MoviePass Founder's Next Act: Watch Ads, See Free Movies

Stacy Spikes co-founded MoviePass, a subscription service that lets you frequent movie theaters for a set monthly fee. After MoviePass sold off a majority stake in 2017, Spikes watched as the new owners quickly expanded, only to find the cost of all those movie tickets too high to sustain.

Now Spikes has a new idea: free movie tickets for people who first agree to watch ads. His new startup is called PreShow.

Spikes spoke with The Associated Press recently about the state of movie theaters. Questions and answers have been edited for length and clarity.

Q: Why change moviegoing?

A: If you do not evolve with the times, you will wake up and find you're like a record store or a video (rental) store. To keep cinema at the forefront, we need to be innovating.

Q: You get a free movie ticket after watching at least 15 minutes of video ads on your phone. What's to stop me from just leaving the ads running on a table?

A: We had to build in facial recognition so that you can tell that the person actually watched. If I look away, it can detect that. It'll pause if it doesn't see me for five seconds.

Q: Whoa, that sounds creepy.

A: Nothing is recording. It's a motion detector. There is nothing leaving your device, nothing stored. (All advertisers get) is this many people watched these spots.

Q: How are longer ads better than 30-second spots?

A: You actually get the time to go into a story. It should feel like you're being entertained versus you're sitting through painful ads. The more time you spend focused on an activity or brand, the more you're likely to spend your money.

Q: How's starting PreShow different from MoviePass?

A: We were trying to figure certain things out, like how much do you charge and how much are they going to eat (use the service)? There were people going every day, and there were people who maybe didn't use the service. There were regions behaving differently. The ad businesses are more straightforward. Facebook and others have figured it out.

Q: With MoviePass, you took a loss as you covered the full cost of movie tickets in most cases. Will you also be subsidizing tickets with PreShow?

A: We're expecting to run this business such that you're paying your way (through ads) to go to the movies. The way to do that is to let in a few people, and you have certain advertisers to start, and you grow over time.

The investment community wants smarter businesses. There's not the same tolerance to, "Oh, we'll figure it out."

Q: What advice do you have for others starting their own businesses?

A: Do something that you know you love so much, you're your own kind of expert at it. I'm not going to do this for sporting events or online gaming because I don't know these worlds. But I know cinema.