# Sinemia (2015 – 2019)

- URL: https://girisimcikafasi.com/en/startup-graveyard/sinemia/
- Sector: Consumer apps
- Country: Turkey
- Total funding: $2.5 million
- Cause of closure: Regulation and legal issues

## What did it do?

Sinemia was a cinema subscription service founded in Istanbul in early 2015 by Rıfat Oğuz. Members paid a fixed monthly fee and could watch films regardless of cinema or showing. The company secured discounts by buying tickets in bulk from cinemas and processed payments through card infrastructure. After Turkey it expanded to the United States, the United Kingdom, Canada and Australia.

## Why did it shut down?

According to the company, shortly after it entered the US its rival raised more than $300 million and cut prices aggressively. Lawsuits brought by the same rival cost up to $1 million each to defend, which made new investment harder to find. In April 2019, after a rise in user complaints, the individual membership model was discontinued in the US. In Turkey, Law No. 7163 abolished cinemas' bulk ticket discounts, wrecking the company's core business model. Stopgaps such as a top-up fee did not work under the new rules, and Sinemia ceased operations on 1 July 2019. The company also said it might offer memberships again if conditions changed; no separate record of a formal liquidation could be found.

## The story

Launched in Istanbul by Rıfat Oğuz in early 2015, Sinemia set out to turn cinema-going into a subscription habit. Members paid a fixed monthly fee and could see any film they liked, regardless of showing or cinema. According to Webrazzi, the Turkish tech news site, at the end of 2015 the service had signed up members in more than 50 cities in its first year, and requests for invitations had passed 100,000. Around the same time it received its first investment, from Aslanoba Capital.

In the years that followed, investors such as 500 Startups, Revo Capital and Social Capital joined. Sinemia expanded to the US, then to the UK, Canada and Australia. According to a report by egirişim in early 2019, the company had grown its revenue 38-fold the previous year and was generating 93 per cent of its sales abroad.

The US, however, proved a far harsher arena than expected. According to the company's closure statement, a smaller rival was sold to a listed company shortly after Sinemia entered the US, gaining access to more than $300 million, and began selling memberships very cheaply. Defending the lawsuits the rival brought cost close to $1 million each. For a company that had raised $2.5 million in total, that burden was unsustainable. In April 2019, as complaints about hidden fees and cancellation problems grew, the individual membership model was suspended in the US.

The decisive blow came from Turkey. Law No. 7163 barred cinemas from offering discounts on bulk ticket purchases. According to the company, the industry had begun withdrawing those discounts months before the law took effect. Interim models such as a top-up fee were tried, but the discounted subscription could not be kept alive. Sinemia ceased operations on 1 July 2019 and advised members who had paid without receiving the service to seek refunds through their banks. The statement also noted that membership sales could resume if the law changed or start-ups were granted an exemption; in other words, the announcement was a suspension of service rather than a permanent liquidation.

Sinemia's story shows that global interest in an idea is not enough on its own. A rival's capital, the cost of litigation and a regulation that ended the discount the business model relied on all piled up at the same time.

## Lessons

- If your business model depends on a single supplier discount, a regulation that ends that discount can finish you overnight.
- Before entering a price war with a rival that has many times your capital, work out how many months you can last.
- Rapid growth turns into a wave of complaints if your support and technology infrastructure is not ready.

## Sources

- [Sinemia has shut down [Breaking News]](https://webrazzi.com/2019/07/12/sinemia-kapandi/)
- [Turkish start-up Sinemia has shut down](https://egirisim.com/2019/07/12/yerli-girisim-sinemia-kapandi/)
- [Private cinema club Sinemia receives investment from Aslanoba Capital](https://webrazzi.com/2015/12/30/ozel-sinema-kulubu-sinemia-aslanoba-capitaldan-yatirim-aldi/)
- [Why did Sinemia end its individual membership model in the US market?](https://egirisim.com/2019/04/27/sinemia-abd-pazarinda-bireysel-uyelik-modelini-neden-sonlandirdi/)
- [Sinemia earns 93 per cent of its revenue from overseas markets](https://egirisim.com/2019/01/02/sinemia-gelirlerinin-yuzde-93unu-yurtdisi-pazarlardan-elde-ediyor/)