Loot Crate: Geeks, Gaming, and Profits

Need a gift idea for your teen this holiday season? How about a subscription to Loot Crate, a curated box of apparel and other swag aimed at geeks, gamers, and nerds alike? Sound odd? Maybe. But, while Loot Crate might seem on the surface to be too “niche”, think again. Boxing stuff up for geeks is huge business.

Founded in 2012 by Chris Davis and Matthew Arevalo, Loot Crate has amassed over 200,000 subscribers across 10 countries. In 2016, the company was ranked #1 on Inc's Fastest Growing Private Companies. Earlier this quarter, Loot Crate announced a partnership with Amazon that will see its box featured right on Amazon's subscription box store home page (yes, Amazon now has a dedicated store for subscription boxes).

Loot Crate targets super fans of entertainment franchises. The company partners with major studios, game companies, comics publishers, professional sports leagues and personalities in a shared curation of premium and exclusive consumer products in themed mystery boxes, delivered directly to subscribers' doorsteps.

Loot Crate has done an incredible job of not only curating boxes, but building an entire community around it all. The original version of the crate was a kind of “comic-con in a box,” containing four pop-culture related items valued at around $45. Boxes were, and still are to a large extent, centered around a theme, like “future,” “anti-hero,” and “origins.”

But, since its early roots, Loot Crate has expanded its offering. There’s a Loot Crate DX subscription for the truly dedicated nerds out there, with premium items worth at least $100. There’s an Anime box, featuring exclusive items from the best anime & manga series. There are also plenty of other options, including Loot Gaming a themed box gear from my favorite video games and a thing called Loot Fright, which features a bunch of horror collectibles and apparel. Strange yes, but plenty of value-added upside for passionate gamers and horror junkies.

The list of curated options also extends into other apparel subscriptions for socks, underwear, t-shirts, wearables, and random gear. Moreover, the company also has film and TV themed crates, built around shows like DeadPool and StarTrek.

And, Loot Crate has done well to carve out its place in the subscription economy. But its strength and prowess in the space goes beyond just boxing stuff up for nerds. As part of its capability to properly execute themed subscription boxes for loyal fans of things like Marvel and WWE, Loot Crate has also broadened its horizons by partnering with Major League Baseball (MLB), and the National Basketball Association (NBA) to power Sports Crate - a bi-monthly subscription box of licensed team merchandise and collectibles targeted at sports fans. Although not all teams are available as of yet, the company plans to roll out the balance in the near future.  

With the kind of constant variety this company is churning out year after year, there’s no competitor coming close to Loot Crate in the collectibles category in subscription – and that says something about the industry in general.

Box companies like Loot Crate that do well to carve out a specific niche, and then expand horizontally, will have the most runway with which to grow; attracting plenty of capital along the way - the guys have raised over $41 million to date.

Chris Davis, LootCrate’s CEO says that "Over the past 6 years, Loot Crate has grown and evolved from a single subscription to offering multiple subscriptions spanning the best of pop culture, sports and gaming, ….”  He goes on to say that the company provides "a unique opportunity for fans to connect with their passions.”  He’s right.

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Ref:

https://en.wikipedia.org/wiki/Loot_Crate

https://mashable.com/roundup/best-subscription-boxes/#ovpNTuYGagqm

Columbia House: Why big subscription businesses fail

In 2011, a nationwide class action suit was filed against Columbia House (Direct Brands Inc.) seeking monetary damages and an injunction stopping Direct Brands and its business practices on the basis of unauthorized credit card charges, inability to cancel, lack of customer service, unwanted products mailed to homes and several other alleged issues.

In 2015, Rolling Stone published an article titled “Columbia House Files for Bankruptcy, Blames Streaming.”  The company’s assets at the time, valued at $2 million, were smothered by the $63 million it owed to creditors.

The failure of Columbia House, once considered a foremost leader in music subscriptions, in fact, has nothing to do with streaming. Rather, the storied fall from grace provides a stark example of a subscription failure rooted in customer acquisition greed.

Back in 1955, the Columbia Record Club, turned the music industry upside down when it launched. Tied directly to this pivotal decade in music, Columbia’s one free monophonic record incentive provided the perfect hook to get consumers on board the new subscription service. 

By the end of its first year, the Record Club had attracted 128,000 members. Two years later, it was shipping 7 million records to subscribers. Soon, the club accounted for 10 percent of the recorded music industry.

Not unlike Netflix which began decades later selling DVDs through direct mail, Columbia too was investing early in analyzing and optimizing for customer preferences. In fact, Columbia Record Club was one of the first to leverage data processing and computers to anticipate changing musical tastes.

But, as Columbia House (its rebranded moniker) scaled to millions of members by the mid 1990’s, the leadership team shifted its focus solely to the front-end funnel, and away from the customer; making the club not only an early pioneer in subscription selling, but also a business case in subscription failure.

While competition from Napster, Kazaa, and Walmart in the late 1990’s explain some of the challenges, the root cause of Columbia’s demise stems from its aggressive incentivized marketing tactics, lack of customer service, and brutal exploitation of negative option billing - a practice whereby a customer is provided goods or services automatically, and charged accordingly on a recurring basis.  

Most subscription companies use negative option billing appropriately. They pay attention to marketing and promotional material, the communication of billing terms, and overall customer service and satisfaction. Issues arise however, when businesses, like Columbia House, ignore these pillars.

Columbia’s opaque incentivized marketing tactics, such as the famous “first album for a penny” worked brilliantly as a front-end hook; but caused all kinds of customer satisfaction issues on the back-end since important offer terms were purposefully buried in the fine print. As a result, thousands of customers who fell for the trial incentive didn’t actually understand what they were signing up for.

By the time a customer realized they didn’t want the high-priced second, third, or fourth lot of CD’s, Columbia House had already dinged their credit card multiple times. As complaint levels increased, attempts from consumers to dispute these charges went unresolved.

For years, Columbia got away with ignoring the backlash from its subscriber base, because consumer protection watchdogs like the FTC, had prioritized other mandates over consumer rights efforts. That is, until the emergence of online shopping prompted the protection agency to seek out not only Columbia House, but thousands of other online charlatans selling all kinds of stuff using similar free trial hooks - from teeth whitener, and weight-loss items (remember Acai berry?) to business opportunity scams, free credit reports, and more.

As consumers flooded the Federal Trade Commission with complaints of fraudulent, deceptive and unfair business practices online, the agency began levying the bad apples with significant fines, lawsuits and in rare cases, imprisonment. Columbia House soon became public enemy number one among online music services.

Whether it’s a music service like Spotify, or a traditional cable provider, the Federal Trade Commission now takes just about every subscription model seriously, requiring any service offering a negative option plan to clearly and conspicuously indicate purchase obligations, cancellation procedures, and related terms and conditions. Failure to do so, means harsh punishment.

While several industries operate under the same negative option umbrella, the companies who stay out of trouble have learned a lesson from Columbia House by striking a balance between marketing and acquisition, customer service, and overall customer satisfaction.

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REF:

http://bluewatercredit.com/negative-option-billing-shady-marketing-practice-youre-probably-already-falling/

https://en.wikipedia.org/wiki/Negative_option_billing

https://www.npr.org/sections/thetwo-way/2015/08/11/431547925/8-cds-for-a-penny-company-files-for-bankruptcy

https://en.wikipedia.org/wiki/Columbia_House  

http://www.voicesofeastanglia.com/2013/02/crc-music-factory-columbia-record-club.html

http://www.fundinguniverse.com/company-histories/columbia-house-company-history/

https://www.rollingstone.com/music/music-news/columbia-house-to-relaunch-as-vinyl-subscription-service-in-2016-35689/

Stitch Fix: The future of Retail is Personal

Stitch Fix has created a real buzz around what makes a great apparel business work in today’s retail landscape, where Amazon looms high and mighty in online commerce. The company, which has focused on a profit-first approach since day one, may be the most innovative and cash efficient e-commerce retailer in the modern digital era.

As Amazon devours an increasing amount of the online purchasing economy, companies like Stitch Fix that have focused on profits and premium personalized service, have developed a way to differentiate themselves - no easy feat with Bezos lurking in the background.  

The company, which began operating as Rack Habit, got started out of founder Katrina Lake’s Cambridge MA apartment in 2011. Later changing the name to Stitch Fix, Lake, who was studying at Harvard Business School, partnered up with Erin Morrison Flynn, a former buyer at J Crew to hash out a new “assisted commerce” concept targeting fashion forward females. 

The business works as follows: When customers sign up to Stitch Fix, they fill out a form detailing style preferences, clothing needs and price points. Algorithms then churn out a set of potential choices, which one of the company's stylists then tailors to the individual customer before shipping five items for a $20 fee. Anything a customer doesn’t want can be returned free of charge. Should a customer keep any of the items, the $20 styling fee is applied toward the purchase - customers who keep all five items, receive a 25% discount. What they get each time varies, but typically items from trendy brands like Citizens of Humanity, Scotch & Soda and Barbour fill each box.

While Stitch Fix shies away from calling itself a true subscription company, customers can set up automatic deliveries for subsequent boxes, choosing desired shipping frequencies. Perhaps not the “norm”, the automated shipping option, creates a nice derivative on the traditional sub-box model.

Stitch Fix is not the first company to try this out. In 2009, Trunk Club found a real demand for assisted commerce, specifically with curated apparel targeting men. The Chicago-based company was ultimately sold to Nordstrom for $350 million in 2014.

Trunk Club’s success planted early seeds for the category online – in a way, allowing Stitch Fix to watch from the sidelines, and later carve out a better version of their own.

By the numbers, Stitch Fix has surpassed expectations. The company has doubled sales every year between 2012 and 2017, becoming the 11th-largest U.S. online apparel retailer in the e-commerce market. And, the ramp up was quick, with Stitch Fix tallying $73 Million in revenue in 2014, followed by sales of $343 million in 2015, $730 million in 2016 and just shy of $1 billion before filing to go public in October of 2017. Its stock price has more than doubled since.

There are several factors contributing to the Stitch Fix upswing. The company nailed obvious business fundamentals early, like product-market fit, fulfillment, customer service, and profitable growth. Yet, Stitch Fix’s killer moat is its lethal combination of subscription, with a resounding emphasis on hyper sophisticated data science.

The leader driving the data bus at Stitch Fix is Eric Colson, the company’s Chief Algorithms Officer. Colson, a former VP of data science and engineering at Netflix, was largely responsible for architecting the Netflix recommendation engine, so you can bet it was a real coup when Lake convinced him to come over to the world of data-driven fashion.

In addition to things like recommendations, human computation, resource management, inventory management, algorithmic fashion design and many other areas, Stitch Fix’s data driven centricity pushes this company way beyond the status quo.

How serious is the company about data? Stitch Fix provides a full Algorithms tour of how everything works, and how data is woven into the very fabric of the company on its website. If you’re a real nerd, you can geek out here: 

https://algorithms-tour.stitchfix.com/

Under Lake and Colson, the more than 75 data scientists have helped Stitch Fix to become a technological pioneer in retail fashion, painting a clear picture of what the future of personalized shopping looks like. The company’s robust execution has left Stitch Fix in a league of its own. Forget the Trunk Club for women. Stitch Fix is the Netflix of fashion – a moniker that properly underscores what distinguishes this great company from the rest.

References:

https://www.nytimes.com/2017/05/10/business/dealbook/as-department-stores-close-stitch-fix-expands-online.html

https://algorithms-tour.stitchfix.com/

https://en.wikipedia.org/wiki/Stitch_Fix

Ipsy's Ivey league play

Birchbox, headquartered in New York, has grown primarily through the traditional Ivey league formula: smart founders from a top school (Harvard), a good idea, and a bunch of venture capital. The company’s recent moves into traditional television advertising, and retail brick and mortar, provide positive optics the media loves to write about.

IPSY, on the other hand, has flown a little under the Birchbox radar; despite near tripling its subscriber count. And, they've done so on the back of founder Michelle Phan’s social influence. Phan parlayed an early passion for cosmetics into one of the biggest things on YouTube, and ultimately, into one of the most successful stories in the subscription space.

Subscribers to Ipsy, which the company calls “Ipsters”, are charged about $10 per month for glamour bags (not boxes) full of sample-sized beauty products. There are over 100,000 new subscribers joining Ipsy every month, alongside an estimated 2.5 million base.

While Phan never went to Harvard, she did learn something about the value of scarcity. Phan's YouTube videos have been viewed more than 1 Billion times collectively. She’s been on the Forbes 30 Under 30 list, and is often described as one of the most watched talents in the digital space. Her starpower on YouTube is unique, rare, and scarce. In other words, Michelle is what VC types might call, a unicorn.

How to clone a unicorn:  

How do you clone a unicorn? In 2015, the company came up with a unique way to ‘scale’ Michelle.

Seeing the opportunity across the sum of the parts, Ipsy launched the Open Studios initiative: a community play to help budding content creators access resources they’d need to become the next Michelle Plan. Ipsy OS provides studio space with production, lighting, and editing technologies, mobile tools and apps, and experienced mentors to aspiring Ipsters seeking to channel their “inner Phan” - without any commitments, fees, or exclusivities. Creators retain 100% control of their channels, CMS, and revenue. 

What’s in it for Ipsy?

By helping launch the next generation of beauty gurus, Phan’s profile becomes even more prominent. Moreover, as Ipsy latches on to the next generation of ‘Phans’, the company scales much faster, riding a rising tide of next-gen beauty influencers – oh, and Ipsy also benefits from ads that feature these up and coming celebrities and the tutorials they do; that include of course, products Ipsy sends out. 

With plenty of ambitious Kardashian types itching for an opportunity, Ipsy Open Studios received more than 1,000 applications within hours of launch. While communicating an “everyone is welcome” narrative on the website when Ipsy announced the program, the company was “playing Harvard” .... anyone could apply, but admission comes to very few - the very rare. 

Subscription Snapshot! (Thoughts and Trends)

Historically, a traditional retail shopper learns about a product, considers whether to buy it, decides to do so, and goes to a shop to get it. If he likes the product, he might decide to return to the store to buy it. Data geeks in corporate cubicles everywhere run spreadsheets and formulas attempting to dive deeper into customer behaviour – seeking analytics to better understand how to get a buyer to make a repeat purchase. As retailers claw at one another in an attempt to gain more market share, and perhaps a repeat purchaser in the process, a new phase of e-tailing is on the rise.  Progressive retailers are betting on a future in which shopping for any product or service becomes fully automated.

What do Netflix, Spotify, Amazon, IPSY and Dollar Shave Club have in common? They are all pioneers in this changing world of electronic and new age digital commerce, where customers are not just one-time buyers; they are subscribers.

Netflix is the global leader in the world of video-on-demand, with over 125 million members across 190 countries. All of its customers are loyal, recurring revenue generating, subscribers. 

An Amazon Prime membership, which includes unlimited free 2 day shipping on over 100 million items, access to unlimited instant streaming of movies and TV episodes, Alexa voice shopping, Amazon Fresh, and more, is helping Amazon crush retail competition.  And, with membership count at over 100 million, Amazon Prime seems unstoppable.

While Pandora, Apple Music, and Google Play make some waves, Spotify sits on top of the music streaming industry today. The company has over 160 million active monthly users, about half of which are paid subscribers; double that of rival Apple Music. 

IPSY is widely considered to be one of the biggest start-up subscription success stories in the past decade. The glamour-bag cosmetics company has over 3 million loyal subscribers, and was recently valued at $500 million by Forbes.

The Dollar Shave Club is propelling the men’s grooming space to new heights, putting legacy firms like Gillette and Schick on their heels. The company grew its subscriber count exponentially in just 4 years before selling to Unilever for $1 Billion in 2016.

The bet on subscription has paid off for not just the aforementioned, but other major players as well. The likes of Salesforce, Blue Apron, Hulu, Stitch Fix, Birchbox, Starbucks, Sephora, Barkbox, DropBox, Skype, The Honest Company, and others have all grown revenue through subscriptions. 

The trend is looking up. The subscription e-commerce market alone has grown more than 100% a year over the past five years according to McKinsey & Company. The strong growth has attracted more established consumer brands and retailers. P&G's Gillette on Demand, Sephora's Play!, and Walmart's Beauty Box show a defensive response to a fast moving space in the hopes they can keep up!  In addition, there is some good M&A activity—in particular, Unilever’s $1 billion acquisition of Dollar Shave Club (2016), Nordstrom’s $350 million acquisition of Trunk Club (2014) and Albertsons $200 million-plus deal for meal-kit company Plated.

The future outlook for the next phase of subscription is inching closer, thanks to Amazon. While meal kit subscriptions like Blue Apron and Chef's Plate seem novel, Amazon's ability to leverage Prime and its distribution channels (thanks to its recent acquisition of Whole Foods) will force many of these meal box fighters out of the ring. Mix in a little Alexa with some Amazon Fresh, and we’re heading for a time when all groceries will be replenished by the touch of a smartphone button:  “Yes Alexa, you’re right – I’m out of broccoli, eggs, and 2% milk. Send them ASAP.” 

The Netflix Juggernaut

Netflix is a juggernaut and the most likely candidate to join the Big 4 (Amazon, Facebook, Google, Apple) as a true global dominator with stratospheric valuations  – its niche: entertainment. When consumers think streaming, they think Netflix – not Hulu, not HBO, and as of yet, not Amazon (holding breath here). Original content like House of Cards, Orange is the new Black, and The Crown has helped the company keep a firm lead as the world's best Internet TV provider. The lethal paid wall subscription model comes equipped with the perfect combination of solid MRR, low attrition, and loyalty from customers.

How loyal? Millennials spend more time watching Netflix than they do all of cable TV combined. Netflix now has nearly 118 million streaming subscribers globally, adding 8.3 million subscribers last quarter alone. About 55 million of those are U.S. subscribers, but international growth rates are up 11% with subscriber numbers surpassing domestic for the first time in the company's existence. Churn rates are low and the stock price has done nothing but climb since the early 2000's when it IPO'd at $15 USD. 

If we press rewind, back in 2000, Netflix was a relatively small upstart, with 300,000 subscribers opting for movies by mail and slow delivery times. Profit numbers were absent, and operational issues gave rise to concern from analysts covering the company. So, Netflix founder Reed Hastings flew to Dallas to propose a partnership with Blockbuster for $50 million, whereby Blockbuster would acquire the DVD subscription mail order company and represent their brand in stores. Blockbuster balked at the offering, and sent Hastings and his team back to California with a bag of insecurity around future positioning. Today, Hastings’ failed attempt at a deal is nothing but a strike of good fortune, as the streaming service carrying a market cap of $140 Billion has grown into the entertainment operating system of our lives. 

In an article published by INC.com in 2005, Hastings' vision for the future was to reach 20+ million subscribers, and become a company like HBO - one that transforms the entertainment industry. Producers and directors would be able to find the right audience, and Netflix would be the gateway for changing the experience of helping people find movies they love. Mission accomplished! And, while Amazon now owns RETAIL (sorry Walmart), Netflix has become the cornerstone of the ENTERTAINMENT industry as loved ones get together to “Netflix and chill”. 

Affiliate Marketing – Yesterday and Today  

We often get questions from clients regarding affiliate marketing. Here's some insight for those interested in exploring AM as a possible solution for their online campaigns.

Affiliate marketing has been an online force since around 1994. One of the early innovators of affiliate marketing is Amazon.com, who in 1996 launched its associate program permitting associates to place banners or text links on their own sites for individual books, or to link directly to the Amazon home page. While it was not the first affiliate marketing program, it was one of the most successful and served as a good model.

In the digital age, affiliate marketing is a method of promoting a brand’s products or services across the Internet through a network of online independent marketing publishers (also known as “affiliates”). Affiliate marketers are compensated for helping a business achieve certain marketing or sales objectives. The overarching value to the advertiser is that affiliate marketers can offer a pay-per-performance compensation model, meaning the merchant only pays for a desired result. More specifically, advertisers can compensate an affiliate, or an affiliate network on a cost per acquisition/sales (CPA, sometimes known as CPS) basis. Conversions are generally tracked using a link with a personally identifying code, or SUB-ID embedded, enabling the advertiser to track where conversions originate.

The affiliate channel is regarded by many marketers as the predominant direct response channel across all forms of media for sales generation (Hewiston). Moreover, as we track on through time, there are significantly more requirements that advertisers must meet to execute a successful online marketing strategy - those requirements are becoming excessively burdensome for the merchant to manage in-house. Therefore, an increasing number of merchants are seeking alternative options through outsourced affiliate program management, provided by affiliate networks. Industry veterans include names such as CJ Affiliate, ShareASale and Canadian based, Max Bounty.  As the affiliate marketing industry continues to mature, there are emerging opportunities in the marketplace for networks to deliver differentiation to their clients in the form of quality, better customer service and of course, greater transparency.

CPA in the New Age

Anecdotally, it seems smaller advertisers routinely pursue affiliate marketing partners who can execute their acquisition mandates on a pay per sale basis. Although this worked increasingly well for all parties between 2007-2010 when CPA campaigns were booming, affiliate earnings per click were high, shifts in payment terms, media costs, regulations, and publisher expectations have put pressures on both networks and publishers. Smaller networks that couldn’t innovate with the industry shifts fell to the sidelines, while only the larger names survived; this consolidation of the masses was a good thing for the health of the industry on the whole, but did reduce the total number of CPA/ CPS networks. 

Growth in the industry does remain strong, increasing at a compound annual growth rate of approximately 16%. But, we do see continuing amalgamation of network players.  In 2017, AWIN acquired US-based ShareASale, presenting a new, unified AWIN brand, which brought together Affiliate Window and Zanox. Affiliate Crossing merged with Nutryst. There's been a long list so we won't bore you further. 

While good CPA networks may be tougher to find and possibly more expensive, more fully integrated value-added solutions are available on a cost per click and/or CPM basis. Robust reporting tools, and analytics have improved dramatically allowing advertisers to take additional risk on a CPM basis, since they’re quickly able to determine a media campaign's potential. More importantly, advertisers can identify marketing sources and affiliates who are effectively producing the desired outcomes as mentioned earlier (ex: conversion tracking via SUB-ID).  The optimization of marketing metrics, profit percentages per transaction and other KPI’s are now readily available to an advertiser. 

Dollar Shave Club: Product Perfection, on Subscription

Let’s rewind to a cold 2016 evening in New York City, where Dollar Shave Club (‘DSC’) founder Michael Dubin and Unilever senior executive Kees Kruythof enjoy a long conversation over dinner. The two sides hit it off and what started with an exploration around advisory synergies ended with Unilever becoming an outright acquirer, buying DSC for $1 Billion, cash. The acquisition turned the quiet business of subscription ecommerce into a category Wall Street media junkies were paying real attention to.

The street began to understand why the acquisition multiple made sense to both buyer and seller. Paul Polman, CEO of Unilever believed with the growth of e-commerce and the loyalty behind DSC’s brand, this was a good fit. 

Dollar Shave Club’s innovative viral marketing, and its sales numbers made for an attractive asset. But, what many business analysts missed in the mainstream media storyline is the power of DSC’s unit economics driven by its subscription model. Recurring revenue from their sticky member-base was predictable and stable. In terms of actual retention, a metric experienced subscription operators pay close attention to; about half of Dollar Shave Club’s customers acquired in month 1 remained subscribers after 1 year. Further along the customer timeline, Dollar Shave Club saw about 24% of its customers retained by month 48 — that’s about 1/4 of its subscribers still subscribing to the service 4 years later.

The healthy retention rate at DSC is not by accident. It first begins with the product category itself. Men buy razors, and need to change the blades frequently. This consumption and replenishment cycle lends itself perfectly to a subscription play. Next, the experience of buying razors in store was, and still is frustrating, and as Dubin pointed out, most men dislike the actual experience of shopping for razors in store – another win. Lastly, and perhaps the one component many companies overlook, is the ability to properly build a relationship with subscribers through great customer service - DSC has worked at perfecting its multi channel customer servicing. 

If we can imagine for a moment some of the programs we subscribe to as a consumer: an OTT content service like Netflix, a music streaming service like Spotify, perhaps a food service like Blue Apron. Every great subscription business has a retention model like the one outlined in the aforementioned paragraph. What’s different is each company’s ability to retain members over time. Netflix for example, perhaps the best at maintaining its customers, is said to have a retention rate of about 95% after 12 months. In other words, only 5% of Netflix customers cancel their account after signing up a year earlier. A steady and sticky subscription business almost always beats a comparable faster growing subscriber count with poor retention. 

Dollar Shave Club started as an underdog, but smart marketing and superb operational execution allowed the company to catch the attention of the big players. Beyond the Unilever acquisition, rival shave giant Gillette launched a lawsuit against DSC while also attempting to copy the company’s vision with a razor club of its own. Shave on .... 

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References: 

http://fortune.com/2015/03/10/dollar-shave-club-founding/

https://www.inc.com/magazine/201507/diana-ransom/how-youtube-crashed-our-website.html

https://www.entrepreneur.com/article/224282

https://www.nytimes.com/2016/07/20/business/dealbook/unilever-dollar-shave-club.html

https://www.youtube.com/watch?v=SIVn_nb26BE

https://en.wikipedia.org/wiki/Dollar_Shave_Club

https://medium.com/@nbt/the-secret-behind-dollar-shave-clubs-billion-dollar-success-in-one-graph-f02fba883635

Will subscriptions save the cinema?

Netflix has officially disrupted the entire movie-going experience.  A night at the movies used to be relatively affordable, but today it’s anything but. With the increasing availability of other entertainment options accessible from the couch, consumers are no longer heading to their local movie theatre and traditional providers are scrambling.

But, could subscription commerce - the same business model floating Netflix - help save the old school movie business?

MoviePass an American-based subscription-based movie ticketing service allows subscribers to purchase a single movie ticket per day for a flat subscription fee per month. The service went through several pricing structures following its original invite-only launch (including those limited to 2 or 3 films per month, and "unlimited" plans, with pricing based on market size), before announcing this past August that it would switch to offering a plan with a single film per day priced at $9.95 per month.

Cinemark, another monthly Movie Club, lets customers buy a movie ticket a month for a discount price of $8.99, in addition to 20% off on concessions. The Texas-based chain, which owns about 350 theatres, allows members to roll over unused tickets every month and buy additional ones for friends at a lower price. Cinemark said that it has developed Movie Club after doing extensive consumer. Cinemark’s move appears to be a specific response to MoviePass.

MoviePass announced last month that it was debuting a limited-time subscription that allows users to pay $6.95 a month to watch a movie a day for a year, with the provision that users commit to a 12-month subscription.

MoviePass pays theaters the full price for a ticket, so it is in essence subsidizing its users’ movie going and losing money each time they check out a film. The average movie ticket costs $8.60 through the first three quarters of 2017, but in major cities, such as Los Angeles and New York, tickets often cost more than $10.

AMC, America’s largest chain, threated to take legal action against MoviePass in August and predicted that the company would fail because its business model was not sustainable. While subscription services like these are available to consumers in the U.S., Canadians wait patiently for someone locally to follow suit.