MoviePass Ex-Chief Pleads Guilty To Fraud Over 'Unlimited' Cinema Scheme

Former MoviePass CEO Theodore Farnsworth has pleaded guilty to securities fraud and conspiracy charges for misleading investors about the movie subscription service's "unlimited plan" and its parent company's capabilities, U.S. prosecutors said.

Farnsworth falsely claimed the $9.95 monthly unlimited movie plan was sustainable and that Helios & Matheson Analytics could monetize subscriber data through artificial intelligence, knowing both statements were untrue. He faces up to 20 years in prison for MoviePass-related fraud and five years for a separate conspiracy charge involving Vinco Ventures.

Who doesn't?

[rabbirta]

Unlimited data, unlimited talk, unlimited refills -- who doesn't lie like that in advertising?
Same with AI, what company hasn't ham-handedly slapped AI onto their product description?


Seems odd that this is the one that actually gets prosecuted

Re: Who doesn't?

[KnobbyMcKnobface]

I mostly agree, but there is one crucial difference here. In the examples you gave, the consumers don't quite get what they paid for but the company makes money. The mistake that puts this guy in the dock is that he lost *investors* money.

Re:

[GoTeam]

I mostly agree, but there is one crucial difference here. In the examples you gave, the consumers don't quite get what they paid for but the company makes money. The mistake that puts this guy in the dock is that he lost *investors* money.

Yep, pretty much! You lie to your customers and no one cares (mostly). You lie to your investors and you're lucky to avoid the death penalty.

Re:

[mysidia]

It's not even that you lie to your customers.. "Unlimited data and unlimited talk"

Don't cost the phone company anything. Metering your talk + data and charging a high micro-rate for it was the scam, but your customers are already wise to it and tired of the bullshit, so they''re just offering their customers less bullshit in exchange for mega extra revenue at little cost.

"Unlimited" on a tangible good; OTH is ridiculous. Look at this model $7.95 a month for unlimited movie tickets. The average co

Re:

[Codeman125]

I don't know where you are from, but a movie ticket here in the Denver Metro Area is at least $15 for your basic movie. Add in upcharges for IMAX and other "premium" formats, and you are looking at easily $20 for a single ticket.

Re:

[mysidia]

I don't know where you are from, but a movie ticket here in the Denver Metro Area is at least $15 for your basic movie

This service was operating in 2017 not today. Back then the national average for movie tickets was under ten bucks.
They'd probably close your account if you found a theater charging $15 and put it on your Moviepass.

Add in upcharges for IMAX and other "premium" formats

You originally were Not able to use your MoviePass for higher-cost/premium tickets such as IMAX, etc, At all.

At some point t

Re:

[dargaud]

Probably wanted to hook customers in, then jack up the price a couple times, while at the same time negotiating very cheap deals with cinemas.

Re:

[mysidia]

That possibly could have worked if they would be able to ink a deal with AMC, etc. It might even have been sustainable.

Problem for MoviePass is AMC created their own subscription service with AMC A-List. What sense would it make for the theatres to offer MoviePass a discount, when the theatres can sell a subscription for discounted movies directly to their customers and capture more of that sweet sub revenue?

Re:

[jjhall]

I have Regal Unlimited, they just raised it to $21.49/mo. Standard adult ticket prices are $14 at my local theaters now, more if you book in the app since they add "convenience fees" on top of it. While $7.95/mo was probably low, it's clearly profitable for movie theaters to offer a subscription plan that costs far less than what people use. With the Regal subscription, anyone that goes to two movies/mo saves money, and the savings go up from there. Regal even incentivizes customers to see many MANY mor

Re:

[mysidia]

MoviePass's concept is clearly profitable otherwise Regal, AMC, and other chains that offer subscription-based memberships wouldn't be so popular.

Profitable for THEATREs at the right membership rate - not for a Third party that reimburses theatres for customers' tickets, And also $21 is much higher than 7.95.

I'm not actually sure what percentage of a theatre's ticket price is their costs, but the cost is going to be a lot lower per ticket for the theatre running such service than what a 3rd party has to p

Re:

[FritzTheCat1030]

MoviePass's concept is clearly profitable otherwise Regal, AMC, and other chains that offer subscription-based memberships wouldn't be so popular..

There's 2 major things you are missing here. MoviePass had to pay the full ticket price for every person who went to see a movie. When Regal/AMC provides the ticket to their own theater, they only have to pay out the cost that goes back to the studio. So, if the ticket normally costs $10, MoviePass had to pay the full $10, while a theater will only have to pay $5-6. The other major factor that makes this plan profitable for the theaters is that most of their profits come from concession sales. Giving out th

Re:

[Rinnon]

The mistake that puts this guy in the dock is that he lost *investors* money.

And as we know in America: Robbing a poor man gets you a stern warning; robbing a rich man gets you a few decades in prison.

unlimited movies

[ole_timer]

always was a joke - unlimited movies? who believed that?

Re:

[timeOday]

Yeah, the biggest weakness of the case seems to be that it was so obvious the numbers couldn't add up. If he had told investors, "we're going to do this as a loss-leader for a while until I come up with some scheme to monetize our subscriber base," he'd probably be ok, although he wouldn't have been able to raise as much investment which is the whole point.

Re:

[awwshit]

With the quality and content of current movies, who could stand unlimited movies?

I don't even want to go at all.

Re:

[MBGMorden]

That and I'm over theaters in general. Watching at home is a preferable experience for me, so whatever it is I'll just wait on it to be available at home.

Re:

[awwshit]

Watching at home is better for me. But it is nice to get out sometimes too. Gotta mix it up at least a little bit.

Re:

[garett_spencley]

I agree that getting out of the house is nice, but every time my wife and I take a chance on a theatre (which happened twice this past year: once for Beetle Juice Beetle Juice and the other for Terrifier 3) our experience is completely ruined by other people.

From people using their phones, to talking through the entire movie, to chewing or breathing loudly or making distracting movements. We seem to experience all of the above every single time and end up wishing we had waited for streaming.

And that's in ad

Re:

[MBGMorden]

Indeed getting out of the house is good, but if I'm getting out of the house there's a lot of stuff I'd rather do that go to a movie. We have movies at home, and unlike the meme its actually better. If I'm getting out of the house I'd rather do something I can't do at home. Fishing, amusement parks, beaches, shooting range, etc.

Re:

[bill_mcgonigle]

I still take the kids to the Drive-In in the summer.

Double feature, burgers & fries, and a fun pop-up community.

With lithium batteries a boombox goes five hours on their FM station, no problem.

The cholesterol binds the DEET too!

Re:

[MBGMorden]

Like most unlimited plans, it probably was wanting to rely on people underutilizing the service. EG, the price that you pay for "unlimited" is less than the value of the service that you're using. Sure some people may hyper-utilize the "unlimited" service but your math has to work out to accommodate those people's usage too.

The problem they ran into is that their initial price was just way too low. At $10 per month they're basically just breaking even if the person even watches 1 movie per month. If th

Re:

[DarkOx]

I don't know - I assume movie pass was not 'buying' tickets at retail.

It costs literally nothing to put one more body in an auditorium if the seat was otherwise going to be unsold. How much the distribution houses, theater houses, etc were asking in terms of their cut I can't say.

The real structural issues probably boiled down to movie tickets are not really sold like plane tickets. People just show up a short time before the movie, sometimes after the preview reel is already playing. That customer is sti

Re:unlimited movies

[AvitarX]

Their plan was to get enough customers to have negotiating power and get tickets cheaper (even then $10/month is likely pushing it).

But the theaters basically said "nope" so they ended up paying full price for the tickets, making even one visit on a non Tuesday a lost for them.

Even if they negotiated lower prices, it seems unlikely they'd be able to make money at $10/month.

Re:

[tlhIngan]

Their plan was to get enough customers to have negotiating power and get tickets cheaper (even then $10/month is likely pushing it).

But the theaters basically said "nope" so they ended up paying full price for the tickets, making even one visit on a non Tuesday a lost for them.

Even if they negotiated lower prices, it seems unlikely they'd be able to make money at $10/month.

And that is a fundamental misunderstanding how movie theatres work in reality.

Studios get a cut of ticket sales. Disney for example, oft

Re:

[tlhIngan]

It costs literally nothing to put one more body in an auditorium if the seat was otherwise going to be unsold. How much the distribution houses, theater houses, etc were asking in terms of their cut I can't say.

100% for the first couple of weeks to a month. That is, all ticket sales goes to the studios. The theatre revenue comes from concessions. After that period, the theatre gets a cut of the ticket sales to make up for falling demand (and thus concession sales).

So yes, filling an empty seat costs a theat

Re:

[will_die]

As a happy user.
They used numbers for how often the average person went to a movie each month.
In addition they planned to make money by have the theater owners paying them for bringing the business. future plan was to then get money by directing movie watchers to a restaurant afterwards.
To many people like me who went to any movie that showed up, and then walked out if it sucked. Or went to see movies multiple times.

Re:

[mysidia]

The people who subscribed in 2017 or earlier for the months before they went bankrupt, and the service stopped working?

He missed a trick

[GeekWithAKnife]

He should have used ChatGPT to send people to prison for just $9.95 monthly for the unlimited movie plan there. I guess he has as much as 20 years to watch as many films as he wants in prison on his subscription plan. He needs to think out of the box =)

Theodore Farnsworth

[slack_justyb]

"has pleaded guilty to securities fraud and conspiracy charges" Well that's not good news at all.

Net Zero?

[Megane]

To follow from the previous story, it was like a Net Zero [slashdot.org] initiative, only for movie tickets!

Worth it

[Perfycat321]

So one guy goes to jail which allows a bunch of people to see movies really cheap on the dime of Wall Street investors. It sounds like the good guys won in this case.

181 movies for $94

[ardmhacha]

https://apnews.com/article/2d2... [apnews.com]

"... But then came a too-good-to-be-true subscription deal from MoviePass, a promotion that offered a daily movie for a year for just $94. With ticket prices no longer an issue, I ended up seeing 181 movies — including most of the Oscars contenders. Those movies would have cost me $2,747 without MoviePass. That’s 52 cents per film, a 97 percent discount from $15. The deal was so good that MoviePass no longer offers it..."