MoviePass Overview

The Rise & Fall of MoviePass

The Vision: Unlimited Movies for a Reasonable Price

MoviePass started in 2011 with a tiered subscription service for cinephiles. The co-founders, Hamet Watt and Stacy Spikes, envisioned a world where people could easily access movies in cinemas without the hassle of buying individual tickets. However, the project struggled to gain traction, stagnating at around 20,000 subscribers.

Explosive Growth & Peak Popularity

In 2017, everything changed for MoviePass. The company was acquired by Helios and Matheson, a publicly traded data analytics firm based in New York. The new owners introduced an exciting pricing model: unlimited movies for just $9.95 per month. This bold move created some buzz, skyrocketing subscriptions to over 3 million within a year and boosting overall U.S. cinema attendance by 4%. Suddenly, MoviePass was dubbed the "Netflix for theaters."

While cinemas celebrated the increased foot traffic, MoviePass was losing money on every ticket sold, with individual ticket prices averaging around $12—higher than the subscription cost. Subscribers happily exploited the unlimited plan, watching far more movies than anticipated, which caused losses to soar. New CEO Mitch Lowe, a former Netflix executive, believed subscriber data could be monetized. Unfortunately, MoviePass’s financial situation was quickly spiraling out of control.

The Beginning of the Downfall

As demand surged, MoviePass's cash flow began to shrink. Helios and Matheson had to raise extra funding, relying on stock sales and venture capital to cover losses peaking at around $20 million a month. To stabilize MoviePass's finances, they also raised subscription prices and introduced new restrictions, which drove many users away.

In 2018, MoviePass further implemented surge pricing, limited access to new releases, restricted users to just three movies a month, and cut customer support. These measures backfired dramatically, sparking outrage among subscribers who felt betrayed. Complaints flooded in about bugs, customer service, and misleading marketing.

The Fallout

In just a few months, the company’s stock had tanked, losing over 99% of its value. The final blow came in January 2019 when MoviePass announced they were shutting down operations. Soon after, Helios and Matheson filed for bankruptcy, facing debts of more than $300 million. The backlash was swift, with former subscribers venting their frustrations on social media and in the press.

In 2022, after reclaiming the company’s rights, original CEO Stacy Spikes made headlines by relaunching MoviePass with a limited plan. Later in 2024, Mitch Lowe pleaded guilty to securities fraud, facing up to five years in federal prison. Ted Farnsworth, the CEO of Helios and Matheson Analytics, is also set to stand trial on similar charges.

What Went Wrong?

Unsustainable Business Model

MoviePass’s business model was fundamentally flawed. Offering unlimited movie tickets for less than the price of a single admission is a classic example of a loss leader taken too far. The original idea was that most subscribers wouldn’t visit the cinemas often enough to impact the bottom line—similar to how gym memberships rely on no-shows. Unfortunately, this strategy backfired spectacularly. Mitch’s assumption that subscriber data would generate additional revenue also proved misguided. MoviePass struggled to find a B2B angle, leaving them reliant on an unsustainable B2C model.

Corporate Greed and Mismanagement

In a desperate attempt to address its financial troubles, MoviePass implemented a series of policy changes that left many users feeling misled and unheard, causing a significant loss of trust in the company. Employees shared similar frustrations as Helios and Matheson’s leadership shifted focus to side projects that seemed out of touch with the company's urgent struggles—like acquiring a movie production studio and hosting festival parties. Further allegations of stock price manipulation surfaced, ultimately leading to serious accusations of securities fraud.

Competition

At first, major theater chains were cautious about MoviePass’s model, worried it might hurt their profits. However, as MoviePass began to struggle, competitors saw an opportunity to step in. AMC, for example, launched its own subscription service, offering a simple and reliable option for cinephiles. This shift underscored MoviePass's inability to capitalize on its first-mover advantage to build a sustainable business.

Key Lessons

1. Unit Economics Matter

MoviePass’s strategy ignored profitability entirely. Founders should ensure their unit economics support sustainable growth from day one.

2. Don’t Alienate Your Customers

MoviePass’s lack of transparency led to heavy subscriber churn. Founders should focus on building customer loyalty through consistent communication and reliable services.

3. Reckless Growth Often Backfires

MoviePass’s pursuit of scale overshadowed sustainable business practices, and its venture into non-core projects diluted focus and resources. Founders should align their growth strategies with long-term viability and remain focused on their core business.

4. Losing Control Can be Costly

Founders Hamet Watt and Stacy Spikes saw their stakes diluted and their compensation tied up in H&M stocks following the acquisition, leaving them with nothing when the company ultimately failed. Founders should be comfortable with the deal structure before entering a sale agreement.

Thanks for reading the first-ever article of The Startup Graveyard. 

If you're curious to dig deeper on MoviePass, check out these resources: MovieCrash, The Verge, The Guardian.

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