As the founder of Urbanworld Film Festival, Stacy Spikes led a foundation with a mission of redefining and advancing the presence of the multicultural community in cinema and cross-platform media, by implementing initiatives that actively support and develop content creators of color. Now as CEO of MoviePass, Spikes is determined to get more people back into the theaters, with a subscription model that enables moviegoers to see unlimited movies for $30 month (which is basically equivalent to a dollar per day for seeing a movie every day).
Two years ago, the company launched a disruptive technology allowing anyone with a smartphone to choose where they want to see a movie, then reload their MoviePass card and pay at the counter with that card to see any 2D movie in nearly any theater they chose. As of April 2015, MoviePass members had watched nearly one million movies with their subscription. This signaled a key turn for the company after a partnership with AMC theaters and a 70% increase in subscribers in 2014.
In the future, MoviePass plans to introduce a wide range of exclusive new features that will let users view premium formats, as well as share and manage their movie going experience more effectively. CEO Stacy Spikes has plenty to say about it all.
EBONY: You’ve already had a pretty successful career in the entertainment industry, in both music and film. And although this is still entertainment, it’s also very much a technology company. How was that transition for you?
Stacy Spikes: I think for all of us, when the iPhone and the app store came onto the scene, the iPhone changed all of our lives and no matter what industry you were in. We suddenly had this device in our hands that could do almost anything. The leap for me as an entrepreneur I think is the same leap that we’ve all had to make.
There’s just this massive shift in how we do business today, and the phone is not just used for talking and email like the Blackberry years. It’s now a computer with a remote control that can control a toy helicopter, get you a car, order your coffee and get your laundry done. The idea of taking that technology to assist the movie industry, there was just this natural evolution. Because now you have tools to do things you couldn’t do before. Being in this space, you’d say, “we can do this, this, and this that we can never do.”
It’s just organic evolution. It wasn’t hard. I didn’t have to go to school to learn to code or to be a developer. It’s similar to when you used to send out emails, then you got a website up, and then you started doing a blog and then you started doing a video blog and then the Internet really got mature and now it’s transactional. It’s been an evolution. It looks like a big step, but I don’t think it’s a big step. I think we’ve been waiting for the Internet to become small enough that we can effectively use it, and now it’s a rock.
EBONY: You’ve worked for some established companies. Now you’re an entrepreneur. Resources are different. How has that changed how you work?
SS: I find entrepreneurship far more freeing. The corporate structure can be draining and a challenge at times. You may not have the same resources, but you can get a lot done. It’s a lot like being a Navy Seal vs. a normal part of the infantry that doesn’t move. You know you’re on your own and you’ve got to get a lot done and you can play a strategic point.
There’s advantages to that, but I think it depends on the personality type. If I were more of a person who just cared about getting a check at the end of the month, I probably couldn’t do this job. You have to be able to do things that people think are crazy. But you’re also taking risks in trying to be a pioneer and you’re falling down a lot. Falling down is part of the entrepreneurial job requirement.
EBONY: MoviePass is a pretty disruptive idea. In fact, theaters and services like Fandango weren’t too happy about you guys when you first launched. How did you come up with such an idea in the first place, and how did you get the movie industry and its ancillary services to really understand that you’re helping to grow the movie industry overall?
SS: Subscription isn’t something new. Whether it’s subscription to a magazine or to cable or to your telephone or your gym. It’s very old. But subscription only works if it’s something that people do repeatedly and often. The trick in 2004, AMC tried a subscription model in their theaters and it was actually successful, but they couldn’t figure out with studios how to break up the revenue. Studios were very nervous about it.
The industry has been talking about subscription for a while, because it knows that people will go more. But the question becomes, how do you do it? The theaters only care about their theaters. They don’t want to make something that benefits someone else. It would get siloed. And then you’d have a Regal subscription and AMC subscription a Cinemart subscription. You needed an over-the-top system that works for everyone.
When we tried to introduce the idea, everybody lost their minds. I had already been talking to everybody for five years; it wasn’t like we just threw this thing up. We actually did our deal through movietickets.com and had access to their API. So what we were doing was no secret. You don’t just get access to someone’s API without them giving it to you. Ultimately, a year later we announced a partnership with AMC. What helped everyone is that we created a technology that was over the top and it made it so they couldn’t shut it down, so now everyone was ready to have a conversation.
EBONY: While MoviePass is about getting more people in theater seats, the cable networks, Netflix and Amazon are killing it now with their original content and more people are staying at home. Sure, a subscription service will help, but there has to be better content too, right?
SS: I think television is television, whether it’s on my phone, my television or on the big screen. But the communal experience where the movie theater is like the concert experience. That will always be there, but it diminishes when people aren’t investing in cinema as they are in the Netflixes of the world. It’s like going to the Warner Bros. heyday when they owned the theaters and they owned the content. So it was from the cradle to the grave.
When you can control the pipeline, you create more power in your own system. I think right before Reagan, what they did was they broke the studios/theaters up. The studios had too much power. They controlled the talent, they controlled where the movies played, they controlled Technicolor. You’re kind of having that system with HBO and Netflix now. They’re controlling the making of the content and the distribution, and now we’re back to an oligopoly system that is completely dominated by certain verticals.
When you saw United Artists and other studios being created, it was because Warner Bros. had such a monopoly the talent got locked into things. If you were Warner Bros., you were Warner Bros. for life. History is repeating itself. Movies will need a similar rebirth.
When I think of MoviePass’s role, I think of it as being something that will ultimately create content. You can see it in theaters, you will own it and have it at home. It’s cradle to grave also, so that movie theaters can compete with the Netflix and HBOs. You can’t compete in a system where there’s too many people in your food chain taking cuts of your money. It’s like the phone companies and the Baby Bells and then all of a sudden here comes Skype and it becomes more valuable, where I don’t even need your system any more.
EBONY: So people will always want to go to theaters? Theaters will never be obsolete?
SS: Seventy-five percent of our members are under the age of 35. Young people want to consume content differently. They want to go to the movies, but they also want it to be more fluid. The windows sill shrink. The big titles will get theatrical releases. It’s no different than when home video came along. Things released theatrical, and then you waited six months to get it on home video. There were things that came out that were so-so, and then you waited three months for home video, and then there were titles that went straight to video. There’s still that system in play.
It’s like the music artist who releases an album but doesn’t tour. The movie artists who want to make all the money who know they will get merchandise and get all the ancillaries know they have to go big if they want the big money. In music, putting an album out is not the same thing as people seeing you live. I don’t think the industry will. The movie theater won’t disappear, but it needs to go through a renaissance, and we’re at the tip of that spear.
EBONY: Are art houses a part of the mix? Like in New York City: BAM, Angelika and Landmark?
SS: All theaters that take major credit cards are in. We have three requirements: they take MasterCard, they list their showtimes in the tribune feed, and they’re not a specialty house, like the dine-in theaters that are past a certain price point.
EBONY: When it comes to MoviePass though, for the subscriber, you’d have to go to the movies often for it to be of value. There seems you’d have some cases of overuse and then some cases of underuse. What are the trends you’re seeing in the two years you’ve been around?
SS: There’s three different types of people. There are the ones who join the gym, lose the weight, change their lifestyle and they’re in there six days a week. There’s other people who are seasonal. They go to the gym and they get fit for the summer or they lose the Christmas weight. And then there are those who join and never go. Subscription businesses are all pretty much the same.
Some people are heavy consumers. Some are seasonal. For instance, I’m an HBO Go and Netflix subscriber, that I’m not on there all the time, I’m there when certain title drop. So I’m driven by content. My wife and daughter are on there far more frequently than I am. There are different behavior patterns, but we’ve found that the average person who signs up for MoviePass goes 1.5 times per month.
EBONY: You guys are one of the first to come along and tie location data to the debit/credit card system. How can you perfect that system so that it works for everyone regardless of connection or phone system?
SS: Our over the top system was that you didn’t need to be part of anyone’s system. We didn’t want a scenario like we had the first time, where if we went through someone’s gateway and they changed their mind, they could close the door on us. So we decided to use what was more universal that couldn’t be closed down. But then there’s trade offs. Do you want to be fast, good or slow and you can only pick two.
What we chose was a 90% footprint in the marketplace, and our footprint is larger than Fandango and MovieTickets combined, but it’s a walk up transaction. But now as we are partnering with theaters, we’re able to offer electronic ticketing, and that’s how we’re increasing the ability to have advanced ticketing and seat selection, but there won’t ever be a situation where the theater can shut it down.
EBONY: Not like you’re going to be Foursquare or Yelp, but is there opportunity to tie into local businesses? People want to go to dinner or drinks after the movie.
SS: We want to conquer some of our first verticals. We’re aware that opportunity exists, but it’s not something we’re spending time on. We want to focus on the consumer experience around the product. We know they’re eating and traveling to and from the theater. Some of our members have asked to help with babysitting, which there are services that exist for that. We want to focus on making this a better product and experience for them.
EBONY: So let’s talk about the product for a second. What is your product lifecycle like, and are you making agile changes based on user and influencer feedback?
SS: We make agile changes based on feedback. Weekly, we look at customer service feedback. If someone says I don’t want to do X, we say, “why not?” And we’re improving upon those things all the time. We have a roadmap of what people want for the product, and we’re working to make that happen as well.
EBONY: It’s a tough VC market out there. What’s the process been like for you?
SS: Like for everyone. Raising money has been the hardest part of the business. You have to keep pitching. You have to keep going and pushing that rock up the hill until you catch this watershed moment until it takes off on its own. I think we’ve done well and have done better than some. We’re in that B stage, which is probably the trickiest place to be for a startup business. It’s not that “show us an idea” or “show us proof of concept.”
C round is add money and grow. D is exit, and where you’re Spotify or Netflix or Uber stage, where you’re deciding if you go public. This stage is critical, the first part of this wobbly bridge. We have good industry traction. We had to bulldoze the business twice, so we’ve really turned a lot of those things around. Having the partnership with AMC and the announcement has really helped to turn things around in terms of traction with the investment community.
Lynne d Johnson has been writing about music since the early 1990s, tech since the late ’90s, and the intersection of music and technology since the early 2000s. She currently writes, teaches and consults companies on how to better engage with their audiences. Follow her on Twitter @lynneluvah.