You may remember a time when you could go to the movies once a day for the low price of $9.95 a month. It’s a deal that you couldn’t really beat. For the price of one matinee ticket, you could watch a movie a day, ultimately making it one of the biggest bargains you could possibly ask for. If you took advantage of this MoviePass subscription in the late 2010s, you may have even asked yourself “how could this company possibly afford this?.”
Come to find out they really couldn’t, and there may have been some shady happenings going on behind the scenes. One of the architects of MoviePass’ downfall has pled guilty to defrauding investors.
Ted Farnsworth is the former CEO of Helios & Matheson Analytics. That name may not sound familiar but they’re the parent company of MoviePass, having acquired the company in 2017. It was shortly after this time where the pricing point $9.95 for a movie per day was unveiled. Prior to this, there were a number of different pricing points being discussed. There were plans for everything for unlimited films to a couple films a month with pricing ranging anywhere from $15 – $50. Arguably, none of these price points could’ve been considered sustainable, but $9.95 was definitely not going to work.
In order to offset this cost, Farnsworth was planning on two things. The first would be that subscribers just wouldn’t go to see the moves and let their subscription languish, something that happens all the time with other businesses like gyms. He also planned to leverage customer data, something that presumably could mean selling it to third party data collectors and businesses. Regardless of intention, something wasn’t adding up behind the scenes, yet Farnsworth allegedly lied about revenue and sustainability to investors. Turns out that lying to investors for financial gain is illegal.
Investigators into MoviePass’ dealings alleged that the company not only knew they were misleading investors, but they were deliberately tampering with subscriber accounts to try and stop them from using the service. This included resetting subscribers’ passwords without telling them. Can’t use the service if you can’t sign into it! It would seem that none of this went by unnoticed by investigators and Farnsworth is now pleading guilty to the lot of it.
But that’s not all! While being investigated by the SEC, Farnsworth was allegedly secretly operating another company called Vinco Ventures. This was not on the up and up, and Farnsworth was also hit with conspiracy charges tied to his actions in controlling the company. He also pleaded guilty to these charges. All in all, a pretty eventful day for the guy.
All that’s left now is the ultimate irony of Farnsworth tenure at MoviePass being turned into a film and released on a streaming platform.
