MoviePass Rival Sinemia Considers Ending Its Subscription Service

(Bloomberg) -- Sinemia Inc., a MoviePass rival that launched in the U.S. last year, may shutter its movie-subscription services and focus instead on building membership programs for cinema chains, people familiar with the situation said.

The company is considering the step as it copes with mounting legal costs and a backlash from consumers. Sinemia said last month that it canceled 3 percent of its user accounts due to “misuse or fraudulent activity” and that it would issue refunds to those members. That led to complaints from customers online.

The move would let the company concentrate on SubGen Inc., a so-called white-label business that has created subscription plans for theater owners such as Studio Movie Grill, said the people, who asked not to be identified because the decision isn’t yet final. SubGen also created a subscription app for National Amusements Inc.’s Showcase Cinemas, a chain based in Norwood, Massachusetts.

Sinemia’s consumer app has drawn criticism, which it responded to by beefing up its customer service. By sidestepping consumers and focusing on business-to-business services, the company could avoid some of those headaches.

MoviePass Decline

The struggles of Sinemia show the difficulty of creating a sustainable movie-subscription service without ties to the theater chains. MoviePass enjoyed exponential growth last year after rolling out a plan that offered a movie a day for $9.95, but red ink forced it to repeatedly change its terms. Customers fled, and the stock of its parent company crashed.

AMC Entertainment Holdings Inc., the largest movie chain, also offered its own subscription plan, making it harder for independent services to compete.

Sinemia was founded by Rifat Oguz, a former telecom executive. Sinemia has launched a range of ticket plans that it previously said would be sustainable, with prices starting at $3.99 a month for one ticket per month.

In March, the company launched a new plan called Sinemia Limitless, where users pay $70 for a digital card worth $100 to buy movie tickets at “any theater any time.” The service didn’t require a subscription or an app.

In February, Sinemia said it reached agreements to create movie-ticket subscription services for 10 theater chains. It launched the business in November as Sinemia Enterprise.

Though not as well known as MoviePass, Sinemia has maintained a high profile in the movie industry. Along with SubGen, Sinemia hosted a gala earlier this month at CinemaCon, the annual convention of film exhibitors.

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