With one way of thinking about it, there were two My Little Pony movies. One was actually the pilot episode of the My Little Pony television series, dealing with the evil Tirek's plot to capture the My Little Ponies to transform them into monstrous creatures to tow his flying Chariot of Darkness. I can neither confirm nor deny that it was ever released to theaters. There was also a feature length My Little Pony movie released to theaters in 1986, intended to introduce the new season and its new characters and new locations. The other Hasbro cartoons, Transformers and G.I. Joe, had similar movies themselves, coming out in '86 and '87 respectively.
The story's villains are a witch (Hydia) and her two daughters (Reeka and Draggle). They explain that what is now Dream Valley was once a dark and forbidding place, but the My Little Ponies moved in and somehow transformed the natural ecosystem into a false and unnatural rolling grassland, completely against the wishes of its former inhabitants, who were forced back to a volcano lair. The witches want to reclaim their rightful territory, restoring it to its original state. Unfortunately, despite the family's tradition of power (they once managed to make Easter Sunday fall on a Tuesday, challenging the will of the gods themselves), the daughters are something of a bumbling disappointment.
The witch daughters attempt to disrupt the Ponies' Spring Festival by flooding Dream Valley, but are stopped in a sequence which was probably only put in the script to showcase the Sea Ponies, who otherwise wouldn't have anything to do in the movie since practically nothing else happens anywhere near water. They return to the volcano lair in defeat to face the wrath of their mother (who for some reason hates being referred to as their mother and demands they call her by her first name). Clearly, more desperate measures are required, and the movie takes an unexpectedly dark turn for the rest of its running time. Hydia decides the only way to reclaim their lost land from the ponies is to unleash a powerful weapon called the Smooze. The Smooze is powerful enough to lay waste to entire kingdoms, as when it was last used, it destroyed the country of Grundleland. Hydia just needs her daughters to collect the ingredients.
Cue up a musical number, which was a sadly missing element from the Transformers and G.I. Joe movies. Although not the only song in the movie, this one is going to stick in my head for the rest of my life, so I'm going to share a few lines:
I'll do the dirty work! I'll handle all the dirty work!
Each humble job I'll assume!
I'll be working overtime,
Collecting mold and filth and slime . . .
All you have to do is get the phlume!
The daughters are terrified at the prospect of collecting "phlume", and after going back and forth for a while trying to decide who has to collect it, they wind up not collecting it at all, hoping the magic will work without it, and Hydia won't notice it's missing. After a nervous moment tossing the ingredients into the volcano, it appears that their gamble paid off.
The Smooze lives.
The Smooze is an undulating, writhing purple mass of slime, an amorphous beast capable of generating limbs, teeth, and eyes from its gelatinous form when and as required. As it spreads, it grows, covering and devouring all in its path. It pours down the volcano into Dream Valley and begins its work destroying the unnatural greenery the Ponies introduced. It seems as unstoppable as Hydia brags it to be, and any Pony caught in so much as a splash from its slime becomes encrusted with a vile purple filth which cannot be cleaned off. But the thing's true power is not to corrupt the body, but to envelop the victim's very soul in an unshakeable malaise, leaving them bereft of hope and wallowing in a near suicidal depression.
Magic Star, one of the "ordinary" groundling Ponies (as opposed to the Sea, Pegasus, and Unicorn Ponies), reveals some of her mysterious past as she is the only one who recognizes the Smooze and the danger it represents as it floods Dream Valley in its juggernaut charge. How she knows so much is left unexplained, giving the audience nothing more than a tantalizing glimpse of her true nature. Even 18 years later, fans still debate her history, citing clues like this that were scattered throughout the series. We may never know for certain, as an attempt to revive the series in 1992 was cancelled after a single season of new episodes.
Soon, Dream Castle is flooded and enveloped by the all-consuming Smooze. The Ponies know that their only hope lies with their human friend Meagan, keeper of the Rainbow of Light, their only defense against such eldritch horrors as the witches and Tirek's Chariot of Darkness from the pilot episode. After a brief introduction to Meagan's family, Meagan and her little brother and sister accompany the Ponies back to Dream Valley to confront the Smooze.
What follows is a battle that pits the most powerful forces of Good and Evil in the My Little Pony continuity against each other in an action sequence the likes of which were never seen again in the series. Optimus Prime's final battle with Megatron and Duke's duel with Serpentor both paled in comparison to the Rainbow of Light's mystic assault on the bubbling, writhing Smooze. The Rainbow begins the battle strong, stinging and burning the Smooze wherever it struck, but the Smooze had grown large and powerful consuming Dream Valley, and soon begins to fight back. The battle turns against the Rainbow of Light as the Smooze rises up, forming pseudopodia and tentacles with its infinitely plastic form, finally rising up as a massive purple wave, and like a mighty fist it overwhelms and envelops the Rainbow of Light.
The forces of good have lost this battle.
But the Smooze's victory is hard-won, and it lapses into a slumbering form, solidifying and crusting over everything it covered, dead but dreaming. Hydia discovers her daughters never collected the phlume, and orders them to get it immediately, as it is the only thing that can revive the Smooze and allow it to finish the job it started.
Meanwhile Meagan and the Ponies, barely able to believe that the Rainbow had failed them when it had always protected them in the past, know they're in a race against time. They need to find a way to stop the Smooze for good before the witches can revive it, and their only remaining hope lies with their friend and mentor, the Moochick, in the vain hope that he might be able to provide them with another Rainbow.
The witches waste no time themselves, and the audience soon discovers the unearthly horror that is the phlume. On a rocky outcropping of a forbidding cliff devoid of all other life lies the phlume: a six foot, aggressive, carnivorous plant with four long fronds it uses to drag victims into its vicious maw. Armed with only a pick axe, the witch sisters decide they are more afraid of their mother than the plant, and working together, manage to overpower it, draining its precious life-giving fluid from near the base of the stem. They return to Hydia victorious.
Meanwhile the wise but apparently senile Moochick sadly informs the Ponies that there is no other Rainbow of Light, and their only hope lies with the strictly isolationist Flutter Ponies, beings with wyrd and wonderful abilities. However, he is able to use what power he has to offer to create a new playset to buy home to live in, the Paradise Estate.
All seems lost, however, as before they even start out on their journey to Flutter Valley, the witches return to Dream Valley with the phlume, and revive the Smooze. Now energized with the phlume, it is even stronger than before.
Now, I skipped over a subplot that's been going on since the beginning, but one of the ponies, Lickety-Split, who wouldn't toe the line and conform like the others decided to run away, unable to cope with the oppressive mistrust of individuality in Dream Valley. She meets up with the Grundles, who were the first victims of the Smooze, and rescues a lost Flutter Pony, Morning Glory, who brings her to Flutter Valley at the same time Meagan and the other Ponies are searching for it. Although their queen, Rosedust, is reluctant to betray the isolationist mentality that has served to keep them out of the conflicts of others thus far, Lickety-Split and Morning Glory manage to convince her that if left unchecked, the Smooze will spread to Flutter Valley in time. They can either take the fight to the enemy now, or be caught unprepared later. Rosedust sees the wisdom in this, and orders the Flutter Ponies to take to the air.
The ending is a bit of an anticlimax, however, compared with the battle between the Rainbow of Light and the Smooze. The Flutter Ponies simply use their wings and magic to blow the Smooze back into the volcano that spawned it, robbing it of its life and breath and freeing the Rainbow of Light and Dream Castle from its flood. They are likewise able to blow the Smooze off of the ponies that were infected with its debilitating, soul-crushing filth, restoring them to their normal selves. The witches are defeated, the Ponies have a new home in Paradise Estate, and the formerly homeless Grundles are given Dream Castle to live in.
Cute little kids movie marketed toward pre-teen girls? Hardly. Hasbro's scriptwriters managed to weave a Lovecraftian horror with surprisingly heady elements explored — like conformity, foreign policy, and the right of a foreign people to take over formerly inhabited land, driving the indigenous people back to live in an area they considered unsuitable. Whether or not the Ponies were right to transform Dream Valley to better suit their needs is seen as irrelevant to the witches' actions in trying to take back their territory by violence.