Sinemia, a would-be rival to MoviePass, is closing down its U.S. operations — telling customers it could not find “a path to sustainability” amid legal headaches, competitive pressures and the challenging economics of the business model.
The company announced the shutdown in a notice on its website Thursday.
“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,” Sinemia said in the statement. “The competition in the U.S. market and the core economics of what it costs to deliver Sinemia’s end-to-end experience ultimately [led] us to the decision of discontinuing our U.S. operations.”
From the notice, it’s not clear whether Sinemia will be extending refunds that may be due to subscribers.
Among other legal problems, MoviePass has sued Sinemia, alleging patent infringement. Sinemia also has been targeted by customer lawsuits accusing the company of charging hidden fees and shutting down accounts without warning.
MoviePass, meanwhile, itself has been teetering on the edge of folding. The service killed its own one-movie-per-day plan last summer after its parent company’s losses mounted and was forced to borrow more money to stay afloat. Since then, MoviePass’ customer base has reportedly plummeted over 90%, to 225,000 members, with minimal uptake of its recently introduced $14.95 monthly “unlimited” service that carries a number of restrictions. (A MoviePass rep disputed the 225,000-subscriber figure but declined to say what its current customer count is.)
Just a month ago, Sinemia rolled out a new Always Unlimited plan, which was supposed to let subscribers to see one movie (in 2D) every day for $14.99 per month. According to Sinemia, its Always Unlimited plan gave moviegoers the flexibility to choose any movie theater and any showtime. It also offer tiered plans offering one, two or three movies a month, with options for 3D and IMAX tickets.
Turns out, the cost of Sinemia’s too-good-to-be-true offers was unsustainable, the company admitted. “Despite the best efforts of our team, it has been difficult for us as a startup to continue providing our services to the moviegoers in the U.S. without resources and enough capital to meet increased operations and legal costs,” Sinemia said in the April 25 statement.
In addition to competition from MoviePass, Sinemia cited ticket-subscription plans from theater chains as a reason it’s tapping out of the U.S. market. AMC Theatres’ Stubs A-List now has over 700,000 subscribers for the $19.95-per-month plan that lets customers see three movies per week, the exhibitor announced in February.
Sinemia, which says it is based in Los Angeles, also offers movie-ticket subscription plans in countries including Canada, the U.K., Australia and Turkey. The company has raised $2.2 million in funding from investors including Turkish VC firms Revo Capital, Nexus Ventures and Aslanoba Capital, according to Crunchbase.
In March, Sinemia said that after it conducted a fraud-detection analysis, it canceled 3% of its U.S. user accounts “due to misuse or fraudulent activity.” Examples of unauthorized activity included using a Sinemia membership to buy tickets for other people. According to the company, it issued a full refund for the difference between a user’s membership payment and the value of previous movie tickets purchased with the service to the user’s payment card.