MoviePass cofounder Stacy Spikes admits he was not a happy camper a few months after Helios and Matheson Analytics bought MoviePass in summer 2017. And it’s likely a big reason why he was then let go in the new year.
Since 2005, Spikes had been building the scrappy startup into a revenue stream the US box office had never had before: movie-ticket subscription. The app was evolving with the times and slowly growing in popularity among moviegoers, with the price point ranging from $12 a month to up to $75 (which included access to 3D and IMAX showings).
But the moment when the company suddenly came into the popular lexicon, and grabbed the attention of the industry, was in 2017 when Helios and Matheson Analytics became interested in buying MoviePass.
“Ultimately the proposal came in at $25 million for 51% of the company,” Spikes told Business Insider. “And in the proposal it said they wanted us to temporarily drop the subscription price to $10 to help climb up to 100,000 subscriptions.”
Spikes said nothing in that proposal worried him, and in the summer of 2017, Helios and Matheson became the owners of MoviePass. In August of that year, the $10-a-month to see a movie a day deal was launched and MoviePass hit 100,000 subscribers in 48 hours.
“So I’m like, ‘OK, turn it off, we reached our goal,'” Spikes said.
But the attention MoviePass suddenly received was too intoxicating for most at the company, especially the new owners. And despite Spikes’ warnings, things went forward.
“Where things started to divide is: Myself and a handful of others were methodical about testing price points,” Spikes said. “The lowest we ever got down to was $12.99 and as high as $75, where we added Imax and 3D. We knew what was sustainable. But the overriding voice was, ‘No, this is awesome, look how fast we’re growing.’ And it was this moment of ‘but $10.’ It doesn’t fly.”
By December, Spikes said the company was growing at a quarter million subscribers a month. And despite his warnings that the company could not survive at that price point, no one would listen.
With a clear divide between Spikes and the new leaders of the company — Mitch Lowe, who came on as CEO in 2016 (Spikes took the role of COO), and Helios and Matheson CEO Ted Farnsworth — Spikes said he received an email on January 9, 2018 that his services we no longer needed at the company.
“After that, I’ve never spoken to Mitch or Ted,” Spikes said. “And I’ve been watching it all unfold, like everyone else.”
Spikes said he and the leadership “just disagreed on the approach.” But he’s not bitter about leaving the company he launched because, in his eyes, the idea of movie-ticket subscription working in the industry became a reality with AMC, Cinemark, Sinemia, Studio Movie Grill, soon Alamo Drafthouse, and others all getting into the movie-ticket subscription game.
“The good side was cinema had not been taken seriously since Netflix really got its footing,” Spikes said. “So what I liked about that was this had risen to the zeitgeist of conversation. 75% of our members were under the age of 26. Cinema was an event people cared about again. So while there is a sadness around the brand, I was happy to see that this is front and center.”
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