MoviePass relaunched yesterday with a 40-minute virtual event light on specifics. Its original $9.99/month unlimited plan ignited the late-2017 moviegoing world; five months later it proved to good to be true (and possibly fraudulent). So when founder and CEO Stacy Spikes — who, by his own account, was fired in January 2018 for objecting to the unsustainable unlimited plan — took the stage to unveil the new MoviePass, the question was how this plan would be different and could he quell the skepticism of previous customers who, as Spikes acknowledged, lost money when Moviepass went belly-up in 2018.
Spikes described a sliding and transferable credit system and a “web 3.0” app that empowered theaters and studios to directly market and lure costumers with discounted tickets and special promotions — but how these pieces fit together to form a subscription plan was unclear.
The result was skeptical headlines, while social media chatter mocked Spikes on-stage demonstration of in-app feature PreShow. It allows consumers to earn free movie tickets by watching a distributor’s product placement video on their smartphone, which tracks the viewer’s eyes to ensure the advertiser that its video is actually being watched. [Spikes’ PresShow demo starts at the 33:48 minute mark in the video below.]
In a half-hour interview with IndieWire following his presentation, what became clear is Spikes’ vision is less of a traditional subscription service, and more a virtual marketplace and app in which customers buy credits. Its success will depend on how well moviegoers, theaters, and distributors utilize its tools.
In theory, this will create a better, more efficient ecosystem, especially for non-blockbuster films. (Spikes said 2017-18 data points show MoviePass “moving the needle” for these films’ ticket sales.) The goal is to motivate moviegoing by offering discounted tickets or promotional giveaways for films like “Licorice Pizza” or “Drive My Car” (two examples he used on stage), rather than the previously unsustainable model of buying a full-price ticket for opening night of the new Marvel movie.
You can watch Spikes’ presentation below, which is followed by a transcript of his interview with IndieWire, lightly edited for length and clarity.
IndieWire: During the presentation you were very honest about the situation that led you accept less-than-ideal funding and partners in 2017, and how hard it can be for people of color and women to raise capital. Taking that into account, what is your current funding and where is it coming from?
Stacy Spikes: We aren’t announcing anything yet. But I can tell you there were enough really good conversations that we felt confident to be able to do what we did today. There’s a few NDAs from the existing investors in PreShow that we wouldn’t have done today if we didn’t feel pretty good about that.
Also taking the learnings and revisiting the model, I think COVID really changed people’s mindset. So there’s a lot of good that has happened since everything went down. We did a listening tour and the feedback among exhibitors was so different than what it was back in ‘17 and ‘16 and ‘15 and ‘14. I think, too, with the big three [AMC, Regal, and Cinemark] having subscription services, it’s just a different universe.
So it’s safe to say that you’re still raising capital? Part of the presentation today was this call out to potential investors. Can you give us an idea of how much more you need?
When we’re ready to announce those things we will. Not until you get to your series C or D, you are always raising capital. There isn’t a point in the lifecycle where that’s not part of what you have to do. Even when you’ve got money in the bank you’re still always raising. We sincerely did want to open up and take a slightly different strategy where we want to engage the audience base more. I think some of the investment community can be — again, you’re facing diversity issues, you’re facing a lot of people who are negative on the movie industry overall, there’s a lot of confusion. All of that being said, the conversations that we’ve been having, we felt confident enough that we’re like, “OK, let’s go.”
Stacy Spikes at the MoviePass relaunch event
Lawrence Miner
After you were let go in January 2018, you did an interview which made it clear you never really believed in the $9.99 unlimited model and that you had hoped in the beginning it would just be a promotional thing to lure subscribers. I found that interview really hard to read because three months prior to you being fired, you and I talked for 75 minutes and you really espoused and spelled out the logic of the $9.99 unlimited plan. And you were using a lot of the same talking points I heard today.
There’s two different things and you might be mixing them up. If you’re talking about when I was CEO, we had a capped plan. That capped plan was $10 [and] we had a $16-$19 capped plan that was capped. That’s different than you literally can go see 30 movies a month. I was never in support of an unlimited plan, which means I can go every day.
That idea [of an unlimited plan] never entered our lexicon until HMNY [Helios and Matheson, the company Spikes sold Moviepass to] suggested it as a stunt to get traffic. That had never even come up until the summer of 2017. Never while I was CEO, ever, did I ever promote a $9.99 all-you-can-eat, go every day plan. That’s suicide.
PreShow was a big part of today’s presentation. What is the role of that in this new iteration of MoviePass? Are you figuring out how transactions and credits and all the pieces will work in a subscription plan?
The best analogy I can give you is to think of a virtual movie theater, but let’s take concessions out. That theater has two revenues: ticketing and advertising. In our studio conversations, what we were introducing is cinema actually has the ability to capture ad revenue that currently today goes to third parties as an acquisition engine.
If you took the last “Avengers,” you had the Audi E-tron and a bunch of other product placement deals. Their ad spend equaled what Marvel was spending on P&A. Those dollars [then] go out on third-party platforms with the hope of driving traffic to go to the movies or getting to you to sample whatever the product is, “go test drive that car.”
[With PreShow] a studio can actually capture ad revenue that it currently gives away. We created a technology that closes the loop. We’ve figured out how to put the pieces all together: The credit system helps make that. Maybe you have two credits, maybe there’s 10 credits for it. It makes it so you can move those levers up and down and makes it easier to test things and try them out.
When you look at MCM and Screenvision and Spotlight Cinema [ads that play before the trailers in movie theaters], all are examples we’re looking at being able to [put] inside MoviePass and converting your attention to currency, versus “we made you watch an ad and somebody else got the money.” Web 3.0 [technology] is putting the consumer and their own time, attention, and data in the driver’s seat. We believe very strongly in that, based on what we’ve seen in our focus groups, what we’ve seen in our conversations with the studios, and what we’ve seen with the big three [theater chains] and ad agencies.
One thing I kept hearing from distribution and marketing sources in the winter of 2017 — that winter of “Lady Bird” and “The Shape of Water” — is what a powerful marketing tool the MoviePass app was for distributors to advertise to moviegoers. Today’s presentation indicates you’re looking to tap into that. Big picture, is this a marketing benefit that you’re looking to give partners, namely the studios and theaters, and that could lower ticket prices? Or is this something that MoviePass is viewing as a potential revenue source in the way that, say, IndieWire sells ads for new movies on our website?
We look at ourselves as a technology company that wants to create a marketplace. The more business that marketplace rises, we rise with it. I would say, think of MoviePass as Airbnb to the movie industry, where now A24 can speak directly and engage with consumers directly and easily. They don’t have the muscle or the might to be able to move the needle.
You had an example today with the credit system, where different showtimes of “Licorice Pizza” cost a different amount of credits. We all know that 7 o’clock show sells a lot more tickets than the 4 o’clock. In the old model, MoviePass had to go buy that 4 p.m. ticket, which costs the same full-ticket price as the 7 p.m. ticket. This would seem to indicate to me that the credit system is based on a partnership with a theater or distributor, where MoviePass is getting that afternoon “Licorice Pizza” ticket at a discount. Is that correct?
We only saw ticket inventory day-of, even if we were with partners. I think the difference is the mid-level film and the smaller exhibitors wanted a way to compete against the big boys. We saw that clearly we made a difference in their lives, where we didn’t make a difference for the big three [theater chains] or the Spider-Mans. So, it’s “How do we give A24 and Angelika tools to engage that audience in a better way?”
Let’s say Steven Spielberg does a Q&A on “West Side Story” for The Angelika, and they take that and say to anybody in our MoviePass ecosystem who sees this movie on opening weekend, “We’re going to make that available.”
Everybody was hoping for plan details today. All we know is there will be different price tiers, but it sounds like, if I’m hearing you correctly, this is more about buying credits in a marketplace and you trying to build a healthy marketplace around these smaller films. It’s less a straightforward subscription plan and all these potential discounts and promotions you are mentioning being something that benefits all sides, is that correct?
You are spot on. That’s a difference between the old MoviePass and this MoviePass. Once we got the data and once we saw the behavior and once we were able to listen to the feedback we got, we then took those things, put them on the table, and said “How do we make everybody happy?” We know that if we can do that for the exhibitor and do that for the studio, the consumer will win.
We were talking to the Alamo [Drafthouse] guys and they said there’s certain directors where they charge a higher ticket price, but give a T-shirt to every person that comes on opening night. There’s the capability to do that ourselves inside MoviePass: Maybe it’s more credits, but they’re going to include the free T-shirt. That capability doesn’t exist anywhere and that’s where I think we can really shine.
So it’s about what those credits will buy you at different theaters?
You’ll be able to, mid-month, buy more credits. Like Audible, sometimes I finish my book for the month, but I want to start a new book so I pay for more credits. Then there’s times when I’m two or three months in and I’ve got some credits stacked up. With tradeable credits, or being able to [rollover] your credits to summer when school’s out, we think it allows for a lot more freedom. Where the previous MoviePass was simple, it also had drawbacks.
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