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Stacy Spikes Wants to Change The Movie Business

Stacy SpikesThe adventure of new ventures.

Twice in 2011, Stacy Spikes tried to start a subscription service for going to the movies. Called MoviePass, it offered cinephiles nearly unlimited access to theaters – up to one 2-D film each day – for a flat monthly fee. Mr. Spikes hoped his service would transform the industry; he wanted to see it go big. But something always got in the way.

When an initial test run was announced in San Francisco, about 19,000 people signed up in a single day to try the service. But theater chains balked. Mr. Spikes had arranged to purchase users’ individual tickets through a third-party supplier; the theaters claimed they weren’t in the loop. “Their feeling was, ‘You didn’t come to us first. You didn’t get this approved,” said Mr. Spikes, 44, a former movie-marketing executive. And without the theaters’ cooperation, the test never got off the ground.

A few months later, Mr. Spikes tried another iteration of MoviePass. But some users didn’t like that the new system required them to print out vouchers. Theater managers found them slow to process, too. Each voucher had a single-use credit card number, so cashiers had to key them all in by hand.

Mr. Spikes didn’t surrender, though. He rolled out a third version of MoviePass in October. This time, he believes it’s foolproof.

Each MoviePass subscriber pays between $29 and $34 a month, depending on location, and gets equipped with a smartphone app and a special debit card. When a user enters a movie theater, the GPS-enabled MoviePass app lists the films available in that area. After a selection is made, the user’s MoviePass debit card gets unlocked for 30 minutes, loaded with funds to buy the ticket. “It operates just like any card sitting in your pocket, so customers are free to go where they want and theaters are paid the full fare,” explained Mr. Spikes. In other words: So long as they take credit cards, theaters don’t need to change anything to accept MoviePass.

The service is currently available as an invite-only beta version. Mr. Spikes wouldn’t release his subscriber numbers or revenue. He said he plans to offer subscriptions to the general public within a year.

Based in Manhattan, MoviePass currently has eight employees in addition to Mr. Spikes and his cofounder, Hamet Watt. The company has raised $5 million in financing from investors that include True Ventures, AOL Ventures and William Morris Entertainment.

We caught up with Mr. Spikes for an interview that has been edited and condensed:

Aren’t you taking a big risk here? You take a monthly fee of $34 and then promise to provide essentially unlimited tickets that you have to pay full price to obtain. Couldn’t you lose a lot of money if subscribers go to a lot of movies?

We’ve studied this and similar subscription businesses for a while and have conclusive data that reinforces our strong subscription model that includes incremental revenue streams.

Are you saying that you could lose money on the subscriptions but make it up with other revenue?

We believe the best way to have a successful business model is to have multiple revenue streams. This model is very similar to that of a studio that is focused on more than just box office ticket sales.

What are those other revenue streams?

Apart from the subscription service, we have three planned revenue streams: advertising, sell-through and data. It’s definitely not a one-trick pony.

For sell-through, let’s say you just saw Harry Potter. We can offer books, we can offer the DVD, we can offer the back catalog, all of those things, because we know what you’ve just seen. We can offer to sell people things related specifically to their viewing habits.

But what’s really the beauty of this is the data. Just like Google can measure analytics online, we can do that for movie theaters. Ninety-six percent of movie ticket transactions are walk-ups; they’re the equivalent of cash transactions that don’t leave data trails. Our technology lets us say, “This is the type of people who are going, this is when they went, this is what time of day it was.” We can break it up by age, by race, by sex. The only thing we can’t tell you is what they ate for lunch and what their blood type is.

We’ve met with some of the studios and the chains. Right now, they know what their gross numbers are and some generalities about their demographics, based on which theaters customers visit and how many tickets were sold. They don’t really know more than that. But we do…

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