Film-Tech Forum ARCHIVE: Class Action Against Sinemia Calls Its New Fees 'Bait and Switch'

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Posted by Jonathan M. Crist (Member # 413) on 11-13-2018, 09:37 AM:

MoviePass competitor Sinemia is being sued by angry customers who say it ripped them off with new fees

When MoviePass was forced to drastically change its business model in the face of mounting losses in August, competitor Sinemia stepped into the spotlight.

The movie-ticket subscription startup was founded in Turkey in 2015 and had operated overseas, but in early 2018 it capitalized on the hype around MoviePass to launch in the US. Despite their similarities, Sinemia CEO Rifat Oguz positioned his company as the anti-MoviePass, focused on "profit" and "sustainability" where MoviePass was focused on hypergrowth.

But as MoviePass began to introduce unpopular new restrictions, Sinemia went for the jugular, introducing a plan at the same price as MoviePass (around $10 per month), with the same number of movies (three per month), but with no restrictions on movies or showtimes — and with the ability to book tickets in advance.

For some movie fans, including myself, it seemed we had finally found a subscription service we could rely on. That feeling didn't last for many.

On Friday, the law firm Chimicles & Tikellis LLP filed a class action lawsuit in Delaware on behalf of two plaintiffs, alleging that Sinemia "essentially became a bait-and-switch scheme."

"It lures consumers in by convincing them to purchase a purportedly cheaper movie subscription, and then adds undisclosed fees that make such purchases no bargain at all," the lawsuit claims. "Sinemia fleeces consumers with an undisclosed, unexpected, and not-bargained-for processing fee each time a plan subscriber goes to the movies using Sinemia's service."

I, too, encountered Sinemia's sneaky fees and wrote about them in a piece published last week. In the piece, I urged the company to be more transparent with customers about its pricing structure. After the article published, I was contacted by over 40 Sinemia subscribers, many of whom expressed anger and frustration with its fees and lack of customer service.

On Sunday, less than a week after my story, Sinemia deactivated my personal account without explanation. A button to "reactivate" my subscription didn't function and my email to customer support hasn't been answered. Despite paying a $20 activation fee, my account was only active for two months before Sinemia shut it off.

I saw one movie, "A Star Is Born," which I highly recommend.

How did it all go so wrong so quickly?
Fees upon fees

The crux of the class action lawsuit against Sinemia is a new $1.80 "processing fee" that the company began to roll out in mid-October.

To understand how the new fee changes the value proposition of the service, it's helpful to look at one of the lawsuit plaintiffs: Paul Early of California.

Early signed up for Sinemia in August and paid $191.88 for a year plan of two movies per month for two people, plus $9.99 for early activation, according to the suit. All in he paid over $200. The first five times Early used Sinemia, he incurred a $1.50 third-party "convenience fee" (from using ticketing sites like Fandango). Sinemia had disclosed before he'd bought the subscription that he'd have to pay that fee.

But then when Early went to use the app on October 22, he was charged a further $1.80 "processing fee" per ticket, according to the suit.

After getting hit with this new fee a few more times, Early contacted customer support asking to cancel his plan and get a refund for the remainder. He never heard anything, according to the suit.

"The movie plan Early is now stuck with has lost significant value with the imposition of the processing fees," the suit argues.

Many Sinemia subscribers echoed these sentiments to Business Insider, saying they felt taken advantage of by the fees, especially when "processing fees" were added on top of "convenience fees." Multiple subscribers said they had requested refunds for the remainder of their yearly subscriptions and been told Sinemia was a "non-refundable service."

Others simply never heard from Sinemia's customer support despite multiple follow-ups (including myself).

Sinemia provided the following statement to Business Insider after publication:

"From the beginning, the goal of Sinemia has been to make the moviegoing experience much more affordable and enjoyable for moviegoers by covering for the cost of the movie ticket. While nobody enjoys fees, there are certain costs related to booking and processing outside of the price of the movie ticket that are out of our control. A processing fee of up to $1.80 applies so that Sinemia can continue to provide access to all showtimes for all movies in all theaters without restrictions as well as to keep our subscription plans and services consistent, as they have been since the founding of the company. Also, Sinemia is developing a feature in the app which will allow users to order physical cards in December or earlier."

Sinemia Class Action Fee Lawsuit

Posted by Mike Croaro (Member # 3123) on 11-13-2018, 09:49 AM:

"Sinimia" A foreign language? America's trend of mispelling words for fun?

Posted by Buck Wilson (Member # 5885) on 11-13-2018, 06:35 PM:

What a mess all these services are.

Posted by Bobby Henderson (Member # 840) on 11-13-2018, 08:05 PM:

AMC Stubs Premiere and Stubs A-List don't offer nearly as much money savings to customers but at least the services seem more stable. I use the $15 per year Premiere service; it pays for itself after just a couple or so trips to the movies. Stubs A-List almost seems like having another cable bill.

Posted by Marcel Birgelen (Member # 6801) on 11-14-2018, 03:44 AM:

On their website, the only location you can actually read something about those fees is in the FAQ.

Essentially, they easily can charge you close to $4 per booking in fees... For a few dollars more, you can buy a matinee ticket at many locations.

Those subscription services can never be profitable, unless the theaters actively participate in it.

Posted by Dave Bird (Member # 490) on 11-14-2018, 08:39 AM:

I'm interested in how the chains report their own subscription services to the studios. We know from the various other industries that subscriptions are profitable since most people eventually use it less. But then most of these things aren't required to take attendance and pay the supplier for each person who shows up. I've even heard some MLB teams are selling ultra-low price "subscription-type" passes which get you in the park for a bleacher seat or standing room based on availability, but again, they aren't turning around and paying a percentage on that.

Posted by Mike Blakesley (Member # 26) on 11-14-2018, 06:50 PM:

In the past, studios didn't really care how you handled your money or even if you actually charged any money; as long as each person in the auditorium has an appropriately-valued ticket which has been duly recorded by whatever system you use, and that you pay the studios their percentage on those tickets.

I wonder if that is still in place today. It wouldn't be surprising if some of the large chains have worked out some kind of "deals" with the studios on the subscription programs.

Posted by Marcel Birgelen (Member # 6801) on 11-16-2018, 03:49 AM:

I doubt that till this date, any exhibitor has gotten a special deal for subscription "tickets" from one of the major studios.

It's not like the butcher will give me a discount on his prime rib, because I run an all-you-can-eat steakhouse, other than just the regular volume discount.

Posted by Dave Bird (Member # 490) on 11-17-2018, 07:26 AM:

You're probably right, studios likely haven't given any deals. I wonder if they should consider it. It would certainly change the accounting for settling up with them. It's a little different from the butcher in that the butcher has paid for the cow and can sell it for whatever price he wants, including subscription I suppose.

Posted by Frank Cox (Member # 6258) on 11-17-2018, 10:24 AM:

butcherbox.ca

Posted by Dave Bird (Member # 490) on 11-18-2018, 08:08 AM:

Oh, they're trying to kill the grocery store Frank, they have been for decades. A number of things holding them back so far. Groceries have the most extensive and efficient distribution network of anything and really has for millenia. They cannot be bought cheaper than you going and selecting what you want when you want it. That's been the hardest selling feature of these services (not really subscription, they're not "all you can eat for a monthly price", it's still a "value proposition" - set quantity for a set price), they're committing you to spend X dollars per month regardless of whether it turns out to be too much or too little. They might be offering it at a slight discount to the store, sure, but the inefficiency of committing to the "inventory" likely kills your "savings". That's the beauty of capitalism though, keeps everyone on their toes, have to assume somebody out there is coming after you.....

Posted by Mike Spaeth (Member # 524) on 11-18-2018, 11:26 AM:

AMC reports a ticket sale of $8.99 for every Stubs A-List ticket purchased for a film.

Posted by Marcel Birgelen (Member # 6801) on 11-19-2018, 04:15 AM:

quote: Dave Bird
It's a little different from the butcher in that the butcher has paid for the cow and can sell it for whatever price he wants, including subscription I suppose.

In what way does the butcher in this regards differ from the studios? The studios paid for the movie, they alone decide how they're going to sell the movie to the public. Netflix, for example, does have a studio arm and sells most of its productions only via their subscription service, whereas Disney still employs the traditional release cycle for their A-list productions.

But it will be a hard sell towards e.g. Disney, to convince them to change their business model towards you as exhibitor, only because you happen to sell "flat fee, all you can see" subscriptions. They'll tell you: Great, if you can make it work, but we still want our regular cut of every "butt-in-the-seat", which seems to be exactly what's happening.

So, the "Stubs A-List" service will most likely still be profitable for AMC across the board, although if everybody would max out their three movies a week, it would obviously not be profitable, unless those people would compensate their loss with massive amounts of concession sales, which will be mostly unlikely.

Posted by Lyle Romer (Member # 1266) on 11-19-2018, 05:33 AM:

The only way I could see the studios even considering a flat rate rental would be to get some kind of share of concession sales. That would get quite complicated because, outside of a single screen, how would you figure out the split between studios?

I'm guessing with something like the AMC stubs A-list program, they have figured out that on average the usage rate will allow them to pay the film rental on the ($8.99 if accurate) tickets without losing money on the program overall. The profit comes from concession sales (or food sales in dine-in locations).

I couldn't find 3 movies a week to see if it was free so the usage can't be anything near 12 movies a month. Back "in the day" in the mid/late 90's when I worked for GCC and got free movies as a perk, I could manage to find 1 movie a week that was worth the time to watch.

If I was a Stubs A-list customer, they'd report $468 worth of sales. At 60% film rental that's $280 to the studios. I paid AMC $239. They'd be $41 upside down. However, they are very likely to get me to buy $100 worth of profitable food/concession over the course of the year with my 52 visits.

Plus, a lot of the time, I'd probably have a guest with me that isn't a member and pays regular price.

A program run by an exhibitor can work simply because most normal people can't possibly find that many movies to see in a year. A program run by a 3rd party can't possibly work because they have to pay full price to the exhibitor and would have to charge more to actually make a profit (or have an extremely low usage rate).

Posted by Dave Bird (Member # 490) on 11-22-2018, 07:20 AM:

It differs in that the butcher (I essentially was one) has purchased his meat for an agreed upon final cost from his supplier. He's then free to sell it for whatever price he wants, even at a loss. He could run a subscription service based on what he knows would be his final product cost.

Posted by Marcel Birgelen (Member # 6801) on 11-22-2018, 08:45 AM:

Ok, but I still don't see the difference between the butcher and the studio.

The studio essentially "bought" the movie, usually also at a pre-determined price. As in, there was a budget and a bunch of people hired by the studio made a movie within the budget allotted (yes, there might be public cases about budget overruns, but don't let us make it too complicated [Wink]

). Now, the studio is going to sell that movie. The studio can essentially choose any way they want to sell their movie. They might rent it out to exhibitors or offer it as part of a subscription service.

Posted by Dave Bird (Member # 490) on 11-23-2018, 12:49 PM:

You're correct, studio has it's cost, my point was it's difficult for us as exhibitors to consider a subscription model, since we don't have our cost. The whole industry baffles me a little in why they insisted on such complicated equipment and no flexibility on 2-3 week minimums where it makes sense. Seems to me they had the opportunity to sell their product in every town all the time, just like Coca-Cola or McDonald's. Finding some way to get on the subscription gravy train whilst not ruining the exhibitor would probably boost sales volume and profit (from unused "float").

Posted by Jack Ondracek (Member # 1466) on 11-23-2018, 05:15 PM:

Dave, I think the issue has more to do with image and logistical overhead than capability.

COULD the studios carpet bomb digital content across the globe? Sure... especially with satellite or internet distribution. The satellite platform could be made simpler than it now is (receive-only, for starters), and there'd certainly be time to broadcast content over the internet.

My suspicion is they don't do this because of the image they try to project for each of their titles. For some reason, the industry is obsessed over individual gross performance, as related to competitors' titles. That "per-screen average" has always been a biggie for them. For that reason, among others, my guess is they'll continue to be driven to first-serve those theatres that return the higher rentals... holding off smaller operations to back-fill the initial numbers.

The other part is logistical overhead. Even though the cost of delivering content has gone down with the conversion to light, durable hard drives and satellite, there's still a cost to administer, monitor and collect, and the smaller theaters will likely always cost more to watch and collect from than larger, more stable companies.

Just my opinion here... worth what you paid for it.

Posted by Mike Blakesley (Member # 26) on 11-23-2018, 11:10 PM:

quote: Dave Bird
The whole industry baffles me a little in why they insisted on such complicated equipment and no flexibility on 2-3 week minimums where it makes sense. Seems to me they had the opportunity to sell their product in every town all the time, just like Coca-Cola or McDonald's.

We've been down this road before; it's all about "screen count," although I don't understand why it would make a difference if a bunch of those smaller screens like us would move their print over to another small screen for week 2. Net loss of screens = 0 and they'd be making more film rent than letting it rot in a small theater for a second week. But that's why we don't play more movies on the break.

If they'd change that one stupid damn policy I would play a new movie almost every week, my ticket sales would probably go up by at least 30% and I'd be paying more film rental. But they don't like that idea. I guess.

Posted by Dave Bird (Member # 490) on 11-28-2018, 07:37 AM:

I believe what y'all say, no doubt. Certainly I'm biased by being a grocer for so many years, in fairly rural centers too. That distribution system is so mature that if Mrs. Jones wants a different brand of pickled herring than the 11/12ths of a case that's been collecting dust on your shelf for years, you can generally have it for her in a day or two. They manufacturers want every nickel of revenue they can get. That may be my answer right there, they either feel it's too hard to get those nickels OR they are so conditioned to believe it's not worth their time (from film days) that they're still just using those policies. There's probably just nobody in the chain who has any incentive to try anything new.

Posted by Mike Blakesley (Member # 26) on 11-28-2018, 10:48 PM:

I've always wondered if it's a computer software issue, myself. Their systems are set up on the "old way" and there's no easy way to change it.

Posted by Dave Bird (Member # 490) on 11-29-2018, 10:35 AM:

Well that's a good point, the odd time a studio sends a statement out, our double-features always have the full net sales attached to both. Makes sense on payment terms, but there you go, all they would have to do is assign you a "ghost" screen #2. Ironically, it wouldn't help us outdoors at all, but it movies were brand-new, you were just starting the whole thing, they'd charge more to ship anything to smaller places, they might insist that you pay a bit more for the trouble, but I think they'd give everyone the product, and the idea of "splitting" a screen wouldn't even occur to them. Lots of places wouldn't go for it, but others would. You could decide for yourself if you wanted to run 2 or 3 titles a night. They'd probably have minimum runs which would be fine.