In a speech at a theater near Lincoln Center that was live-streamed on YouTube, Spikes detailed what went wrong for the business and his plans to restart it. Those plans will rely in part on a group of blockchain-based technologies known as web3. That will include a virtual currency that covers ticket costs, he said, rather than the paid subscription that put MoviePass 1.0 out of business.
It is not clear yet what the new service will ultimately cost or what theater chains it will work with. The business plans he teased Thursday included a demo of how MoviePass customers can watch ads in exchange for access to movie tickets, a model Spikes has designed in another startup, called PreShow Interactive.
Spikes said he put the offer for MoviePass after hearing from a documentary producer that no one had bid on the company while it was in bankruptcy court. A judge signed off on Spikes’ bid in November 2021. MoviePass customer data was left out of the sale.
Lost money, lost trust
For Spikes, the purchase gives him a do-over on a business idea that made him a rising star in the city’s tech scene .
A former film industry executive, he co-founded MoviePass in 2011, with Hamet Watt, as a service that let subscribers pay $30 to $40 each month for unlimited access to cinema tickets.
MoviePass experienced a spike in users in 2017 , shortly after Helios & Matheson Analytics bought a controlling stake and lowered the monthly rate to $10. Spikes was pushed out in 2018 after he objected to the price reduction.
“There were big differences in belief for the way the company should move forward and how to take it to the next level,” Spikes said during his speech Thursday.
“And we all know what happened after that,” he added, cutting to a photo slide showing an image of the Hindenburg.
The price cut brought millions of new customers but proved wildly unsustainable. MoviePass was hemorrhaging money by the time it shut down in 2019 and filed for bankruptcy in January 2020.
“A lot of people lost money, lost trust, were hurt and disappointed,” Spikes said. “I was one of those people who was disappointed and hurt.”
Spikes, who is Black, also pointed to the fact that a majority of venture capital goes to founders who are white and male. “We couldn’t keep the engine going and other people just had access to capital like it’s nothing,” Spikes said.
Part of the vision for MoviePass 2.0 involves allowing users to invest directly in the company, though he did not detail the exact mechanism for doing so.
Spikes other startup, PreShow Interactive , raised a $3 million funding round in April 2021, led by Harlem Capital . PreShow is still in beta testing mode, according to its website, but it appears that its watch-ads-for-virtual-bucks model will be incorporated into MoviePass.
Challenging market
This is still not an easy time to be in the movie-theater business. Box office revenue in 2021 was 60% behind 2019 . Nobody outside of Spider-Man has found a way to bring people back to theaters. AMC’s subscriber program, called A-List, had recovered only about two-thirds of its 900,000 members as of November when the company last reported earnings.
“The virus continues to be with us,” said AMC CEO Adam Aron, two weeks before researchers traced the first case of the omicron variant.
But Spikes is betting that MoviePass can help. He pointed to data that MoviePass, in 2018, boosted box office sales by 4%. It was especially effective, he said, at driving people to arthouse theaters and mid-budget films—the type that have been particularly crushed by the pandemic.
He hopes MoviePass can soon capture a third of all movie sales.
“Our moonshot is to get to 30% by 2030,” Spike said.
