,” says McManus, “and he was even more passionate about movies than I was.”
Spikes recruited Hamet Watt in 2011 to co-found the company. They raised a total of $1 million from AOL as well as venture-capital firm True Ventures. MoviePass launched that year, but five years after that, it still wasn’t profitable. Mitch Lowe was a former executive at Redbox and Netflix and served as an adviser to MoviePass in the early days. He found it frustrating working with Spikes. He felt that they had always been in touch and agreed to become the CEO of MoviePass. “His main investor brought me in to essentially be his boss,” Lowe says. “That would be hard for anybody. His heart was in it. But he and I were great partners for that first year and a half, two years.”
MoviePass founders Stacy Spikes and Hamet Watt, both at AMC San Francisco (Calif.) on January 29, 2011
Liz Hafalia—The San Francisco Chronicle/Getty Images
The company was losing $50,000 per month to that point. It had about 20,000 customers at the time, who were paying $34.95- $49.95 each month. Lowe struggled too to convince investors MoviePass contained juice. He admits that Spikes might have been discriminated against, but his business plan was flawed. “I met with 120 different investors and got Please enter no on 120,” Lowe says. “My wife is African American, so I see racism out there. It is the treatment of people that I observe. However, I wouldn’t say it was the only reason. I wasn’t with Stacy in any of his investment meetings, but I can tell you I had 120 Please enter nos, and I’m a white guy.”
For $25 million, Helios and Matheson purchased 51% of the company. To increase subscribers, Helios and Matheson wanted to run a “promotion” dropping the price to $9.95 a month. Spikes had tried prices ranging between $19.99 and $49.99 throughout the years but was not enthusiastic about this idea. Users would be able to access nearly unlimited movies at a cost of just $8.97. This is compared with the average price for movie tickets in America, which was $8.97. Ted Farnsworth and Lowe, the CEOs of Helios and Matheson said that MoviePass was similar to a gym membership. A lot of people will pay the monthly fee and not go. This makes the gym a profitable one. Here’s the problem: people don’t like running on a treadmill; they do like going to the movies.
Spikes said he was open to the promotion provided that the price is increased after the 100,000 additional sign-ups. “It happened in literally 48 hours,” says Spikes. “I was like, ‘Great, turn it off.’ And they were like, ‘No, no, leave it on. Let’s see what happens. We know what we’re doing.’”
Spikes calculated that customers were losing $30 each month. Lowe estimates it to be closer to $17. They were both losing money. “The math didn’t work,” says Spikes. Spikes was dismissed from the board in December 2017. This happened the month MoviePass had reached the millionth subscriber. He was told the next month that he wasn’t needed by the company.
Spikes was expelled a few days later and went to the cinema. “I walk up to the kiosk. The person to my right pulls out a MoviePass Card. The other person to my left pulls out a MoviePass Card. And they’re literally looking and smiling at each other. And you knew we were all part of something big,” he says. “And I’d created that. I never forgot that feeling.”
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According to Lowe, MoviePass users had purchased 6.6% of movie tickets in America by the end of the first half 2018. In the first half of 2018, MoviePass members purchased 6.6% of all movie tickets in America, according to Lowe. However, Matheson and Helios had an estimated loss net $329.2million that year. In 2020, Helios and Matheson filed for Chapter 7 bankruptcy, and in 2021 the Federal Trade Commission filed a complaint alleging that the company had failed to secure customer data and had engaged in fraudulent practices like invalidating users’ passwords to try to prevent them from buying too many tickets. In the end, it was forbidden from misleading its customers and had to implement better security protocols. MoviePass had been shut down in September 2019 and was no longer available for purchase. (Lowe said he could not comment on the FTC investigation because of a nondisclosure agreement, but blames the demise of MoviePass largely on user fraud—members sharing cards with one another and otherwise bypassing the system. Farnsworth didn’t respond to our requests for comment.
Spikes equates the experience with PTSD. “I was licking my wounds for about two months when my wife was like, ‘You need to put some clothes on and get out of the house.’” Then, late last year, he heard from someone working on a documentary about the rise and fall of MoviePass that nobody had bought the company assets during the bankruptcy auction. He phoned the trustee and was told that there was a minimum bid of $250,000. He was able to negotiate a $140,000 price reduction with Spikes.
The deadline for September 2020 isSpikes drove solo from Manhattan to Hoboken (N.J.), donned two masks and joined 10 others to view the action film in theaters. Tenet.It was again on his mind the following weekend. “He’s my people, right?” Spikes says of director Christopher Nolan, who very publicly refused to debut his movie on a streaming service. “I told my wife, even if I have to get on a plane to fly to an open theater, I’m going to support this movie. And I’ve been at the movies pretty much every weekend since.”
He’s likely one of the few who can make that claim. During the pandemic, movie attendance fell dramatically: 76% of Americans and Canadians saw at least one film in theatres in 2019. That number was 47% by 2021. It is possible that people have become accustomed to watching movies online at home since the launch of services such as Disney+, HBO Max and Peacock right prior or during the pandemic.
Each year, data is released by the Motion Picture Association on both the home and mobile entertainment market. It found that worldwide digital spending, which includes rentals and purchase of movie from Amazon or Apple, made up 48%, 42% and 10% respectively. Digital spending accounted for 72%, while theatrical sales accounted for 21% and physical content, 7%. That digital spending calculation doesn’t even include the money customers pay for subscriptions to streaming services like Netflix.
A shrinking window exists between theatrical releases and streaming movies. Moviegoers may have to wait for a few more weeks in order to watch the movie they want. Batman.Oscar-winning CODAStreamed simultaneously in theatres and online. Sometimes, studios skip the theater entirely.. Spikes dismisses the threat of streaming and compares the situation to when DVDs went mainstream in the late ’90s. “We forget that we were worried people would stay home then too,” he says. But Rich Daughtridge, CEO of the upstart chain Warehouse Cinemas and president of the Independent Cinema Alliance, views the proliferation of streaming differently: “We see our main competition as the couch.”
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MoviePass customers are a loyal customer, which Spikes frequently praises. When he first founded the company, he was inspired by Steve Jobs’ biography to suggest that every employee—including himself—spend at least one day per month on the customer-service line. He is reminded of a customer who lost her phone on the way to the theater. This unhappy customer demanded that the company get her a brand new $600 smartphone. “I was like, ‘But, ma’am, Please enter your email address dropped your phone,’” he says. “I think I gave her a free month.”
But, more often than not the calls would become discussions about MoviePass members love of going to movies. They hadn’t abandoned cinema because of Netflix. They’d abandoned it because movie tickets had gotten too expensive: movie attendance was already declining before the pandemic even as the box office ballooned, thanks to higher ticket prices. MoviePass’s relatively low (and later, absurdly low) price tag helped increase its customers’ attendance, until those fervent movie-goers quite literally loved MoviePass to death.
MoviePass might be less difficult than convincing moviegoers to sign up for it again. MoviePass purchases tickets directly from theaters for its customers. The company will thrive if it is able to purchase discounted tickets in return for advertising the theater and encouraging customers to visit the movie on slower days. If it must pay the full ticket price, however, it will be forced to heavily rely on other revenue streams such as advertising.
Spikes asserts that MoviePass has opened theaters to MoviePass because of the pandemic. “Before, the conversation was ‘Eh,’” says Spikes of his initial proposal in the 2010s. “Now the conversations are, ‘Congratulations on buying it. How soon can you be up?’ So COVID definitely did something it would have taken us years to do.”
I was more careful in my interactions with theaters. The head of a small theater chain, who asked to remain anonymous because the company is still considering working with Spikes, said the customer-service issues that plagued MoviePass at the end of its first run “left a bad taste in our mouths.” The big chains—AMC, Regal, and Cinemark—declined to comment for this story. Loría of Boxoffice Pro says those chains likely see MoviePass as competition to their own loyalty programs, which were developed, at least to some degree, because of the success of MoviePass 1.0.
Spikes remains unperturbed. He says he’s had preliminary conversations with Cinemark and Regal, but AMC has not responded to his calls: “My feeling is at the beginning there may be some competitiveness, but if you still have empty seats, what do you care? Get bodies in there.”
Spikes is a Hollywood addict who visits the movies every week.
Justin J Wee, TIME
Smaller chains and independent theaters—which make up about 20% of the industry, according to Daughtridge—seem more open to working with MoviePass. Alamo Drafthouse boasts 36 locations in the United States and offers comfortable seats and meals, as well as alcohol. The founders pride themselves on exhibiting smaller films that the bigger chains don’t show. In theory, their interest in saving the indie filmgoing experience should align with MoviePass’s mission. Lowe stated that MoviePass purchased 30% of American movie ticket sales for smaller movies (those with a grossing less than $20 million) in 2018.
“We’ve been quite disruptive in the space,” says Michael Kustermann, the chief experience officer at Alamo. “So I think we were always curious about MoviePass. It was a huge mistake to charge $9.95 for MoviePass. But like all good disrupters, there was probably a seed of a great idea that theaters should have been thinking of themselves.” Kustermann says Alamo, which has its own loyalty program, has not yet decided whether it will partner with MoviePass but has not ruled it out. “Instead of being dictatorial about how people get in the door, Alamo focuses more on the experience once they’re in the door.” After all, most theaters make their money on concession sales, and that’s especially true of chains that sell alcohol.
“I’m definitely intrigued,” says Daughtridge, of Warehouse Cinemas, which has two theaters in Maryland. Spikes and Daughtridge have talked many times about MoviePass 2.0’s potential. “We’re just running the numbers to make sure we don’t cannibalize our own sales.”
It will be a hot summer! a crucial test for MoviePass’s viability, as a backlog of delayed blockbusters, like Top Gun: Maverick, Doctor Strange, in the Multiverse of Madness And Jurassic World DominionExclusively in theaters. “All the good content had been moved out. So it’s kind of like starving the patient and asking why they’re not gaining any weight,” Spikes says of the box office.
The optimistic prognosticators predict that the outlook will be positive Spider-Man: There is no way home,The film had December’s second-largest opening weekend, even though it premiered during the Omicron surge. This is an indication that viewers will return. Even with this coup, domestic box office revenue was only $4.5 billion, as opposed to $11.4 billion for 2019.
Comscore estimates that 10% to 5500 of America’s 5,500 theaters were closed temporarily or permanently in response to the pandemic. The theaters still open are surviving off a handful of hits. Spider-ManAnd Batman.Cinephiles are worried about a future where studios only make superhero movies for big screens and stream everything else. MoviePass doesn’t move the needle on the Marvel or Star Wars movies—people are going to come out for those anyway—but it may be able to have a substantial impact in driving ticket sales to indie films, Oscar bait, and documentaries.
MoviePass could be a significant player in the saving of moviegoing. If it can scale up, MoviePass will likely succeed. But with just months before launch, MoviePass won’t confirm whether Spikes has brokered any deals at all. MoviePass can exist without theater buy-in, but it’s unclear if it can thrive. Spikes is working to rapidly build subscriber bases. There are several updates from the initial version of MoviePass, including tiered pricing options, and in-app credits customers can earn through watching ads. They will be able to apply these credits toward tickets for friends and family members who don’t subscribe to MoviePass, and, eventually, Spikes says, users will be able to trade credits among themselves via blockchain technology. The company also offers customers the opportunity to invest in it as shareholders.
During the MoviePass relaunch presentation, Spikes floated the idea of implementing technology that would track the user’s eyes during an ad and pause the ad if the user looked away or put the phone down. This demo instantly drew parallels with dystopias such as The Clockwork Orange. “I can say it’s given us some level of pause,” Spikes tells me when we meet. “If it’s something that we even decide to deploy, it might be radioactive. So it maybe doesn’t see the light of day.” A month later, he says he’s decided it will not be a part of the app launch this summer, though he may consider integrating it later.
It’s clear that Spikes cares deeply about the future of cinema, but he’s also desperate to give the MoviePass story a happy ending. “I sometimes worry if I build something new, someone will take it away from me again,” he admits. He persevered with the relaunch. “I knew I could build something again. Because you can’t take my intelligence. You can’t take away my passion.”
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Spikes’ case will be vindicated if MoviePass is successful. Lowe and the others who made him leave will be seen as obstacles that he overcame to come back. Lowe answers my question about how he views his potential role in this story. “I’d be so happy for his success in this,” he says. “It wouldn’t bother me at all for people to say that he told me so.”
Reporting by Mariah Espada
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