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

Published

4 years ago

March 23, 2019

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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Netflix restructures its film units, aiming to make fewer (but better) original movies

Published

10 hours ago

March 31, 2023

Francisco Peguero

Netflix is restructuring its film units and vowing to make fewer but better movies, according to a new report from Bloomberg, which Netflix partially confirmed. The report said the streaming giant is combining film units that produce small and midsize films, resulting in a handful of layoffs, including two longtime executives. Netflix told TechCrunch that these changes were made to simplify its structure and set it up for the next phase of its growth, but declined to comment on how many people were being let go.

Scott Stuber, chairman of Netflix Film, has been looking to scale back the company’s output of films to ensure that more of them are high quality, according to the report.

It appears that this change has already been implemented, as the report comes as Netflix recently revealed its 2023 original films lineup, which consists of 49 titles. In comparison, the company had 85 original films in its lineup last year. For context, a Netflix original refers to both the content that has been produced in-house and the content to which it owns the distribution rights. It’s unclear for now if Netflix would also be scaling back the addition of originals that it didn’t produce, but obtained the rights to — a move that would impact the output of new originals on the service.

One of the executives leaving the company is Lisa Nishimura, who was behind the company’s foray into standup comedy and original documentaries, Netflix confirmed. Nishimura had worked on some of Netflix’s most popular titles, including “Making a Murderer,” “Power of the Dog” and “Tiger King.”

Ian Bricke, who served as the vice president of Independent Original Film at Netflix, will also be leaving. Bricke played a big part of Netflix’s dominance in the rom-com space, as he spearheaded notable titles like “The Kissing Booth,” “Set It Up” and “To All the Boys I’ve Loved Before.”

“Lisa Nishimura joined Netflix in the DVD days, and as the company moved into streaming, she built our original documentary and stand-up comedy divisions from the ground up, and established Netflix as a powerhouse in both spaces,” Stuber said in an emailed statement. “Ian Bricke has been at the company for more than a decade, building and leading our independent film team, attracting filmmakers like Tamara Jenkins, Nicole Holofcener, and Mark and Jay Duplass. We thank them both for their contributions to making us a world-class film studio and wish them the best for the future.”

The handful of layoffs come after Netflix conducted a series of job cuts last year. In May 2022, the company laid off approximately 150 staffers. A month after that, the company laid off 300 more people, which represented 3% of its workforce at the time. Netflix then laid off another 30 employees in September who were part of its animation department.

On the editorial side, Netflix laid off 25 people on its editorial staff just five months after launching its in-house Tudum publication.

Earlier this year, Netflix boasted to shareholders it has successfully scaled its decade-long original programming initiative.

“Now that we are a decade into our original programming initiative and have successfully scaled it, we are past the most cash-intensive phase of this buildout,” the company wrote to shareholders. “As a result, we believe we will now be generating sustained, positive annual free cash flow going forward.”

Netflix is scheduled to report Q1 2023 results on April 18.

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Hulu debuts a new interface with a vertical sidebar on Fire TV, Apple TV and Roku

Published

11 hours ago

March 31, 2023

Francisco Peguero

Hulu is slowly rolling out a new interface on streaming devices like Fire TV, Apple TV and Roku, among other compatible devices. The new redesign moves the navigation to the left side with options for TV, Movies and My Stuff.

The company confirmed to TechCrunch that the updated interface began rolling yesterday. It will be available across all supported connected TV devices in the coming months, including Android TV devices as well as Chromecast, LG smart TVs, Samsung smart TVs, Vizio SmartCast TVs and more.

Cord Cutter News was the first to report the new interface.

Users that have seen the update were welcomed with a message from Hulu that writes, “Over the next few weeks, Hulu’s navigation menu will move to the left side of the screen on living room devices. Press ‘back’ to open the menu for easy access to TV, Movies, My Stuff, and more.”

The update makes it easier for TV users to navigate to these destinations. Previously, viewers had to scroll all the way up to the top of the page. Users can now click on the remote’s back button to access the menu.

Image Credits: TechCrunch

The streaming company’s last major redesign push for the big screen was in 2020 when it introduced categories like “TV,” “Movies” and “Sports” through top navigation.

Last October, the streaming service raised its prices from $6.99 per month to $7.99 per month for the ad-supported plan and from $12.99 per month to $12.99 per month for the ad-free plan. Disney’s ad-supported bundled plan with ESPN+, Disney+ and Hulu also went from $13.99 per month to $14.99 per month.

In December, Hulu also hiked the Live TV bundle prices from $69.99 per month to $74.99 per month for the Basic plan, which offers Hulu Live TV and ESPN+ with ads and Dinsey+ with no ads. The premium plan got a raise from $75.99 per month to $82.99 per month, which offers Hulu Live TV and Disney+ with no ads and ESPN+ with ads.

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Ambani bats for IPL cricket streaming glory as Disney scales back in India

Published

20 hours ago

March 31, 2023

Francisco Peguero

Reliance’s Jio, having aggressively recruited talent from Disney’s Hotstar, is placing a substantial wager on IPL in a bid to win a large slice of India’s streaming market.

Mukesh Ambani’s Jio, the South Asian telecom powerhouse, has long sought to entice its customer base with a plethora of services aimed at boosting subscriber retention. Despite amassing over 425 million customers and claiming the mantle of India’s top network provider—due in large part to its aggressively competitive data pricing—Jio’s array of additional services has yet to gain significant traction.

With the highly anticipated Indian Premier League (IPL) cricket tournament starting later today, Ambani is eyeing this as the perfect opportunity to revamp Jio’s service adoption strategy.

Viacom18 – a venture between Ambani’s Reliance and Paramount – outbid Disney to secure five years of IPL’s streaming rights for the Indian subcontinent region with a sum of $3 billion. Unlike Disney’s Hotstar, which restricted access to IPL streaming to paid subscribers in recent seasons, Viacom18 is opening the floodgates for IPL games to everyone on the Jio network.

In a move that proved transformative, Star India executives Ajit Mohan and Uday Shankar’s strategic investment in cricket streaming nearly a decade ago catapulted Hotstar to prominence as a household name. The platform drew over 100 million digital viewers during the two-month-long event year after year, with cricket alone solidifying Hotstar’s position at the pinnacle of the market.

Star India’s Hotstar was a crown jewel in Fox’s large portfolio in the $71 billion acquisition by Disney, prompting the Mickey Mouse company to expand the service to many international markets.

However, Disney’s decision last year to relinquish digital streaming bids in favor of securing television broadcast rights under the leadership of former CEO Bob Chapek left many industry insiders perplexed. The company has also decided not to renew the licensing rights for HBO content in India in a move that has understandably frustrated many Hotstar subscribers.

In 2016, as Reliance prepared to launch Jio, the company emerged as the first telecom operator to believe in Hotstar’s vision and commit to collaboration, according to a source familiar with the discussions. Disney reaped significant benefits from Jio’s competitively priced data plans, which enabled tens of millions of Indian consumers to alter their internet consumption habits virtually overnight.

Now, it appears that Reliance is shifting gears and focusing on its own interests.

Jio has been assertively recruiting talent from Disney’s Hotstar, restructuring its infrastructure to accommodate a large user base. The company plans to provide 16 distinct feeds for IPL matches, featuring ultra-HD resolution – a first for cricket in India – and coverage in 12 languages.

Analyst group Media Partners Asia estimates that Jio Cinema, where Viacom18 plans to stream matches, will be able to drive sales of up to $350 million during the IPL season this year, up from $128 million in digital sales in 2022. The group marked down advertising sales on pay TV to $220 million, from $442 million last year.

“The US$550 mil. number across digital and pay-TV is marginally flat Y/Y and represents a steep loss against annualized 2023-27 IPL rights fees of US$1.2 bil. Subscription fees are expected to be very modest this year because of challenges on pay-TV distribution and the lack of a subscription fee on digital,” it wrote in a report.

Reliance has “promised” advertisers that cricket streaming on Jio Cinema will reach 400 million users, said Media Partners Asia. Jio Cinema has also promised a concurrent user base of 100 million, nearly four times of the current records, the analyst group added.

Nonetheless, this underscores a considerable leap for Jio Cinema, which currently boasts fewer than 30 million monthly active users, as per data from mobile intelligence firm Sensor Tower. This is despite the fact that over 400 million Jio subscribers are eligible to access Jio Cinema at no extra charge.

Numerous industry executives have expressed skepticism regarding the likelihood of such a significant number of users transitioning to streaming on their smartphones when they have the option of watching games on their satellite televisions.

Additionally, whether Jio Cinema can effectively manage the technical demands of tens of millions of viewers tuning in to cricket matches remains an open question for the time being.