MoviePass competitor Sinemia shuts down operations in the US as 'Avengers: Endgame' enters theaters

MoviePass competitor Sinemia has shut down in the US, the company said on Thursday.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.”The movie-ticket subscription service faced a class-action lawsuit from customers and had promised to give users it had recently terminated partial refunds.Visit Business Insider's homepage for more stories.Embattled MoviePass competitor Sinemia has shut down its US operations, the company said in a statement posted to its website on Thursday. The abrupt closure came right before “Avengers: Endgame,” which is already breaking box-office records, opens in theaters.“We are all witnessing that the future of moviegoing is evolving through movie ticket subscriptions,” the movie-ticket subscription service said in the statement. “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.”The company's announcement did not address whether customers who paid for yearly plans up front would get partial refunds.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.”Some customers filed a class-action lawsuit in November, which was amended in late February, alleging Sinemia ripped them off by introducing a new “processing fee.” MoviePass had also filed a patent infringement lawsuit against Sinemia.Sinemia said in March that it had terminated “approximately 3 percent of its accounts due to misuse or fraudulent activity.” But more than 100 users contacted Business Insider saying their accounts were terminated unfairly. One user even went so far as to document on video, and post on YouTube, the process of getting his account canceled while trying to buy a “Captain Marvel” ticket. Sinemia had promised to offer terminated users partial refunds of the difference between what they had paid into their Sinemia plan versus what Sinemia had paid movie theaters.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.MoviePass has faced its own financial challenges. After burning hundreds of millions of dollars, the company was forced to alter its features to stay in business, prompting its subscriber count to drop from over 3 million to around 225,000.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.