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MoviePass parent’s CEO says its rebooted subscription service is already (sort of) profitable – TechCrunch

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Two days after MoviePass announced the return of the company’s unlimited ticket plan, Ted Farnsworth, CEO of its parent company Helios and Matheson Analytics, sat down with TechCrunch to offer insight into the state of the beleaguered service.

According to the executive, MoviePass Uncapped is already seeing positive results. While he didn’t share concrete numbers, he says that sign-ups have increased “well over 800 percent in the last few days. And that’s conservative.”

Asked what it would take to make the company’s subscription business profitable, Farnsworth says, “Well, it’s profitable right now.” As for when it turned the corner, he added, “I will tell you this, because it’s out there: MoviePass has actually paid Helios back money over the past several months, towards the loans that they have. So, that gives you an idea of when we really started focusing on getting rid of the 20 percent of the abusers.”

Important caveat: A Helios & Matheson spokesperson later clarified that Farnsworth meant MoviePass’ subscription business is profitable on a revenue-per-subscriber basis. In other words, it’s not losing money on subscriptions, but the business unit isn’t necessarily profitable when you take overhead and debt into account.

The plan marks a return to the initial unlimited model that helped turn MoviePass into a household name in the past year. But that success arrived with a massive price, as the service began hemorrhaging money. MoviePass withdrew the unlimited plan and began reworking its plans on what seemed to be a weekly basis.

In July, at the height of what was supposed to be the Summer of MoviePass, the service experienced an outage as it struggled to pay bills. Helios secured a $5 million loan from creditors Hudson Bay Capital Management in order to turn the lights back on.

WEST HOLLYWOOD, CA – FEBRUARY 24: Ted Farnsworth attends the 27th annual Elton John AIDS Foundation Academy Awards Viewing Party sponsored by IMDb and Neuro Drinks celebrating EJAF and the 91st Academy Awards on February 24, 2019 in West Hollywood, California. (Photo by Jamie McCarthy/Getty Images for EJAF)

“I think the big SNAFU there was the credit card company,” the executive explains. “When one company sold to the other, we had been doing business with them for four years. They decided it was too much credit for them and literally call the credit line on a Friday night and I do a personal guarantee on a Saturday.”

However things might have gone down on the back end, the optics of such a situation were clearly less than ideal. MoviePass’ struggles were very public from the beginning, as part of a publicly traded company. A literal shut down for the service appeared to be just the latest sign that the too good to be true service was exactly that.

And while Farnsworth admits that the company would have benefited from a bit more privacy, he claims that he never had any doubts about MoviePass’ future, even as he negotiated with creditors for a fresh cash injection.

“There were no moments in my mind where I thought it would go down. In my mind, I thought it was too big to fail,” he says. “You created a household name in less than a year. I think any time you have something like that, where you’re going to run into issues from sheer growth. Our investors did well investing along the way. The investors believed in us and they still do. We knew we had to slow it down to get in front of the fraud side because there were so many moving parts. It was moving so fast.”

It’s that “fraud” that was at the center of MoviePass’ woes, says Farnsworth. MoviePass’ initial downfall, he believes, was the product of too many users “gaming the system.” He believes the total number of users that fall into that category to have been around 20 percent of the overall subscriber base.

It was a minority, certainly, but still a sizable figure, given that, by June of last year, that total figure had exceeded three million. By that point, the service also comprised around five percent of U.S. box office receipts. Much of the past year has been spent attempting to plug holes in the subscription service as the MoviePass boat began rapidly taking on water.

To be clear, “gaming the system” doesn’t just mean watching a lot of movies — Farnsworth says he’s happy to have “hardcore” users, even if they’re buying way more than $9.95 or $14.95 worth of tickets. Instead, his concern is users who are doing things like sharing their subscription or just using a MoviePass ticket to use the theater’s restroom — something surprisingly common in places like Times Square, where public bathrooms are hard to come by.

One of the primary fixes, Farnsworth says, is utilizing mobile tracking to ensure that subscribers are, in fact, using the service as intended, and looking for “red flags” like constantly changing the device using the app. Users are already required to enable location-based tracking in order to enable ticket purchase. This will utilize that to ping the ticket purchaser’s location, in order to make sure that they’re actually attending the movies for which they’ve purchased tickets.

HMNY moviepass parent chart

“For instance, another issue is where people would go to the theater, they’ll pick up the ticket, they’ll hand their ticket to the kid or their child or their friend or whatever it is … and the person that’s paying the subscription goes back home or whatever they do,” he says. The new strategy: “When the movie starts, 30 minutes later [we’re] able to ping them inside the theater, just to make sure they still are at that theater.”

Looking ahead, Farnsworth says that the days of constantly changing pricing and restrictions are over, and that the company is committed to the unlimited plan. In fact, in his telling, the goal was always to get back to the unlimited plan — it was just that MoviePass had to figure out how to cut down on fraud to make the plan work.

At the same time, he says MoviePass’ film studio will also be an important part of the business. It has been overshadowed by the headlines about the company’s subscription struggles, but MoviePass Films has titles starring Bruce Willis, Al Pacino and Sylvester Stallone scheduled for this year.

MoviePass also invested in “Gotti,” and although the film was reviled by critics and only grossed $4.3 million at the box office, Farnsworth doesn’t see it as a failure.

“We never looked at Gotti as a money-maker” he says. “They only projected that it would do a $1.3 million in the box office here. Because then, when we pushed it with MoviePass, we took that up to five million. So, I mean, when you can take a movie — I gotta be careful here, but when you take a movie that might not be that great or perfect, and you can move that needle, [that] was always our theory of subscription.”

Check back later for our full interview with Farnsworth. Also, this post has been updated to reflect that MoviePass recently saw 800 percent growth in sign-ups (not subscribers), and to clarify Farnsworth’s remarks about profitability.

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Afterpay unveils BNPL subscription offering for US customers – TechCrunch

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“Buy now, pay later” company Afterpay announced Wednesday that it was going after the $1.5 trillion global subscription payments market by offering to its U.S. customers payment installments for subscriptions, like gym memberships, entertainment subscriptions and online services.

The service will launch in both the U.S. and Australia beginning early in 2022 and will be free for customers who pay on time. IPSY, BoxyCharm, Savage X Fenty and Fabletics are among the initial list of merchants that will offer the feature. The company plans to expand the feature in-store and into other regions later, including Canada, New Zealand, the U.K. and Europe.

In addition to paying for subscriptions in installments, Afterpay is also enabling its offering to be used on preordered items, where users can pay in four installments over time once the item ships. Another feature coming soon will allow merchants to accept deposits on custom items.

“By offering customers the option to pay for subscriptions with Afterpay, we’re not only giving consumers flexibility to pay for more expensive monthly costs, but we’re also helping our merchant partners capture a wider consumer base through this convenient experience,” said Zahir Khoja, general manager of North America for Afterpay, in a written statement.

Klarna, Afterpay’s competitor in the BNPL space, also announced news this week for its U.S. customers that it was offering its “Pay Now” option.

Meanwhile, in August, Square announced that it was buying Afterpay in an all-stock deal valued at $29 billion. Afterpay has also been on a roll with feature debuts recently, launching both Afterpay Ads, a suite of advertising products for brands to engage with shoppers within the ecosystem, and merchant analytics tool Afterpay IQ, in August.

Afterpay works with 100,000 retailers and has approximately 10.5 million active customers in North America as of June 30, up from 5.6 million the year prior. North America is the company’s “largest region in terms of underlying sales,” which grew 145% year over year, or from $4 billion in fiscal year 2020 to $9.8 billion in fiscal year 2021, according to the company.

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Fairphone hits software support longevity akin to Apple’s iPhone – TechCrunch

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Fairphone, the Dutch social enterprise dedicated to making consumer electronics (more) sustainable and ethical, including by supporting repairability so that users can hold onto their hardware for longer, has announced public testing of Android 10 for the six-year-old Fairphone 2.

Owners of the modular handset that was first released back in 2015, running Android 5, should expect to be able to upgrade to Android 10 (released date: 2019) in early 2022, Fairphone said today, announcing the beta rollout of the upgrade.

Fairphone stopped producing (but not supporting) the Fairphone 2 back in 2018 — going on to release the Fairphone 3 (in 2019), the Fairphone 3+ (in 2020, also available as a modular upgrade to the 3) and, earlier this fall, the Fairphone 4, its first 5G handset — which it said would be supported until at least 2025.

Given the Fairphone 2’s impending update to Android 10 next year — which will mean it will have been supported for a total of seven years — 2025 looks like a conservative estimate of how long Fairphone 4 owners should expect to receive software support.

Fairphone says it collaborated with its community of users for the Android 10 upgrade project — and with a software developer in India, Bharath Ravi Prakash, which it says worked as a volunteer open source dev — and by doing that says it was able to streamline the process and shrink the time required to carry out the upgrade.

So while the prior Fairphone 2 OS update (to Android 9) took 18 months, this time the process has been condensed to 10 months.

Google, meanwhile, has gone on to release Android 11 (2020) and Android 12 (last month) — for a sense of how far behind the Fairphone 2 upgrades are trailing the latest OS release.

“The company learned a lot from the Android 9 upgrade and although still complex, Android 10 was more predictable than Android 9,” Fairphone notes in a press release, which also quotes its head of software longevity & IT, Agnes Crepet, who writes: “Our unique approach to software has allowed us to help our users keep their devices for as long as possible. We’re pleased to be able to provide our Fairphone 2 community with yet another software upgrade, reaching our goal to provide at least five years of support from launch for our phones and with the Android 10 upgrade, we’re going beyond that to seven years of support. We are constantly raising the bar for ourselves and the industry, showing that doing things more sustainably in software is possible.”

Seven years’ support puts Fairphone into Apple iPhone software support timespans. But of course the average Android-based handset can expect fair fewer years of software love — typically Android smartphones only get around three years’ support. So it’s a major achievement.

And while Fairphone may only now be catching up to Apple on the software longevity front it is already years ahead of Cupertino in another respect: Hardware sustainability through repairability via modular construction and offering direct-to-consumer spare parts.

Earlier this month Apple announced that, starting next year, it would kick off a “Self Service Repair” program — shipping spare parts and repair tools to iPhone and Mac users to let them perform basic repairs at home.

It’s by no means full modularity from the company that has — historically — loved a hermetically sealed, stupidly thin, often literally glued shut box, but it is a small step in a more sustainable direction. And one that Fairphone has long pioneered.

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Spotify tests a TikTok-like vertical video feed in its app – TechCrunch

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TikTok has seen its short-form video feed copied by a host of competitors, from Instagram to Snap to YouTube and even Netflix. Now it looks like you can add Spotify to that list. The company has confirmed it’s currently testing a new feature in its app, Discover, which presents a vertical feed of music videos that users can scroll through and optionally like or skip. For those who have access to the feature, it appears as a fourth tab in the navigation bar at the bottom of the Spotify app, in between Home and Search.

The new addition was first spotted by Chris Messina, who tweeted out a video of the Discover feature in action. He described it as a “pared-down version” of a TikTok-style feed of music videos.

Messina told us he found the feature in Spotify’s TestFlight build (a beta version for iOS), where a new icon in the navigation toolbar brings you immediately to the video feed when tapped. You can then swipe up and down to move through the feed, much like you would on TikTok. In addition to tapping the heart to like songs, you also can tap the three-dot menu to bring up the standard song information sheet, he notes.

Messina also speculated the feature may be taking advantage of Spotify’s existing Canvas format.

Introduced broadly in 2019, Canvas allows artists to create videos that accompany their music on the Spotify app. The feature had mixed reviews from users, as some reported they preferred to see just the static album art when listening to music and found the video and its looping imagery distracting. But others said they liked it. Canvas, however, appears to drive the engagement metrics that Spotify wants — the company reports that users are more likely to keep streaming, share tracks or save tracks when they see a Canvas.

From the video Messina shared and others we viewed, we can confirm that the videos playing in the vertical feed are the artists’ existing Canvas videos. But Spotify would not confirm this to us directly.

TechCrunch asked Spotify for further information on the feature, including whether it had plans to roll this out further, whether it was available on both iOS and Android, which markets had access to the feature and more. The company declined to share any details about the feature but did confirm, via a statement, it was exploring the idea of a vertical video feed.

“At Spotify, we routinely conduct a number of tests in an effort to improve our user experience,” a spokesperson told TechCrunch. “Some of those tests end up paving the way for our broader user experience and others serve only as an important learning. We don’t have any further news to share at this time,” they added.

In other words, the test is still very early and may not make its way to the public. But if it did, it wouldn’t be a surprising move on Spotify’s part. The company has before looked to popular social media formats to engage its users. In the past, Spotify tested a Stories feature that allowed influencers to post Stories to introduce their own, curated playlists. But that option never became available to all Spotify users.

While the TikTok format has been adopted by top social platforms, including Instagram (Reels), Snapchat (Spotlight), YouTube (Shorts) and Pinterest (Idea Pins), it’s also proving to be an ideal format for content discovery. Netflix, for instance, recently adopted the short-form vertical video feed in its own app with the launch of its “Fast Laughs” feature, which offers clips from its content library and tools to save the programs to a watch list or just start streaming them. Similarly, Spotify’s video-based Discover feature could help introduce users to new music and offer a way to signal their interests to Spotify in a familiar format.

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