2. Fees and Physical Cards
[Editor’s Note: One of the chief complaints from Sinemia users is surrounding fees. Some, including those involved in a class action law suit, believe Sinemia is pulling a bait and switch — if you use your monthly subscription to purchase advance tickets you pay two additional convenience charges to the theaters and a second $1.80 charge from Sinemia. If customers want to avoid those charges, you must pay a fee to purchase a physical card that can be used at the theaters.]
It would strike me that the card, the physical card used in theaters, is a way to solve some of those problems, so I want to talk about that. It seems as if physical cards went away, it was then hard to find how to order the card, and now I went to order a card last night and it couldn’t tell me how much it would cost. So it’s hard for me to understand–
Oguz: It didn’t tell you?
No. It used to be $14.99, that’s my understanding. Now it says “Do you want to order a card” and then it says, “Price will vary based on” I want to say “usage.”
Oguz: Huh. Usage? Okay, let me just have a look into this.
Editor’s Note: Sinemia’s exact language regarding ordering a physical card: “Sinemia card fee is determined based on the usage and operational costs vary depending on the plan. Sinemia covers the online convenience and processing fees for physical card users when the card is used in person, at the box office unless told otherwise. Physical card orders cannot be canceled nor refunded. Sinemia reserves the right to make changes to applicable fees and introduce new rules at any time.”
Oguz clarified during the interview that cards cost $14.99 to $29.99. Oguz went on to discuss the $1.80 fee associated with purchasing tickets online, in addition to the theater’s convenience charge.
Oguz: After growth and seeing that the [volume of] online transactions [at one point in early 2018, 87 percent of Sinemia tickets were purchased online in advance] there’s a conveninece fee and to pay that convenience there’s processing fee that we also handle. There’s also a cost behind it in our operation, we had to engineer for that, there’s producting for that, and we started to charge outside of the ticket [because] that’s a cost for us. Payment processors also get some fix amount of dollars whenever you transact a cardholder and we were transacting this convenience fee, because if you want to buy an online ticket you have third party providers asking for convenience fees.
This is the $1.80?
That $1.80 represents what you’re being charged for a processing fee? Because that’s a very high processing fee.
Oguz: No, that’s not equal… and there is operational cost for it.
Yeah, but normally the processing fee is somewhere in the neighborhood – for a credit card or a service like that – is three percent, right?
Oguz: No, no. There’s also a fixed amount for every transaction. It’s not three percent. It’s more than 30 percent. Even if [the convenience fee] is $1, the fixed amount is always there.
Can we work through an example? Last night I bought a $17 ticket at Alamo Drafthouse. As instructed, I bought that ticket from the Alamo website. They had their own convenience fee of $1.75, you are going to pass that onto me. I know that. But then in addition, you’re going to probably charge me $1.80, right?
Oguz: Yes. Because advanced tickets have some cost to us. And that’s actually not three percent of that $1. It’s more than that. It’s more than 30 percent.
Right, so you bought me a $17 ticket. You’re passing on the Alamo Drafthouse convenience fee to me. The issue is that $1.80 is 10 percent of the purchase.
Oguz: To take that convenience fee from you and send it to Alamo Drafthouse, there’s a cost associated with that.
Alamo is charging you as well?
Oguz: Not Alamo, the credit card processors.
Oguz: Even though we’re charging your card [that fee], I can tell you almost half of it is going to the payment processors.
Half of it. Approximately half is what you’re saying?
Oguz: Yes. There’s costs associated with an operational costs, and the virtual card cost, so we cultivated [the $1.80 fee] to maintain the service starting [in] August. Netflix increased their price three times, right?
Everybody understands increased subscription charges, but I know you’ve heard the accusations of bait-and-switch and I know that you’re facing a lawsuit over that. The problem that people have with the fees is it works against the appeal of subscriptions, right? It’s a set cost. I spend x dollars a month and I know what I can do with it. Yes, Netflix is gonna increase costs. Maybe one day Spotify will increase costs.
Oguz: And that’s why we have physical cards right [to avoid the $1.80].
But you’re not increasing subscription costs. What you’re doing is these things accrue. It’s $1.80, $1.80, $2, before you know it, this thing that it thought I was spending $8 or $9 on a month to see a certain number of movies is now costing significantly more if I actually use it. It works against the subscription model.
Oguz: If you really think that, you’ll not use Sinemia. Just your example, you bought a $17 ticket, and you paid $8.99 you said, maybe for three tickets (a month). You paid, let’s say $2 for every transaction, $1.80, right?
Oguz: For one of them, you’re paying $11 and you get $17. Almost a 50 percent discount that you can never find in any of the other, anywhere, right? [With] the second, you’ve paid Sinemia $13 and you have $34 [worth of tickets] that we paid for you. Then your third ticket, it’s gonna be $51, and you’re paying Sinemia $15. When you’re buying tickets, it’s $51 that we are paying for $15 we get, it’s more than 75 percent discount.
[Editor’s Note: In this scenario, that $15 does not include the theater’s convenience fees, which would add an additional $4.50 to $6.]
To avoid the $1.80, the answer is to move towards a physical card [a $14.99 to 29.99 fee], correct?
Oguz: That’s if you really want to avoid the $1.80, if it is really, really important. I can tell you this right now, even physical card holders, again, they’re buying the online tickets [and there are fees].
Are you having problems with the card? Are there any technical problems in implementing these new cards? We discussed the backend of the advanced ticket purchase in the app, are you having similar problems with the cards?
Oguz: With the backend?
Are people having problems using the cards in theaters?
Oguz: No, not that I’m aware of. Where is this question coming from, actually?
There’s been a lot of problems over the last two months.
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