HBO’s new documentary, “MoviePass, MovieCrash,” delves into the rise and fall of MoviePass, a subscription-based movie ticketing startup that ultimately ended in bankruptcy. However, the film also sheds light on the underreported story of two Black men, Stacy Spikes and Hamet Watt, who originally co-founded MoviePass but were later pushed out of the company.
Spikes, a former Miramax executive, and Watt, a serial entrepreneur, were the true visionaries behind MoviePass. Yet, when Mitch Lowe, a former Redbox and Netflix executive, was brought on as CEO in 2016, he and Ted Farnsworth, CEO of Helios & Matheson, often took credit for the company’s success. This highlights the challenges faced by Black founders in accessing venture capital funding. Recent estimates show that only 2.7% of U.S. businesses are majority Black-owned.
Spikes hopes that the documentary will bring attention to this issue and emphasize the need for increased funding for Black founders. He believes that it is essential for venture capitalists’ mindsets to change and for more women and founders of color to be accepted and supported.
When Lowe joined MoviePass, the company was already five years old but struggled with user growth, having only around 20,000 subscribers. Moreover, MoviePass faced the harsh reality of the disparity in venture capital funding for Black-owned companies. In 2023, Black founders in the U.S. raised just 0.48% of all venture capital, the lowest recorded figure in recent history.
The founders believed that bringing on a “white male with grey hair,” like Lowe, would make it easier to attract investment. Consequently, Helios & Matheson bought a controlling stake in MoviePass for $27 million. This decision further exemplified the challenges faced by Black founders in raising capital compared to their white counterparts.
Under Lowe’s leadership, MoviePass changed its subscription model to offer one movie per day for just $10 per month. The drastic price reduction attracted a massive influx of subscribers, reaching over 3 million by 2018. However, this pricing strategy proved unsustainable, as the average ticket price was $11.50.
MoviePass experienced significant financial losses, losing $40 million in May 2018 alone. Spikes warned Lowe and Farnsworth about the unsustainability of the $10 price point, but his concerns were ignored. Eventually, he was fired from the company, along with Watt.
The mismanagement continued as MoviePass tried various revenue-generating strategies, including selling data to advertisers and venturing into the airline business. The company’s spending habits, such as extravagant yacht parties and unnecessary events like Coachella, showcased a level of corporate greed that contributed to its downfall.
Meanwhile, MoviePass employees struggled with repeated outages and angry customers. The site also faced a data breach that exposed card numbers and personal credit card information. These issues ultimately led to MoviePass’s demise.
Lowe and Farnsworth are currently awaiting trial after pleading not guilty to charges of securities fraud and wire fraud. In contrast, Spikes managed to turn his story around. He repurchased MoviePass in 2021 and relaunched it successfully, making it profitable for the first time in 2023.
In addition to the documentary, Spikes revealed additional details about his plans for MoviePass during an interview. He mentioned developing a VR app for MoviePass viewers to watch movie trailers on Meta Quest and Apple Vision Pro headsets, with a planned summer launch.
Watt also moved on from MoviePass and founded his own venture capital firm, Share Ventures, which focuses on investing in healthcare and tech companies.
Overall, “MoviePass, MovieCrash” highlights the challenges faced by Black founders in the startup world and the need for increased funding and support. It serves as a reminder that diverse perspectives and voices are essential for innovation and success in the industry.