HBO’s new documentary, “MoviePass, MovieCrash,” tells a story many of us know: how MoviePass, the subscription movie ticketing startup, was a catastrophic failure. After a series of misadventures and deception, he filed for bankruptcy in 2020.
However, the film also tells the under-reported story of two Black men who aimed to disrupt the film industry, but were then thrown out of the company and forced to watch from the sidelines as their creation burned to the ground.
Mitch Lowe, a former Redbox and Netflix executive, and Ted Farnsworth, CEO of analytics and consulting firm Helios & Matheson, are often seen as the faces of MoviePass. However, neither deserves the credit. MoviePass was originally founded by former Miramax executive Stacy Spikes and serial entrepreneur Hamet Watt.
The premiere of “MoviePass, MovieCrash,” which is available on Max starting today, comes at a time when only 2.7% of businesses in the U.S. are majority black, according to recent estimates by Annual Business Survey. Spikes hopes this documentary will shed light on his perspective and highlight the need for increased funding for Black founders.
“Truth will be told,” Spikes told TechCrunch. She added that the documentary is not only about “the rise and fall of MoviePass,” but also addresses the fact that we are still in the early days of changing the mindset of venture capitalists and that “more women and founders of color are welcome.
(We recommend that you watch the documentary before reading this article.)
When Lowe first took over as CEO in 2016, MoviePass had already been around for five years. Originally it was a subscription where customers got their own debit card that was automatically loaded with exact amount of cinema ticket. Customers selected the movie they wanted to see in the MoviePass app. However, user growth wasn’t where it needed to be – the service hovered around 20,000 subscribers.
The company also needed more money, yet faced the harsh reality of the disparity in venture capital funding for black-owned companies. To this day, a small portion of the funding goes to Black founders. In 2023, Black founders in the US raised 0.48% of all venture capital, or about $661 million of the $136 billion in total. This number was the lowest on record in recent history, with Black founders typically accounting for at least 1% of all venture dollars raised.
Ultimately, the founders thought the appearance of a “white man with gray hair” would inspire other white men to be “more comfortable” investing, Watt shared in the documentary. A year after Lowe joined, Helios & Matheson bought a controlling stake in MoviePass for 27 million dollars.
“You had these experienced founders who knew what they were doing and were very successful and yet they hit the ceiling with the ability to raise capital. Then you have two white people who can raise $150 million from the same brand,” Spikes told us. He assumed the role of chief operational officer until 2018. Watt remained a member of the board of directors.
MoviePass quickly shifted gears under its new owner. To attract as many customers as possible, the company significantly reduced the subscription to $10 a month for one movie every day. The price change attracted about 175,000 users in 48 hours, giving the service a dominant position. By 2018, it had skyrocketed over 3 million subscribers.
“The $10 price was supposed to be promotional. We would only put 100,000 people on this level. The moment [Lowe and Farnsworth] they said they didn’t want to disable which was a big red flag because $10 is not a sustainable price. It’s just not,” Spikes added, explaining that the average ticket price was $11.50 at the time, so customers going to multiple movies a week cost the company tons of money.
In fact, MoviePass was losing millions of dollars every month. He lost $40 million May 2018 single.
Spikes’ warnings to Lowe and Farnsworth were ignored, and MoviePass fired him in 2018, he says. Watt was also let go.
“Mitch and Ted were pushing back and saying, ‘We know what we’re doing. We bought you. Thanks for sharing,” Spikes said in the documentary. “It broke my heart to see two black founders build a company the way we did, and suddenly there’s an all-white board.”
“He just wasn’t a productive member of the team,” Lowe said.
Attempts to reach Lowe and Farnsworth for comment were unsuccessful.
MoviePass later went back on its unlimited movie promise and began limiting its offering to three movies a month. The company also tried alternative revenue streams, such as selling data to advertisers, producing films through an in-house studio and even a strange venture into the airline industry.
From extravagant yacht parties to frivolous spending of $1.1 million on an unnecessary Coachella event, the spending spree exemplified an outrageous level of corporate greed.
Speaking about the Coachella event, Lowe said, “I felt a sense of resentment from the MoviePass employees [who weren’t invited.] Each person has their various roles and not all roles are for parties.”
“I’m sitting at home and on my Twitter feed, Dennis Rodman is getting out of a MoviePass helicopter at Coachella… [They’re] it burns through money. The staff is suffering… It doesn’t make sense,” Spikes said during our interview.
Meanwhile, customer support workers and other members of the MoviePass team faced a sinking ship as the site faced repeated outages and angry customers. (Spikes claimed in a previous interview with TechCrunch that these errors were intentional.) In the summer of 2019, a data breach exposed tens of thousands of MoviePass card numbers as well as customers’ personal credit card numbers.
In its short years under Lowe and Farnsworth, MoviePass imploded. The two executives are currently awaiting trial after pleading not guilty to one count of securities fraud and three counts of wire fraud.
Spikes, meanwhile, managed to change his story. It bought MoviePass in 2021 and relaunched it last year. It seems to be a success so far became profitable for the first time in 2023.
During the TechCrunch interview, Spikes also mentioned details that didn’t make it into the new HBO movie, such as building a VR app for MoviePass viewers to watch movie trailers on Meta Quest and Apple Vision Pro headsets. It hopes for a summer launch.
Watt founded his own venture capital firm, Share Venturesin 2019, which invests in healthcare and technology companies.
