The very first day of SXSW 2024 a 96-minute documentary entitled “MoviePass/MovieCrash” had its World Premiere at the Alamo Theater on Lamar Boulevard. It chronicled how two black entrepreneurs—Stacy Spikes and Hamet Watt—spent a decade developing a way to bring the masses back to the theater experience with a credit card-like approach to movie-going called MoviePass. They described it as “Netflix for movies.” Initially, the two founders had the idea that a movie patron would pay somewhere between $39.95 to $50 monthly to be able to attend 2 movies a month. At first, AMC was going to help roll it out; that all changed with a change in AMC leadership. So no special pricing for MoviePass subscribers.
MONEY NEEDED
Although the Black developers were quite qualified—Stacy Spikes had been Vice President of Marketing for Miramax Pictures and had handled the publicity for films like “Trainspotting” and “Scream,”— they didn’t have access to the kind of investment money to make MoviePass a reality. Since only 1 to 3% of investment money goes to minorities or women, the Black entrepreneurs turned to Chris Kelly, a white guy and former general counsel for Facebook. Kelly had once run for Attorney General of California; he lost to Kamala Harris. Kelly was genuinely enthusiastic about the project. He gave the two a million dollars. It was not enough.
2 WHITE GUYS REPLACE THE 2 BLACK FOUNDERS
Chris Kelly (donor of the first million in seed money) suggested bringing in a guy named Mitch Lowe to facilitate securing more funding. According to Wikipedia, Lowe was president of Video Droid from June 1984 to March 1998.[4][5] After Video Droid, Lowe was vice president of Business Development and Strategic Alliances for Netflix from March of 1998 to January 2003.[6] After 2 years at McDonald’s, Lowe worked at Redbox as Chief Operating Officer (2005 to 2009) and President (2009 to 2011).[8] Mitch Lowe’s insertion into the company seemed logical. But Mitch Lowe brought in Ted Farnsworth. Ted Farnsworth may be the biggest scam artist since Mike Lindell and My Pillow. His schemes range from a Psychic Friends network downward. One of the two original Black founders, Hamet Watts, described Farnsworth as “slick” and said, “I realized that we did not share the same values.”
It was Farnsworth who coined the slogan “Any theater. Any movie. Any day.” And the original plans to charge a higher amount that might have yielded a slight profit (or at least allowed the company to break even) was jettisoned in favor of a ridiculously low fee of $9.95 that gave users unlimited access to movies any time anywhere. Some users appear onscreen and admit to seeing “Crazy Rich Asians” 14 times. The audience member next to me, from L.A., described how the MoviePass card quit working properly and calls to management were not answered. The apps kept going down. The servers were getting annihilated.
CASH CRUNCH
Farnsworth and Lowe reconfigured the board so that they had the power. Soon Hamet Watt was relieved of his duties, while Stacy Spikes was kept on and made COO. As Spikes said in the documentary, “We took the money and we didn’t ask what you want to get out of it. You’re set up to fail.”
NEGATIVE SPIRAL
When Stacey Spikes, whose original idea this was, questioned business decisions the white guys were making, he was told, “This is a company, not a family.” At this point, a relevant clip of the Anger Translator from Key & Peele provided just the right degree of levity to the otherwise bland recitation of who was funding what and how things were going. The answer, under the new white guys, was: not well. Although Lowe and Farnsworth were giving interviews to whomever asked that promised that everything was possible, they had no special pricing deal with the movie companies and there was no way that the $9.95 price tag would cover the expense of purchasing $11.50 movie tickets for 1.5 million subscribers, especially those patrons that were turning up at theaters 4 and 5 times a week.
Spikes, who had a longer tenure than Watt, said that the sudden influx of subscribers was so intense that they couldn’t keep up with the delivery of the MoviePass credit cards. They had to hire a Brinks truck to deliver them nationwide. Things were hectic. The employees who remained on the payroll had to use extension cords to secure electricity. They had to borrow pens from the nearby bank. Only seven employees were fielding complaints from unhappy customers nationwide. The customers had gone to their theater of choice only to have their MoviePass cards not work. That was partially because Farnsworth and Lowe had okayed shutting down the cards, especially during the showing of a big hit like “Mission Impossible.”
LOWE & FARNSWORTH
The new leadership of MoviePass eventually fired Stacey Spikes, too. The Dynamic Duo of Lowe and Farnsworth continued to spend money on a lavish scale, hiring unqualified people like Khalid Itum, going to Coachella and Sundance, hemorrhaging $250 million in record time. While Stacy Spikes was still with the company, he described the experience as “We’re kind of learning how to fly the plane in mid-flight, and changing it from a two-seater to a Boeing 727.” Watts said, “We’re not behind the wheel. We’re not even near the wheel.”
Meanwhile, as the former employees tell the story, only 7 employees were handling the phones, answering complaints from dissatisfied customers that their MoviePass didn’t work. They didn’t work because the two white guys were making the passes inoperable during peak periods of demand. Faithful employees still trying to work under adverse conditions were not invited to the many parties and, when this was mentioned, Mitch Lowe said, “Not all roles get to party.” He and Farnsworth kept repeating, “There is definitely enough money for us to do what we need to do.”All of the funding companies behind MoviePass eventually went bankrupt, as did the company itself, taking with it the $80 million in stock options that the two founders had been promised when they were let go by Mitch and Lowe.
THE DOWNFALL
Under Stacy Spikes and Hamet Watt, the company was losing $200,000 a month. Under Mitch Lowe and Ted Farnsworth that escalated to $30 million a month. It took 10 years to build MoviePass. It only took one year for it to fail under the new leaders. Share value dropped from $8,000 per share to 2 cents.
CRIMINAL CHARGES
On November 4, 2022, Mitch Lowe, along with Theodore Farnsworth, the former CEO of MoviePass’ parent company Helios and Matheson Analytics, were each charged with one count of securities fraud and three counts of wire fraud stemming from their time together at MoviePass. Khalid Itum, a former furniture salesman who Farnsworth brought in and promoted, was charged with 2 counts of embezzling $260,000 during the Coachella fiasco. The two at the top face 20 years in prison if convicted. They go to trial in September of 2024.
With the remark that Lowe and Farnsworth seemed to be pursuing a “Thelma & Louise strategy” the video of Susan Sarandon and Geena David sailing over the cliff in their convertible earned an appreciative laugh. I have to think that neither Stacy Spikes nor Hamet Watt is laughing, then or now.
CONCLUSION
If there is a happy ending to this SXSW entry, it is that the original MoviePass concept, after all the bankruptcies, was put up for auction and Stacey Spikes bought it back in 2023. He remarked on how entrepreneurial giants like Steve Jobs and Michael Dell left their original companies, but came back after leaving, saying, “I’d never live with myself if I didn’t try
