Last week, movie ticket subscription service Sinemia filed for Chapter 7 bankruptcy protection in Delaware, reports Business Insider. Among Sinemias challenges are two class-action lawsuits and a lawsuit by MoviePass for patent infringement. One of the class action suits (Paul Early and Jonathan Gollner v. Sinemia filed November 9, 2018 in the U.S. District Court for the District of Delaware), the plaintiffs allege that Sinemia used a bait-and-switch scheme to lure consumers with a monthly or annual subscription, then added on undisclosed and unexpected fees each time a subscriber sees a movie using Sinemia.
Sinemias website and marketing leads potential subscribers to believe that the monthly price advertised is the all-in or total price they have to pay in order to see a certain number of movies. This is an attractive value proposition to consumers because Sinemias monthly pricing averages out to significantly less per movie than simply buying tickets from theaters each time, reads the lawsuit.
The litigation seeks damages and other relief from Sinemias fraud, breaches of contract, violations of consumer protection laws, and unjust enrichment.
In its bankruptcy filing, Sinemia declared $1.2 million in assets and $158,000 in liabilities, plus potential liabilities resulting from the lawsuits.
In addition to the pending litigation, Sinemia said they are being investigated by the Federal Trade Commission. They did not specify the nature of the investigation; Business Insider reports that the FTC would not confirm whether or not they are investigating the company.
Visitors to the Sinemia website will see the following letter:
Today, with a heavy heart, were announcing that Sinemia is closing its doors and ending operations in the US effective immediately.
As Sinemia, we set out our journey with the vision to help as many moviegoers as possible to enjoy an affordable and better experience at the movies by a creating a movie ticket subscription service that adds value for both the moviegoers and the movie industry. Since 2014, weve been fine-tuning our model and serving movie-goers with a slate of affordable and flexible subscription plans.
We are all witnessing that the future of moviegoing is evolving through movie ticket subscriptions. However, we didnt see a path to sustainability as an independent movie ticket subscription service in the face of competition from movie theaters as they build their own subscriptions. Thanks to the cost advantage and cross-sell opportunities, movie theaters will be prominent in the movie ticket subscription economy.
While we are proud to have created a best in market service, our efforts to cover the cost of unexpected legal proceedings and raise the funds required to continue operations have not been sufficient. The competition in the U.S. market and the core economics of what it costs to deliver Sinemias end-to-end experience ultimately lead us to the decision of discontinuing our US operations.
Despite the best efforts of our team, it has been difficult for us as a start-up to continue providing our services to the moviegoers in the U.S. without resources and enough capital to meet increased operations and legal costs.
We want to sincerely thank our customers that believed in us and helped us along the way for their love and support.
We are so grateful to have had the opportunity to share our dream with you.
MoviePass, of course, has been in the headlines regularly with bad publicity for its business model which is clearly not working. Subscribers have accused MoviePass of bait-and-switch too, and its financials have been misreported, causing additional controversy. In a report by Business Insider, MoviePass dropped more than 90 percent of its subscribers in a year, going from 3 million subscribers to approximately 225,000.
AMC Theatres seems to be the only company doing movie subscriptions right. The company launched its premium AMC Stubs A-List movie ticket subscription last June, and at the end of February, they company had more than 700,000 members, far ahead of its goals. Steady growth and a consistent product/service they can stand behind has served them well. They only need to keep doing what theyre doing; the competition will eliminate itself with bad business practices.