Stacy Spikes spent the majority of 2018 like many movie lovers: Watching MoviePass’ inevitable fall from grace. The only difference is it was far more personal for Spikes, who co-founded the company in 2011 before being fired in January 2018 after a disagreement with its new parent company Helios and Matheson Analytics. In his first major interview since being forced to exit MoviePass (via Business Insider), Spikes said the writing was on the wall the minute Helios became fixated on MoviePass’ $9.95 service charge. While Spikes appeared to be in support of the lower fee when speaking to IndieWire in 2017, he now says that wasn’t the case behind the scenes.
According to Spikes, the idea to lower MoviePass’ monthly fee to $9.95 originated as a “promotional thing” to celebrate Helios’ acquisition of the company. The original plan was to never keep the rate at $9.95, a number Spikes knew from the start was never going to be profitable for the company. Spikes spent many years working on price points, starting out in 2011 as low as $19.99. Years later Spikes had figured out a way to keep the company surviving with a price as low as $12.99, but Helios was not interested once the $9.95 promotional fee turned MoviePass into an overnight sensation.
“We hit 100,000 [new subscribers] in 48 hours,” Spikes said. “So I’m like, ‘OK, turn it off. We reached our goal.’ Where things started to divide is: Myself and a handful of others were methodical about testing price points. The lowest we ever got down to was $12.99 and as high as $75, where we added Imax and 3D. We knew what was sustainable. But the overriding voice was, ‘No, this is awesome, look how fast we’re growing.’ And it was this moment of ‘but $10.’ It doesn’t fly. Now the plane is falling.”
By December 2017, Spikes said the company was “growing at a quarter of a million subscriptions a month.” The co-founder said he started to make it known that he was “not a happy camper.” Spikes described what happened next: “Then on January 9, I get an email that said, ‘Thank you, but your services are no longer needed.’ And my feeling is we just disagreed on the approach.”
Spikes said he has not spoken with MoviePass CEO Mitch Lowe or Helios Chief Executive Ted Farnsworth since being fired. In the months that followed his exit, Spikes had to watch the company flounder as it frantically tried to create new business plans in an attempt to salvage the sinking ship. Most painful for Spikes was watching the company turn its back on its subscribers.
“We had built brand loyalty for years,” Spikes said. “The fact that was evaporating so quickly was concerning.”
Spikes said he saw at least one silver lining: “The good side was cinema had not been taken seriously since Netflix really got its footing. So what I liked about that was this had risen to the zeitgeist of conversation. Seventy-five percent of our members were under the age of 26. Cinema was an event people cared about again. So while there is a sadness around the brand, I was happy to see that this is front and center.”
Read Spikes’ full interview over on Business Insider.