What just happened? Sinemia is ceasing operations in the United States after dealing with a litany of issues stemming from the lack of cash, PR disasters, and legal troubles. While a movie theater subscription seems great on paper, evidently it's difficult to make it financially viable.
Both MoviePass and Sinemia promised to be the Netflix of movie theaters, allowing you to basically binge watch at movies theaters for a low monthly price. Unfortunately, due to strain of figuring out a profitable business model and a legal woes, Sinemia has announced that it's shutting down U.S. operations effective immediately.
Since last year, Sinemia has attempted to adjust their pricing structure to be appealing to consumers while still being profitable. The company initially started with a tiered approach ranging from $4.99 per month for one ticket per month up to $14.99 for three tickets per month (including 3D, 4D, and IMAX). Then, in a bid to fill the void left by MoviePass' cancelled unlimited subscription, Sinemia unveiled its own unlimited plan for $30 per month. Finally, the company introduced rollover tickets and reduced the price of every tier, including unlimited.
It turns out running a movie theater subscription service is hard.
Financial viability aside, Sinemia has also had to deal with public relations headaches regarding users complaining about their accounts being inexplicably cancelled. Sinemia contends that the terminated accounts were using the service fraudulently, much to the consternation of users who were affected.
If that wasn't enough, MoviePass is suing Sinemia for patent infringment. MoviePass alleges that Sinemia stole several patents related to its mobile app, such as confirming customer identity via phone location data. While the court was skeptical on the actual originality of the patent, it denied Sinemia's motion to dismiss the case in lieu of "further fact finding."
The closure of Sinemia doesn't bode well for MoviePass who, despite not completely failing, still had to take out an emergency loan last year. The company has brought back its unlimited plan to entice new subscribers but could still be undercut by AMC's own subscription service, Stubs A-list. Unlike MoviePass and Sinemia, AMC doesn't have to worry about the financial overhead of striking deals with theater chains. Unless MoviePass proves it can be profitable, it may join Sinemia.
Read Sinemia's full letter to customers below:
Dear Customer,
Today, with a heavy heart, we're 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, we've 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 didn't 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 US market and the core economics of what it costs to deliver Sinemia's 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 US 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.
Sinemia Inc.