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- MoviePass competitor Sinemia filed for bankruptcy in Delaware and said it was shutting down US operations.
- In the filing, the movie-ticket subscription service said it was under "pending" investigation by the Federal Trade Commission.
- An FTC spokesperson would neither confirm nor deny to Business Insider that such an investigation existed.
- A class-action lawsuit brought by customers against Sinemia alleged the company engaged in deceptive marketing practices.
- Visit Business Insider’s homepage for more stories.
On Thursday, MoviePass competitor Sinemia filed for bankruptcy in Delaware and said in the filing that it was under "pending" investigation by the Federal Trade Commission.
"We didn’t see a path to sustainability as an independent movie ticket subscription service in the face of competition from movie theaters as they build their own subscriptions," the movie-ticket subscription service said in a statement posted to its website Thursday that explained its decision to shut down US operations.
Sinemia said that its "efforts to cover the cost of unexpected legal proceedings and raise the funds required to continue operations have not been sufficient."
Sinemia’s Chapter 7 bankruptcy filing references multiple "pending" cases against it, including two class-action lawsuits and a patent infringement lawsuit brought by MoviePass.
The company also listed a "non-public" investigation by the FTC as "pending." A spokesperson for the FTC told Business Insider that the agency could neither confirm nor deny that such an investigation existed, and said the FTC did not comment in most cases.
The FTC describes itself as having a "unique dual mission to protect consumers and promote competition." It also says it "protects consumers by stopping unfair, deceptive or fraudulent practices in the marketplace."
Though Sinemia did not list the nature of the FTC investigation in its filing, one of the class-action lawsuits brought by customers alleged that Sinemia engaged in deceptive marketing practices and provided examples in which the company advertised "one low monthly cost." As Business Insider previously reported, there were seven ways Sinemia could charge customers fees.
In the bankruptcy filing, Sinemia listed $1.2 million in assets and $158,000 in liabilities (as well as the pending cases).
Sinemia was started in Turkey in 2014 and also operates in countries including Canada, Australia, and the UK. It’s unclear how operations in those countries will be affected. The company did not respond to a request for further comment from Business Insider.
Here is the full statement from Sinemia posted on Thursday:
Dear Customer,
Today, with a heavy heart, we’re announcing that Sinemia is closing its doors and ending operations in the US effective immediately.
As Sinemia, we set out our journey with the vision to help as many moviegoers as possible to enjoy an affordable and better experience at the movies by a creating a movie ticket subscription service that adds value for both the moviegoers and the movie industry. Since 2014, we’ve been fine-tuning our model and serving movie-goers with a slate of affordable and flexible subscription plans.
We are all witnessing that the future of moviegoing is evolving through movie ticket subscriptions. However, we didn’t see a path to sustainability as an independent movie ticket subscription service in the face of competition from movie theaters as they build their own subscriptions. Thanks to the cost advantage and cross-sell opportunities, movie theaters will be prominent in the movie ticket subscription economy.
While we are proud to have created a best in market service, our efforts to cover the cost of unexpected legal proceedings and raise the funds required to continue operations have not been sufficient. The competition in the US market and the core economics of what it costs to deliver Sinemia’s end-to-end experience ultimately lead us to the decision of discontinuing our US operations.
Despite the best efforts of our team, it has been difficult for us as a start-up to continue providing our services to the moviegoers in the US without resources and enough capital to meet increased operations and legal costs.
We want to sincerely thank our customers that believed in us and helped us along the way for their love and support.
We are so grateful to have had the opportunity to share our dream with you.
Sinemia Inc.
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Source: Business Insider – nmcalone@businessinsider.com (Nathan McAlone)