Burned $150 Million with a $10 Subscription

Hey there, today’s post is about MoviePass, a once-hyped startup that promised unlimited movies for just $10 a month. It captured headlines, grew its subscriber base at breakneck speed, and reshaped how people thought about going to the movies. But beneath the surface, the math didn’t work. The more it grew, the more it lost.

In today’s post:

• Executive Summary

• Background: The Big Idea

• The Business Challenge: Unlimited Demand, Unsustainable Model

• The Strategic Missteps: Rapid Growth, Zero Control

• Execution: From Buzz to Backlash

• Results and Impact: The Subscription Dream Collapses

• Lessons for Business Leaders

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Executive Summary

MoviePass launched with an irresistible promise: watch one movie per day in theaters for just $10 a month. The company exploded in popularity, reaching over 3 million subscribers in under a year. But every ticket a user redeemed cost MoviePass more than it earned.

In an attempt to drive scale and market power, MoviePass ignored basic unit economics. Costs ballooned. Cash burned fast. And instead of adjusting the model, leadership doubled down with wild promotions and erratic decision-making.

In 2020, MoviePass shut down for good. It remains one of the clearest warnings against scaling an unprofitable idea.

Background: The Big Idea

MoviePass was founded in 2011 by tech entrepreneur Stacy Spikes. The idea was simple: give movie lovers a subscription service that let them see a set number of films per month for a flat fee. Originally, prices ranged from $30 to $50 depending on location, with limits on usage.

The concept intrigued cinephiles, but traction was limited. Movie theater chains were skeptical, and the pricing wasn’t mass-market friendly. Growth was slow.

Then, in 2017, everything changed.

Helios and Matheson Analytics, a data analytics company, bought a majority stake in MoviePass and appointed Mitch Lowe, a former Netflix executive, as CEO. The new leadership slashed the price to $9.95 per month for (almost) unlimited movies.

It was a media sensation. Sign-ups surged. MoviePass became a household name. But behind the scenes, chaos was brewing.

The Business Challenge: Unlimited Demand, Unsustainable Model

The sudden popularity of MoviePass introduced massive operational and financial challenges that the company was ill-equipped to handle.

1. Broken unit economics

The average movie ticket in the U.S. cost over $9. Each time a user saw a film, MoviePass paid full price to the theater. If someone saw two or more movies per month, MoviePass lost money.

2. Power users drove massive losses

A small but active portion of the user base watched movies every day. These power users cost the company hundreds of dollars monthly per person.

3. Theaters didn’t partner

Unlike Spotify or Netflix, MoviePass didn’t own content or infrastructure. Theaters didn’t give discounts. The business had no leverage and paid retail rates.

4. Cash burn exceeded revenue

At its peak, MoviePass was losing millions each week. The more popular it became, the faster it lost money.

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The Strategic Missteps: Rapid Growth, Zero Control

In pursuit of user growth, MoviePass made several flawed strategic choices that undermined any chance of sustainability.

1. Aggressive pricing without plan B

Slashing the price to $10 was a gamble. The company had no fallback model or long-term path to profitability.

2. No meaningful partnerships

MoviePass failed to secure partnerships with major theater chains. AMC and others even publicly criticized the service.

3. False confidence in data monetization

Executives claimed that user data would unlock revenue streams through targeted advertising and studio deals. But those plans never materialized.

4. Misleading communications

As losses mounted, MoviePass made confusing changes: blackout dates, restrictions on blockbuster films, and last-minute rule changes that angered users.

5. PR stunts and distractions

From launching a film production arm to selling branded merchandise, MoviePass spread itself thin instead of fixing its core model.

Execution: From Buzz to Backlash

Poor operational execution turned a high-potential idea into a cautionary tale. Mistakes piled up and trust eroded.

1. Unreliable app experience

The MoviePass app frequently crashed, failed to show listings, or incorrectly geo-located users. Technical instability became a major complaint.

2. Sudden restrictions without notice

Overnight policy changes left users frustrated. Previously eligible films became unavailable. Booking limits appeared without explanation.

3. Security and privacy concerns

Investigations revealed that MoviePass continued tracking users' location even after they left the theater. This led to scrutiny from regulators and the public.

4. Customer support is overwhelmed

High demand combined with constant changes led to long wait times and unresolved issues. The support team couldn’t keep up.

5. Burned user loyalty

Many early fans became vocal critics. The company's bait-and-switch tactics destroyed goodwill and drove cancellations.

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Results and Impact: The Subscription Dream Collapses

The fall of MoviePass was slow and painful. It exposed deep flaws in leadership, planning, and investor oversight.

1. Subscriber exodus

After peaking at over 3 million users, the base declined rapidly as trust eroded and features were limited.

2. Financial ruin

MoviePass reported losses of over $150 million in 2018 alone. Parent company Helios and Matheson saw its stock price collapse.

3. Leadership fallout

Founders and executives left amid lawsuits, investigations, and public scrutiny.

4. Bankruptcy and shutdown

MoviePass ceased operations in 2020. Helios and Matheson filed for bankruptcy.

5. A market changed forever

MoviePass forced theaters to reconsider subscription models. AMC, Cinemark, and Regal all launched versions of their own, but with more sustainable terms.

Lessons for Business Leaders

1. Don’t scale what doesn’t work

Rapid growth of a broken model only speeds up failure. Fix the fundamentals before expansion.

2. Unit economics are non-negotiable

No amount of data or branding can overcome a model where every customer brings a loss.

3. Transparency builds trust

Changing features and pricing without warning erodes customer loyalty. Be upfront.

4. Growth must be supported by infrastructure

Operational systems, support teams, and reliable tech must scale with the user base.

5. Leverage matters

Without partnerships or unique value, a business lacks power. MoviePass was dependent on theaters that didn’t need it.