The Big Flop - How MoviePass Bombed at the Box Office with Jamie Loftus and Austin Nasso | 33

Episode Date: April 29, 2024

Stacy Spikes came to Hollywood with dreams of revolutionizing the industry. His creation, MoviePass, promised to offer low-fee, all-you-can-watch theater subscriptions for movie fans. The only problem? It couldn't make any money. Find out what happens when Stacy sells out to an eccentric investor, why a dog had to issue an apology to customers, and how John Travolta is somehow at the center of it all. Misha Brown and special guests Jamie Loftus (The Bechdel Cast, Lolita Podcast) and Austin Nasso (Socially Inept: A Tech Roast) sit back, grab some popcorn, and give a scathing review of MoviePass. Follow The Big Flop on the Wondery app or wherever you get your podcasts. You can listen to The Big Flop early and ad-free on Wondery+. Join Wondery+ in the Wondery app or on Apple Podcasts.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Wondery Plus subscribers can listen to The Big Flop early and ad free. Join Wondery Plus in the Wondery app or on Apple podcasts. On a lovely, almost spring morning in March of 2018, Ken, a retiree, is hoping to make a little scratch trading stocks. He isn't sure what to invest in, but he has about $50,000 to play with. Ken spots something interesting. A business called Helios and Matheson Analytics, the parent company of MoviePass, some hot shot new venture. Currently, Helios' shares are going for $4.62 each, but Wall Street analysts, who definitely know what they're talking about, say it's undervalued. With all the attention this new MoviePass thing is getting, they think it's worth $15 a share, at least.

It does seem like a good deal. Maybe too good. But, Ken thinks, you only live once and purchases 10,000 shares in Helios. Now it's time to watch that $46,000 triple in value. Maybe he can go to Fiji for his next vacation, St. Bards? But Ken notices that the price of his shares aren't tripling, but dropping. In the blink of an eye, his shares are worth less than a dollar each. But the analysts still say MoviePass is a hot commodity and Helios is due for an upswing. So Ken buys some again.

And suddenly, the price falls to just a quarter. So he buys again. But the next time he looks, it's worth just 8 cents a share! Desperately trying to make his money back, Ken ends up losing $190,000 in just three months. On the bright side, Ken has a really funny story to tell at parties, right? It's a question many moviegoers have been asking themselves. Should I get movie pass? But when the company dropped prices to $10 last August, the price to see one movie evened

out to be about the same price as the pass itself. And you get to see an unlimited number of movies each month. How is that a business model? How didn't they realize they would be paying more out of pocket than the subscribers were paying to them? MoviePass announcing it will shut down tomorrow and that it's not sure if or when it'll launch again. From Wondery and AtWillMedia, this is The Big Flop, where we chronicle the greatest

flubs, fails, and blunders of all time. I'm your host, Misha Brown, social media superstar and box office bombshell at Don't Cross a Gay Man. And today we're talking about MoviePass, the unlimited movie ticket service that bombed at the box office. Have you ever felt like escaping to your own desert island? Well that's exactly what Jane, Phil and their three kids did when they traded their English home for a tropical island they bought online.

But paradise has its secrets, and family life is about to take a terrifying turn. You don't fire at people in that area without some kind of consequence. And he says, yes ma'am, he's dead. There's pure cold-blooded terror running through me. From Wondery, I'm Alice Levine, and this is The Price of Paradise, the real-life story of an island dream that ends in kidnap, corruption and murder. Follow The Price of Paradise wherever you get your podcasts, or binge the entire season right now on Wondry+. -♪ Where is my hidden...

-♪ Looking for inspiration? Craving something new? When you visit Audible, there are endless ways to ignite your imagination. With over 750,000 titles, including bestsellers, there's a listen for every type of listener. Discover all the best in audiobooks, podcasts, and originals featuring authentic Canadian

voices and celebrity talent like Brendan Fraser and Luke Kirby's latest sci-fi adventure, The Downloaded. A first listen is waiting for you when you start your free trial at audible.ca. On our show today, we have a writer, comedian and podcast queen. Her shows, Lolita, My Year in Mensa and the Bechdel cast are absolute must listens. It's Jamie Loftus. Welcome to the show. Oh, thanks for having me. As a former MoviePass subscriber, I feel like my voice needs to be heard on this issue. It does need to be heard. I'm so excited. I love any time I get to do one of these podcast shows

and we have like firsthand experience. So I'm excited to get into that. Well, also on the show today, we have a comedian and improviser who is known for his sick tech roasts. It's Austin Nassau. Welcome. Austin Nassau Hello, thanks for having me. I have not used MoviePass. But I'm super excited to talk about his downfall. Yeah, same. I guess before we get into the story of MoviePass,

how much of a moviegoer are you? Are you an opening weekend person on matinee three weeks later? What's your vibe? I might be the worst movie person ever. I will probably go a year after its release and like pending the reviews. Like I'm like truly so behind on films, to be honest. What about you, Jamie?

I'm like very, I'll either go the first week it comes out or five years later. I feel like I have the sort of remaining like what movie pass once was. I'm an AMC Stubbs member, shout out to the AMC Stubbs gang. So that enables me to go to the mall and watch some of the dumbest shit possible.

So I'll either see something, yeah, like then the first two weeks it comes out or it will be a mystery to me for all time. Well in Hollywood, a town known for gatekeeping, Stacey Spikes has worked his way up from video store clerk to VP of Marketing at Miramax. By the time he's 27, Stacy is one of the lucky few who actually break in. But he takes a look around and becomes frustrated by the lack of representation. In 1997, using his connections,

Stacy founds the Urban World Film Festival, which highlights the work of BIPOC filmmakers. By 2004, the festival is such a big deal, it hosts the premiere of Collateral, a thriller starring Jamie Foxx, Jada Pinkett Smith, and Tom Cruise. My mom loved that movie. Yeah, when I saw that, I was like, oh, that's right. I remember that movie. My mom saw that opening weekend and talked about how Jamie Foxx was dreamy for six weeks

afterwards. But that's not enough for Stacey. He wants to expand the festival into a year round platform. And here's the twist. He wants to offer subscription passes to it. Now, do you remember what the movie industry was like in 2005? The movies were good, I think. Is that right? They were better? I feel like I thought all movies were great in 2005, but it was also because I was in

middle school. That's before you go to Rotten Tomatoes. I just would go watch movies and think they were all great. And now all those movies that I liked, I'll look them up and see that they had like a 20 or 30%. It's so humbling. Yeah, like thinking back to like the first dates I ever went on in high school and being like, wow, the Shia LaBeouf Indiana Jones was not in fact the masterpiece I thought it was. See, I'm aging myself here. But in 2005, I was in college. So, what I remembered was back then Netflix was still only sending DVDs in the mail and folks were pirating movies on the internet rather than paying full price. Stacey, who's always thinking one step ahead,

thinks that movie subscriptions could get people back into theaters. So in 2005, Stacey takes his idea to Travis Reed, the CEO of Lowe's Theaters. How does he go to the CEO of Lowe's Theaters? How does one do that? I mean, maybe because he was already doing movies with Jamie Foxx and Jada Pinkett Smith. Oh, yeah. Right. Well, Travis Reed, he thinks a quote movie pass is a good idea, good enough to expand

it beyond urban world to cover the whole movie industry. Travis is the guy in the movie about movie pass who thinks big. Who do you think for casting? I'm thinking Justin Timberlake with some maybe aging prosthetics in the movie. Guy who thinks big? Yeah.

I feel like this is like the same, like, like Justin Long with aging prosthetics. Maybe like Ashton Kutcher, like Steve Jobs kind of vibe. We're all thinking of basically the same guy. The same person. So how does this movie pass thing actually work? Well, the pricing structure is pretty straightforward. The subscription starts at $50 per month for unlimited movies. If you want to see a 3D or IMAX movie, it's an extra $3.

You're creating so much demand. I can imagine that it is very disruptive to the profit margins of these theaters. Yeah. That was like always one of my main questions about MoviePass was like, how do they get away with this? Like, I was never able to figure out the math, but I was happy to benefit from it. Right. So the question is, how can an unlimited subscription possibly make money? Well, get

out your number two pencils or whatever kids use these days because it's time to learn about the idea of breakage. So breakage is the profit machine behind cheap gym memberships, credit card reward points, hotel loyalty programs. These are businesses that revolve around services people pay for, but rarely use. They assume that many folks will just keep paying their small subscription fees, regardless of whether they actually use the company's service. So is this when I get a flight refund and Chase makes it impossible to find my flight credits, is that part of their business model?

Probably. Okay, just checking. Also, like the same logic where no shade, but I try to unsubscribe from Paramount Plus at least once a month and I can never figure out how. And in fact, the last time I tried, I ended up adding showtime and now I can't figure out how to do that either. I'm just like, oh my God, like I'm giving him $12 now. I don't know how it happened. Well, breakage would have been the quickest route to profit for movie pass. Unfortunately,

the math will never math because people love the movies just as much as Stacey does and way more than they love sweating and poorly lit gyms on broken exercise equipment. But I get ahead of myself. Back in 2006, Stacey and Travis work together on a ticketing system for their movie ticket subscription service. They find a way to send tickets to people via the most modern technology available in 2006. That's right, text messages. Hell yeah. The system they build works, but Travis's employer, Lowe's, has just merged with AMC,

and they're not interested in working with MoviePass. They're going to do their own thing. So after getting turned down by AMC, Stacy spends five years trying to pitch his idea to Regal, Cinemark, and other theater conglomerates. Nobody wants it. They're all investing in experiential entertainment like IMAX and 3D. Sidebar, are we happy the 3D movie craze is basically over? They were very painful to watch. Yeah. It would always be the most random things that became 3D.

Like someone would like cough and the droplets were like 3D. I feel like they didn't even know how to prioritize the 3D elements and the glasses really hurt. I think like, I don't know, for kids movies and also like for horror movies, I feel like it hits. I remember seeing Final Destination 3D in high school and I feel like it hits. I remember seeing Final Destination 3D in high school and I was like, this is cinema. This is good. Well, undeterred, Stacey keeps pitching and pitching until he gets his big break. Cue Angelic Chorus. A venture capital exec named Hamey believes in MoviePass and helps Stacy raise a million

dollars. Well, in 2011, MoviePass is ready for a soft launch. Now, for $50 a month, anytime customers want to go to the movies, MoviePass will just buy their tickets for them from another website. Oh, what? Worse though, the ticketing site they use is partially owned by Stacey's enemy, AMC. Whoa. Unfortunately, Stacey doesn't know that yet. This is wild.

So they're paying $50, MoviePass will go and buy all of the tickets for you. From other retailers. This reminds me of, there was one time I went to like a themed sushi restaurant, but they like for sure were not cooking the sushi there. They were ordering sushi from another restaurant, having it delivered to this Titanic themed sushi restaurant and being like, here it is the Rose Dewitt Bicator roll. And you're like, how is this financially worth it?

do it, be catered, roll, and you're like, how is this financially worth it? That's wild. It feels like that at the largest possible scale. Some stories were never meant to be heard. Beneath the visible world of parliaments, politicians and civil servants lies an invisible state filled with secret operatives playing to very different rules. From Wondery, I'm Indra Varma and this is The Spy Who. This month we open the file on Noor Anayat Khan, the spy who wouldn't lie. When Germany invades France, Noor and her family are forced to flee to Britain.

But Noor decides she can't just sit out the war, so she accepts one of the most dangerous spy missions of World War II, a job that will put her deep into enemy territory. Follow The Spy Who now, wherever you listen to podcasts. Or you can binge the full season of The Spy Who Wouldn't Lie early and ad-free with Wondery Plus. Hello, I'm Emily, one of the hosts of Terribly Famous, the show that takes you inside the lives of our biggest celebrities. Some of them hit the big time overnight, some had

to plug away for years, but in our latest series we're talking about a man who was world famous before he was even born. A life of extreme privilege that was mapped out from the start, but left him struggling to find his true purpose. A man who, compared to his big brother, felt a bit, you know, spare. Yes, it's Prince Harry. You might think you know everything about him, but trust me, there's even more. We follow Harry and the obsessive, all-consuming relationship of his life. Not with Meghan, but the British tabloid press.

Hounded and harassed, Harry is taking on an institution almost every bit as powerful as his own royal family. Follow Terribly Famous wherever you listen to podcasts, or listen early and ad-free on Wandery+, on Apple Podcasts, or the Wandery app. early and ad free on Wandery Plus on Apple Podcasts or the Wandery app. Are you tired of dating assholes? Do you want a Prince Charming? If so, we're filming a reality show. Sign up here. Twelve American women are flown over to the UK for a bachelor-style reality dating show. There are so many questions about a show like this because it's so odd. These women have been told that they were going to be dating the world's most eligible bachelor,

Prince Harry. What? Y'all playing with me, right? You can binge The Bachelor of Buckingham Palace exclusively on Wondry+. Join Wondry+, in Apple Podcasts or the Wondry app. Sign-up start on July 4th of 2011 and 19,000 people sign up to become MoviePass members. Or at least they attempt to. 19,000 is way too much all at once. And MoviePass's servers crash. Now, Jamie, you are a MoviePass subscriber.

Were you in that first wave? Oh no, I are a MoviePass subscriber. Were you in that first wave? Oh no, I was a late bloomer. I got MoviePass so I could see I, Tanya, 14 times in theaters and then I unsubscribed. I loved that movie so much. Me too. It was my whole personality for a while. So the launch causes quite the media stir and almost immediately, Stacey gets a call. It's AMC, and they want to know who gave MoviePass approval to sell subscriptions to

movie tickets at their theaters. The next day, AMC releases a statement. To protect their newly launched Stubbs Rewards Program, AMC will not be participating in MoviePass. Drama! Even worse, AMC forces the ticketing site to back out of MoviePass. Our hero, he's unfazed. In just three months, Stacey and his ragtag team of five coders finally finds a modern

way to do movie tickets. Subscribers get a fancy MoviePass card that is essentially an unlimited gift card for movies, except that it only works at the theater and the show time a subscriber selects in the MoviePass app. So no more need for a ticket broker or vouchers for cinemas to balk at. But it's like a credit card. Yeah.

Oh my God. So this card only works at the theater and time you select it on the app. How do you think this magic card works? Like, how do they know that? They don't? They do. They do. And it's creepy.

They partnered with credit card companies and made use of their geo-tracking technology. That's like my 7-Eleven app being like, hey, noticed you're near your 7-Eleven and you're like, yeah, I'm always near a 7-Eleven. You don't need to contact me. Yeah, this is not innovative. I would be turning those notifications off real quick. Well the convenient card allows MoviePass to expand across the country. From 2012 to 2015, MoviePass runs on this

model and expands to more U.S. markets. And all the while, Stacey carefully tracks their data. He clocks that cinemas that use MoviePass double their profits. But again, MoviePass and Stacey aren't getting any of that ticket sales profit. To make money, they'll need to partner with a big player like AMC. So Stacey convinces AMC's CEO to run a year-long study comparing their Stubbs Rewards program to MoviePass and it turns out MoviePass can make them more money. So AMC is all in. Things are looking up. That is until AMC gets a new CEO who decides that, oh wait, we can just make the stubs more like movie pass.

A week later, after their initial agreement, AMC cuts Stacey loose. One week? Yeah. They're really screwing with this poor man. I know that Stacey is like tracking us, but I am rooting for him. Yeah. They're really screwing with this poor man. I know that Stacey is like tracking us, but I am rooting for him. Yeah. It's complicated.

Well, in 2016, things look grim for MoviePass. Stacey and the board decide that the best thing is for Stacey to focus on improving the app while someone else handles securing more money. So they hire a new CEO, Mitch Lowe. Mitch Lowe co-founded Netflix and was president at Redbox. And around this time, MoviePass starts doing something they'll become infamous for. Tinkering with their pricing structure. Now, it's $50 for six movies per month, or $99 for unlimited movies per month. But they're still burning money and need an investor to step up.

In the summer of 2017, a cash-strapped movie pass goes looking for more investors and finds Ted Farnsworth, the CEO of a company called Helios and Matheson Analytics. Based on that name, what do you think Helios and Matheson does? Seal user data. Tracks you, keeps track of how many useful organs you have, waits to harvest them later. Well, Helios and Matheson is actually a data analytics company. But what would they want to do with MoviePass? Well, Ted Farnsworth's history in the business world is pretty wacky.

In the 90s, he co-founded the Psychic Discovery Network, a 1900 hotline that was promoted by Latoya Jackson and was eventually cited in a consumer warning notice from the Federal Trade Commission, though the company never admitted any wrongdoing. Yeah. Hmm. Very good. By 2017, Ted Farnsworth had gotten in trouble multiple times for failing to pay his federal

income tax, and he's worked with not one, not two, but three companies that went public and had their values fall by 99%. Oh my god. And this profit-making wizard has been described by former staffers as, quote, a bumbling, lovable, optimistic sort of guy. Men are so amazing. Yeah, that's the kind of dude who would apply to a job and have none of the qualifications would be like, I believe in myself. A lot of confidence. Yeah. But Stacey and

MoviePass, they're in a pinch. And after hearing Mitch Lowe's pitch, Ted Farnsworth is interested. So Farnsworth's company takes over and lowers the price from $50 a month to $9.95. Business genius. $50 was already losing money and the goal is to get 100,000 subscribers. So losing more money with more customers faster. The $10 pricing structure, that's where I came in. I was not the $100 haver. Jamie, how many movies would you go do a month?

So I only, I truly only did it for like the last two or three months before they crashed and I basically only saw I, Tonya, but you know, 14 times. Oh, so you're actually like really helping them. I don't know. I feel like I did kind of I racked up more than $30 in itania tickets. Certainly. All right. So the goal is to get 100,000 subscribers.

How long do you think that takes once the new price is announced? Really fast, right? I mean, it's I had not even heard of movie pass before the $10 thing. And then all of a sudden, everyone I knew had it. My guess is like a week or two. Something crazy. 48 hours. Yeah, that makes sense. Real quick. So how are you supposed to make money

when the movie subscription you sell is cheaper than a single ticket? That makes no sense at all. Wait, there's like not even a chance it makes money. Yeah. Right? Like, do you have to only make money when people don't go at all. Wait, there's like not even a chance it makes money. Yeah. Right? Do you have to only make money when people don't go at all? Well, as MoviePass's subscriber base grows, so do the problems. AMC, who owns over 4,000 screens at this point, continues to block them out.

Also, because of the surge in subscribers, MoviePass can't get those fancy cards printed and shipped to their new members fast enough. And this creates a customer service nightmare. And actually, Austin, could you please help me read a typical customer service complaint from the at MoviePass's Instagram? Okay, getting to character here. I sent you 12 website messages,

a couple of public messages, two private messages, and still I haven't received a password reset help from any of your team members. What other kind of messages do I have to send? Smoke signals. I love the use of like the all cap letters to really emphasize the frustration. That's insane. So despite the haters, on January 9th of 2018, about half a year after Farnsworth's takeover, MoviePass hits a million subscribers.

That same day, co-founder Stacey, who keeps reminding Farnsworth that they can't make a profit pricing subscriptions at just $10 a month, is fired from the company he started. No! Via email. Wow. Stacey, no! Although, do we feel bad for him or are we just glad he got off the train before it crashed into the ravine? That's true, because now he has, like, I told you so, leverage for later on.

So in early 2018, things really start to go off the rails for MoviePass. With Stacey out, MoviePass is under the chaotic control of Mitch Lowe and Ted Farnsworth, and by June of 2018, there are somehow 3 million subscribers. No. No. Meanwhile, AMC finally launches their subscription program, which I personally think looks a lot like MoviePass. It costs $20 a month and gets you three AMC movies a week.

And importantly, AMC doesn't incessantly tinker with its pricing. So Low and Farnsworth respond, as any of us might, when a competitor moves in on our idea, by doing something completely unexpected. Instead of just buying tickets for movies, they're going to make movies. Wait. They made movies? That guy Farnsworth made movies?

I didn't know that. Yeah. In 2018, Mitchelow and Ted Farnsworth form MoviePass Ventures to help finance films. Their first movie is Gotti. Oh, I saw that. No. To see how much you remember about that bonafide blockbuster, let's play a game.

Yay! This game is called You Gott Gotta Be Kidding Me. It is a multiple choice quiz. Each answer has one correct choice. The guest with the most correct answers wins. The first question. The movie's title refers to John Gotti. What famous Italian-American did MoviePass's studio cast to play the convicted murderer

and mob boss? Was it A. Al Pacino, B. Nicolas Cage, C. Joe Pesci, or D. John Travolta? It was John Travolta. Ding ding ding. It was John Travolta. Yes, the man from hits like Saturday Night Fever, Hairspray, and Wild Hogs was cast to play the gritty title character who narrates from beyond the grave.

The movie spans Gotti's entire life, which means a makeup director had to make the 60-plus year old Travolta look half his age. Although, apparently, they forgot to do the same for the guy playing Gotti's son. RIDDLE. RIDDLE. forgot to do the same for the guy playing Gotti's son. Riddle. Riddle. All right. Number two, Gotti's director is none other than Kevin Connelly, the guy who played E on Entourage.

No. Who had directed just two films before this one, plus the music video for the song Camera Phone by The Game, featuring Neo. Speaking of music, what famous artist helped compose Gotti's score? Was it A, Billy Joel, B, John Legend, C, Pitbull, or D, Elton John? Ah, oh man.

I'm gonna have to go with Pitbull. I was gonna go with Pitbull as well. Ding, oh man. I'm going to have to go with Pitbull. I was going to go with Pitbull as well. Ding, ding, ding. No! Pitbull. Wow. Who is famous for Latin hip hop and reggaeton, used some of his better known music in the soundtrack, which is a little weird given that one, the movie is about a famous Italian

American mobster, and two, it takes place way before Pitbull came onto the music scene. Well, he's Mr. Worldwide, so maybe that also applies to time. Yeah. Yeah. All right. Number three, John Gotti was a New York City mobster. So where do you think they filmed the movie?

A, nowhere. Gotti is actually animated. B, Cincinnati, whose tallest building would rank at about number 100 in NYC's list. C, Hollywood, entirely within a soundstage. Or D, New York City, duh, they're not cheap. Obviously Cincinnati. I'll mix it up, I'll say Hollywood,

but I think Austin's right. It was Cincinnati. One reviewer called out the movie's rotating backdrop of anonymous suburban blocks and brownback alleys for evoking Gotti's beloved city about as authentically as Taylor Swift's Welcome to New York. Wow, very dated, very 2018 criticism. Yeah, I love the drive-by. I'm the queen of music. But you get the point, you know?

All right, number four. What is Gotti's rating on Rotten Tomatoes? Closest without going over wins. I'm going to have to say 1%. I'm going to go flat zero. Jamie, ding, ding, ding. It is zero percent. Wow.

Brutal. Some outlets call Gotti the worst movie of the year, and the New York Post says it, quote, belongs in a cement bucket at the bottom of the river. Wow. Oh no. Gaudi was made on a shoestring budget of $10 million, plus $5 million for marketing, but it still managed to lose movie pass a lot of money. More than $8 million. So not great.

Meanwhile, subscribers are still waiting months for their special red geolocation activated credit cards to arrive. One day, 75,000 of the heaviest users find that their passwords are inactivated and many are unable to reset them. It turns out that this last bug was maybe a little intentional. Ted Farnsworth and Mitch Lowe came up with an idea to make some breakage happen for them by suspending the accounts of people who are seeing the most movies and costing movie pass the most money. As someone who observed this happening in real time, you are inciting some of the world's most annoying people when you do that.

You're inciting people who have time to see 4,000 movies a week, some people with time on their hands. Why would you do that? Oh yeah, that is so true. That is the worst type of person to get on the bad side of. They've got time to make calls, to tweet. They will ruin your life because they all of a sudden, 40 hours of their week have opened up.

That's a dangerous Reddit army. Yeah. They suspended these accounts under the pretense of suspicious activity or potential fraud. And they suspend the accounts of 2% of users seeing the most movies and thus costing movie past the most movies and thus costing movie pass the most money. Then they'd run into technical problems and unresponsive customer service whenever they tried to reset their password, leaving them locked out of the app. I mean, how messed up is that?

That is fucked up. That's wild. And so weirdly short-sighted. Like, I just don't, I don't understand. Well, that wasn't their only seemingly shady way of forcing some breakage. They randomly selected 20% of their most active users to upload photos of their ticket stubs or have their accounts suspended. Of course, when the users tried to upload their photos, the app wouldn't work and MoviePass's customer service did what it does, which is be unhelpful.

Wait, can I really quickly? I just looked up in my email MoviePass to see what my correspondence was with them. So I apparently also on January 13th, 2018 was like, I've been waiting for my movie pass card for five weeks. No way. Yeah. And then I got this customer service email replied, this email address isn't monitored. Thanks the movie pass team.

That's so funny. I did not remember that. I love you for looking that up. That's so funny. I did not remember that. I love you for looking that up. That's so good. Well, according to an FTC complaint, they allege that Lowe hand-selected that random group of users. They also allege that a, quote, tripwire was set, shutting off service for users who saw more than three movies a month. Whoop. That should stop the bleeding, right? Buzzer. Wrong.

At the end of June 2018, Farnsworth's company, Helios and Matheson, reports operating losses of $126 million. That's about 4,000% worse than the year before. Well, that's the Farnsworth touch. Yeah. I mean, that's what do you expect? Their response to that? You guessed it, more tinkering. The unlimited plan is suspended, returns two weeks later, and then is suspended again, restricting members to only four movies

a month. Not exactly unlimited. Movie pass subscribers will also now be locked out of seeing select films more than once. For example, Marvel's Infinity War. So they try to soften the blow by giving customers three free months of iHeartRadio. What? That's just so unrelated. But on July 26th, 2018, the party is over. On that day, Mission Impossible Fallout is released and MoviePass subscribers can't get a ticket.

In fact, they can't get a ticket to anything. The bank that handles the ticket transactions has locked down MoviePass's account. That same day, Farnsworth's company borrows $5 million in emergency funding from an investor to cover their bills. After the fallout, from Mission Impossible Fallout, Farnsworth and company keep doing what they do best. Implementing random changes. Shareholders in Helios and Matheson form a class action lawsuit. The Attorney General of New York announces a probe into MoviePass's business practices. So you might be asking,

how does MoviePass counter all of this bad press and reassure their customers? Well, let me introduce you to the Director of Barketing. No. Jamie, can you describe Chloe, MoviePass's director of marketing? A dog who needs to fire her agents, number one. This dog is a little brown or black fluffy little dog. I don't know dog breeds. She's small.

She's cute. She's wearing a MoviePass bandana and she looks afraid for her life. It looks like an AI-generated Bijan Poodle. Well, this photo is emailed to MoviePass users in November of 2018 after months of complaints, along with a message. So, Austin, could you please read the email that was definitely sent by Chloe the dog in your best Chloe the dog impression? I'm Chloe the director of Barketing at MoviePass and I'd like to explain why from time to

time you may have had a rough experience with us, but it turns out that I'm a dog and I can't talk. What I do know is that I see these humans working like crazy to make MoviePass better and better for you as fast as possible. They are so grateful for your membership and support while they work it out. We're listening, we're learning and we're changing. What? I like, honestly, I respect the big swing that is trying to get movie angry movie pass subscribers to kill a dog instead of...

That's crazy. That is so weird. They're doing like this, irresponsibly running their business and just like, people like, they like dogs, right? That's exactly it. It's just like insulting every remaining subscriber's intelligence just to be like, oh, one picture of a dog, that'll solve it. Mm hmm. I mean, you know, Chloe's lucky she's a very good girl and can't be held legally liable for any of this mess because here's where the house of cards

comes crashing down. In February of 2019, MoviePass customers file a class action lawsuit against the company alleging a bait and switch scheme. Just a few months later, MoviePass ceases operations. But they're not quite dead. Oh wait, yeah, they're dead. In 2020, MoviePass and Farnsworth's company file for bankruptcy. Do you remember where you were when you heard MoviePass died? Probably at an AMC using my Stumps membership. Not giving one shit. Smug as hell. Wasn't it right when COVID came crashing down?

Probably somewhere inside, alone, sad. Wishing I could go to the movies. But their legal woes aren't over. The next year, the Federal Trade Commission sues MoviePass for those alleged deceptive business practices we mentioned before, as well as allegedly leaving customers' passwords and credit card information exposed on unsecured servers. Yay. They eventually settle with the FTC without admitting any wrongdoing. But since then, Mitch Lowe and Ted Farnsworth have been sued by the Securities and Exchanges Commission for false advertising and charged by the DOJ for securities and wire fraud.

Oh. Wow. So in November of 2023, Farnsworth is arrested. No! Farnsworth pleads not guilty, and both of these cases are ongoing. To date, they've denied wrongdoing. If only the psychic network could have warned Farnsworth about all of this. Wow. Wow.

Mm-hmm. So, let's do a little where are they now? Like the most cliched conceit for a sequel, MoviePass is not dead yet. Although you might wish it was. During the bankruptcy fire sale, Stacey Spikes purchased MoviePass for $140,000. Which by the way, did not include any user data. Oh. Cause Stacey says people still like the idea of MoviePass.

I just sort of want Stacey to be able to move on. Yeah. He'll still learn to let go, I think. Yeah. Well, in 2022, Stacey relaunched MoviePass with a new piece of tech that he'd been developing since he was fired from the company. It's now based on credits that are redeemable for tickets. You can either buy credits or earn them by watching ads. And MoviePass uses your smartphone facial tracking software

to make sure you're actually watching these ads. Oh, no. Wait, I hate Stacey. Wait, hold on. Sorry. Sorry. What? Yeah, Vulture reported the return with the headline, quote, movie passes back. And this time it's dystopian. Yeah, let it go Stacey. That's so diabolical. So here on the Big Flop, we always like to end on an upswing. So are there any silver linings that you can think of? The pillows in jail, they're soft.

You know, I saw Iva Tanya 14 times for less than $20. And that would not have been possible at any other time in history. Jamie, I love that. You saw that movie so many times and venture capitalists picked up the tab. I know they never do that for me. So that's nice. Also Stacey Spikes, he did get back control of his company and is trying to help get people back into the movies post pandemic, which you know... It's not worth my face. Yeah, not worth our face.

Sorry, Stacey. Well, now that you both know about the rise and fall and rebirth of MoviePass, would you consider this a baby flop, a big flop, or a mega flop? You know, three million people, pretty big flop. Yeah, I'm going to go big flop too. Yeah, I feel like mega flop has to be reserved for when someone gets hurt. Truly. I mean, like not the defrauding your customers is not hurting someone, but defrauding people

out of $10 and sending a notorious flop to jail. You know, it was a moment in time. Big flop. Yeah, big flop. Well thank you so much to our red carpet worthy guests, Jamie Loftus and Austin Nasso for joining us here on the big flop and thanks to all of you for listening. If you're enjoying the show, please leave us a rating and review. We'll be back next week with a flop that went straight to cable and then to prison.

Abby Lee Miller, the Dance Moms fraudster. Bye. Bye. Bye. If you like the big flop, you can listen early and ad free on Wondery Plus. Join Wondery Plus in the Wondery app or on Apple podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself

by filling out a short survey at Wondery.com slash survey. The Big Flop is a production of Wondery and At Will Media, hosted by me, Misha Brown, produced by Sequoia Thomas, Harry Huggins, and Tina Turner. Written by Anna Rubinova. Engineered by Andrew Holtzberger. Our story editor is Drew Beebe. Our managing producer is Molly Getman. Our executive producers are Kate Walsh and Will Malnati for At Will Media.

Legal support by Carolyn Levin of Miller, Korzenik, Summers, and Raymond. Producers for Wondery are Matt Beagle and Grant Rudder. Senior story editor is Phyllis Fletcher. Managing producer is Joe Florentino. Music supervisor is Scott Velazquez for Freesong Sync. Our theme song is Sinking Ship by Cake. And executive producers are Lizzie Bassett, Morgan Jones, and Marshall Louie for Wondery. We are on a sinking ship

We are on a sinking ship