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MoviePass Inc., the technology platform enhancing the exploration of film and the moviegoing experience, announced today it has raised its seed financing led by Animoca Brands with participation from Claritas Capital, Emerald Plus, Gaingels, Harlem Capital, PKO VC and Sandhill Angels. Animoca Brands’ executive chairman and co-founder Yat Siu will join the board of MoviePass.
MoviePass will use the new funding to accelerate the beta relaunch of its movie theatre subscription service, and to develop and implement the company’s Web3 strategy, including virtual reality cinema experiences and using technology to drive traffic to theaters.
MoviePass is also in discussions with studios to share key learnings on increasing attendance and driving better engagement through technology.
“MoviePass has a strong vision for technology in the field of entertainment and our investment demonstrates our commitment to maximizing the value that MoviePass can deliver across the film industry,” said Yat Siu, executive chairman and co-founder of Animoca Brands. “With its initiatives to increase traffic to theaters, engage audiences with enhanced cinematic experiences, connect studios and their franchise characters to movie fans, and make financing more accessible to aspiring filmmakers, we believe that MoviePass will help to define the future of cinema.”
In the roll call of terrible business ideas, MoviePass ranks alongside the Sinclair C5, Juicero and The Soup Tube.
Starting in 2017, MoviePass sold subscriptions for unlimited cinema tickets that cost $9.95 a month. It then bought each cinema ticket at the full retail price, which was usually more than $9.95, meaning as soon as a customer watched just one movie a month it would lose money.
More than 2mn people signed up for MoviePlus within the first year and went to the movies reasonably regularly, so for every $9.95 monthly subscription it was buying about $22 in tickets. By January 2020, after several rejigs of the proposition, MoviePlus was bankrupt.
Last November, the Department of Justice brought fraud charges against its former chief executive and the chair of its parent company Helios & Matheson Analytics (HMNY). It alleges that the pair, Ted Farnsworth and Mitch Lowe, misrepresented its blitzscaling strategy as a tried-and-sustainable business plan. Also, according to the DoJ, they . . .
… allegedly made false claims that HMNY possessed and used technologies – like “big data” and “artificial intelligence” platforms – to generate revenue by analyzing and monetizing the data MoviePass collected from subscribers. However, the indictment alleges that Farnsworth and Lowe knew HMNY did not possess these technologies or capabilities to monetize MoviePass’s subscriber data or incorporate these technologies into the MoviePass application.
The complaint records in full Lowe’s Gerald Ratner moment.
On March 2, 2018, Lowe spoke at the Entertainment Finance Forum, giving a speech titled, “Data is the New Oil: How Will MoviePass Monetize It?” Even though MoviePass was not collecting basic demographic information for all of its subscribers, Lowe falsely and misleadingly stated that MoviePass collected “an enormous amount of information” regarding its subscribers, and that it even tracked its subscribers through their phones. The following week, on March 12, 2018, Lowe issued an email apology to MoviePass’s subscribers, partners, and employees, saying that “through a mix of exuberance about our future and joking around” he “mischaracterized how MoviePass locates [its] members” and explaining that MoviePass did not “track” its subscribers. On March 13, 2018, Farnsworth sent Lowe a text message that HMNY’s stock was “tanking,” and that investors were “saying the exact thing I was afraid of that we are not a big data company and we just admitted it . . . .” While Lowe’s apology acknowledged that MoviePass gathered a more limited universe of data than it had previously led the public to believe, the March 12 apology did nothing to correct the misimpression that MoviePass was using HMNY technology and capabilities to analyze the subscriber data in MoviePass’s possession.
Oops.
MoviePass founder Stacy Spikes bought the assets out of bankruptcy in late 2021 and last year re-launched the service in closed beta with a minimalist website. Spikes had sold a majority stake in Moviepass to HMNY in 2017, then exited the business in early 2018 having seemingly disagreed with the new owners about pricing.
Leading the first funding round for his reboot is Animoca Brands, a Hong Kong-based crypto speculator that arrived early to the NFT bubble via an investment in the developer of CryptoKitties. Animoca is perhaps best known for running The Sandbox, an ethereum-powered metaverse world whose apparent underpopulation hasn’t stopped it attracting big name tenants including HSBC.
Sandbox’s value, as measured by the market cap of its native token, has traced a familiar shape:
Animoca believes there is overlap between movie customers and fans of the metaverse and blockchain, Spikes told Variety. “We are both thinking about things like, what’s the future of cinema. We are likeminded.”
