In 2017, MoviePass offered something that sounded impossible: unlimited movies in theaters for $9.95 a month.

Less than the price of a single ticket. Watch 30 movies. Pay ten bucks.

People loved it. Three million subscribers in under a year.

Then it all collapsed. The founders are now pleading guilty to securities fraud. The company burned over $300 million. And the whole thing turned out to be... exactly what it looked like. Too good to be true.

Stacy Spikes and Hamet Watt founded MoviePass in 2011. Original pricing was between $29-$50 per month depending on location.

The model made sense at that price point. Similar to gym memberships - most people won’t use it enough to hurt margins. Those who do are offset by those who don’t.

When MoviePass first launched in San Francisco, 19,000 members signed up for the $40/month service.

Modest traction. Sustainable economics. Building slowly.

For years, MoviePass operated with around 20,000 subscribers. Not explosive growth, but the unit economics worked.

Then Helios & Matheson showed up.

In August 2017, Helios & Matheson, a New York-based analytics company, purchased a controlling stake in MoviePass.

Farnsworth’s pitch: $25 million for 51% of the company, two board seats, and dropping the price from $50 to $9.95, with a goal of hitting 100,000 subscribers.

The math was insane from day one.

The average US movie ticket price was $8.73. If someone watched just two movies per month, MoviePass lost money. Three movies? Massive losses.

MoviePass’ website crashed from traffic overload after announcing the $9.95 price. In less than a year, subscribers exploded from 20,000 to over 3 million.

By June 2018, MoviePass hit 3 million paying subscribers and represented more than 5% of total US box office receipts, with peak weeks reaching 8%.

The growth was absolutely bonkers.

MoviePass gained 150,000 new subscribers in just 48 hours after the price drop.

Here’s what Helios & Matheson told investors:

They’d monetize user data. Sell viewing habits to studios. Use AI and big data to generate revenue streams beyond subscriptions.

Farnsworth and Lowe falsely claimed HMNY possessed “big data” and “artificial intelligence” platforms to generate revenue by analyzing and monetizing MoviePass subscriber data. They knew HMNY did not possess these technologies or capabilities.

It was all bullshit.

CEO Ted Farnsworth told TheStreet that MoviePass planned to leverage its 3 million subscribers to provide marketing and analytics to film studios, increasing revenue by $6-$8 per subscriber.

But they didn’t have the technology. They didn’t have the partnerships. They were just... losing money. Lots of it.

In April 2018, Helios disclosed it had been losing an average of $20 million per month since September 2017.

Twenty million. Every month. For seven months.

In May 2018, MoviePass burned through $40 million in a single month. Previous SEC filings showed average monthly burn of $21.7 million.

In May 2018, Helios & Matheson revealed it had only $15.5 million in cash at the end of April while burning $21.7 million monthly.

The company was literally days away from running out of money.

MoviePass burned through more than $219 million in cash since the beginning of 2018. Over $150 million was spent in Q2 2018 alone.

July 26, 2018. MoviePass stopped working.

Following a service outage on July 26, MoviePass was forced to borrow $5 million to continue operations. CEO Mitch Lowe apologized, stating the service was back “up-and-running with stability at 100%”.

The company had literally run out of money mid-day. Subscribers couldn’t buy tickets. The app just... stopped.

They borrowed $5 million emergency cash just to turn the lights back on.

Then came the desperate pivots:

MoviePass changed its offering 11 times in its brief history. The company modified deals six times just in the first eight months of 2018.

Subscribers fled. MoviePass lost a million subscribers by October 2018.

Helios stock skyrocketed from under $3 per share before the MoviePass deal to an intraday high of $38.86 on October 11, 2017.

Peak euphoria. Wall Street believed the hype.

Then reality hit.

Helios announced a 250-to-1 reverse stock split in July 2018 to maintain its Nasdaq listing. When you need a 250-to-1 reverse split, you’re in serious trouble.

By late 2018, Helios shares were trading at $0.10. From $38.86 to ten cents.

That’s a 99.7% value destruction.

September 2019: MoviePass shut down permanently.

January 28, 2020: Helios and Matheson filed for Chapter 7 bankruptcy. Full-year 2018 net loss was $329.3 million on revenue of $232.3 million.

They lost more money than they made in revenue. By a lot.

In September 2024, former MoviePass CEO Mitch Lowe pleaded guilty to securities fraud conspiracy, facing a maximum of five years in federal prison.

In January 2025, Ted Farnsworth pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud, facing up to 25 years in prison (20 years for securities fraud, 5 years for conspiracy).

According to the plea agreement, the government estimates total losses from the scheme at $303 million.

Prosecutors alleged Farnsworth and Lowe knew the $9.95 unlimited plan was a temporary marketing gimmick to grow subscribers and artificially inflate HMNY’s stock price. They also directed employees to throttle service for high-volume users, forcing password resets to lock people out.

So not only was the business model fake - they were secretly preventing people from using the service they’d paid for.

While MoviePass was imploding, AMC was watching closely.

In 2018, AMC Theatres launched its own $20-per-month subscription service.

The difference? AMC owns the theaters. They’re not paying full retail for tickets. Their cost is marginal (cleaning, utilities, staffing - costs they’d incur anyway for empty seats).

MoviePass pioneered the subscription model for theaters. Then failed spectacularly. Then AMC, Cinemark, and Regal copied the playbook - but with economics that actually work.

Stacy Spikes relaunched MoviePass in late 2022 with a tiered credit system. Subscribers pay from $10/month for credits that vary based on movie release date, showtime, and format. In February 2024, MoviePass announced its first-ever profitable year in 2023.

So the sustainable model was... exactly what they started with in 2011. Tiered pricing. Actual viable economics.

It just took $303 million in losses and two criminal convictions to get back there.

The Math Never Worked

This wasn’t a complex failure. The unit economics were broken from day one.

$9.95/month subscription. $8.73 average ticket. Two movies = loss. Three movies = bigger loss.

There was no “path to profitability.” There was no “data monetization.” There was just... spending $270/month per heavy user while collecting $10.

The Gym Membership Fallacy

MoviePass banked on people not using the service. Like gyms.

Except: Going to the gym requires effort, time, and discomfort. Watching movies is entertainment people actually want to do.

CEO Mitch Lowe said people would see around 10 movies per year with MoviePass. At $8.73 per ticket, that’s $87.30 in costs for $119.40 in revenue ($9.95 × 12). Barely breakeven - and only if usage didn’t spike.

But when you have an unlimited debit card for movies, why wouldn’t you use it? The moral hazard was obvious.

Stock Manipulation Over Business Building

Farnsworth and Lowe knew the $9.95 plan was a temporary marketing gimmick to grow subscribers and artificially inflate HMNY stock price.

This wasn’t about building a sustainable company. It was about pumping the stock, attracting investors, and... well, they didn’t think much beyond that.

The “We’ll Figure It Out Later” Strategy

They’d get big, then negotiate with theaters for discounts. They’d monetize data somehow. They’d find revenue streams.

None of it happened. Theaters had zero incentive to give discounts to a company that was already sending them paying customers. The data play never materialized.