Personal Stories: Mark Fisher of OTT.X — From Stop & Shop to Streaming

Editor’s note: This is the first in an occasional series of personal stories by executives in home entertainment, detailing how they got into the business and comparing what they’re doing now to what they did back then. For submissions, please contact Thomas K. Arnold at tkarnold@mediaplaynews.com. 

Mark Fisher

Facebook memories occasionally stimulate reminiscing about days gone by.

The other week, an old post and picture popped up on Facebook that reminded me that my first contribution to the home entertainment industry was opening my first video rental store — the first store-within-a-grocery store — 36 years ago.  That triggered a rush of memories of those earlier years, and the travels to get to where I am today: still in home entertainment, focused on streaming, now the industry’s dominant incarnation.

But let’s step back. In 1985, I was just starting my career.  I had a job at Stop & Shop Supermarkets, the largest grocery chain in New England, managing the non-foods departments in the company’s Connecticut stores — a great gig to have in my 20s.  The company was, compared to other grocers in the 1980s, very professional and progressive, and had lots of really good people in its management ranks. When independent video rental stores were popping up around New England, the company thought, what better place for a rental store than in the neighborhood grocery store. It is, by nature, a convenient location, and customers visit on average of two and one-half times each week.

Personally, I was a movie lover and a video enthusiast. I had a front-projection TV, a piano key VCR (like the one you see at the start of each episode of ABC’s “The Goldbergs”), and I was a regular renter of VHS tapes at the Fotomat drive-through, where you could find all the latest releases.

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A Stop & Shop standalone video store in 1993.

I was recruited to move up to corporate headquarters in Boston and lead a team to develop our own chain of rental stores to operate within our grocery stores. Like every other video rental store, we charged a membership fee and rented movies by the night. Unlike the others, partly because we didn’t have a lot of space, we didn’t put empty boxes out on the shelves — we put the actual tapes out for the customer to bring up to the counter to rent. (That way there was no chance they’d be disappointed if it was out of stock.) We were a well-funded company, and we had an aggressive rollout plan — so, also unlike so many of our competitors, we brought in lots of copies of new releases (think 75 copies of Jurassic Park). Our customers were more likely to go home with the movie they came in for, and hopefully one or two more.

We located the Stop & Shop Video Centers up in the very front of the store layout, so the customer could get in and out easily. Executive management took this new venture seriously. We were formed as a separate division of the company — I reported to the SVP of operations, and my direct reports were the buying team and district managers, while the store teams reported directly to my DMs (unlike everybody else in the store, who reported to the grocery store manager). We were truly a novel “store-within-a-store” concept.

We built our chain up to 63 stores within our grocery stores, and five freestanding 6,000-square-foot video rental stores positioned adjacent to our grocery stores. We had endcaps with video rentals that were serviced out of the courtesy desks in our smaller grocery stores, and a team of merchandisers who revamped the product mix in each weekly.

The most enjoyable part of my job was the promotions that we ran, with the support of our studio partners. We had a tie-in promotion with the actual Mystic Pizza in Connecticut when that Julie Roberts movie released; another with the submarine base in Groton, Conn., when The Hunt for Red October was released. We worked with a local radio station and hosted a day at the Rhode Island Zoo when Disney released Jungle Book. And we raised a lot of contributions and spent Thanksgiving Day helping out at a homeless shelter in Springfield, Mass., to promote Robin Hood: Prince of Thieves. There were countless others — pretty much a new promotion somewhere within our chain every month.

A Mickey Mantle in-store appearance at a Stop & Shop Video Center.

We also had lots of in-store appearances. Customers lined up to meet Mickey Mantle, Phil Rizutto, Gordie Howe and plenty of others over the years.

Our biggest events were our annual Oscar parties. We invited our best customers from each store to join our store managers and management team each year to watch the Oscars on big screens with music, food and drinks. We always had special guests and local entertainment. We really scored the year that David Letterman hosted the Oscars and we had secured Larry “Bud” Melman, Letterman’s “man on the street,” to participate in our party.

How did I learn the business? Here’s where everything comes full circle.  Before we opened our first store, I started going to meetings of the local chapter of the Video Software Dealers Association (VSDA — which eventually became EMA and now OTT.X). The VSDA in those days was primarily an organization of small independent video rental stores around the country. I learned from other retailers and from local distributor reps and studio reps. Stop & Shop joined the VSDA. I attended local meetings, and went to my first national convention in 1986. I eventually joined the board of directors for the local VSDA chapter, and helped out creating educational events for video rental store employees in New England. I served as treasurer for a few years, and during that time I was appointed to the VSDA’s national board of directors, where I served with industry superstars such as Mitch Lowe (later the co-founder of Netflix and Redbox), David Ingram (president of Ingram Entertainment), Ron Berger (founder of Rentrak) and others. Before I left that board, I had moved up to treasurer, while still treasurer of the local board.

All of my team at Stop & Shop was involved in the VSDA — my buyers, my DMs and my store managers. They attended meetings and events and got involved in producing local VSDA events. These sessions supplemented the industry knowledge that we could share with them, and inviting them to local movie openings and VSDA parties served as a reward, too. My team worked really hard — but I always liked to give them the opportunity to play hard, too.

In 1997, I was recruited to head up corporate store operations for West Coast Entertainment — a chain of 450 rental stores plus even more franchisees on the East Coast. Not able to grow our Stop & Shop video store footprint any larger, I left and moved to Philadelphia for my new position with West Coast. It was challenging, managing a chain that had a dozen different retail store brands and nearly two dozen different POS systems, but it was also an opportunity to grow a new team and meet a lot of new friends — many of whom I’m still close with and work with today, including Mike Haney at Allied Vaughn and Steve Apple on our OTT.X team.

Just a few years later, I joined the staff of the VSDA, then headed by Bo Andersen, to manage membership and sales. Twenty-two years later, I’m still here, now in the president/CEO role, and I’ve been at the helm from our transition from physical discs to digital and from EMA to OTT.X.

The old saying, “everything old is new again,” certainly has rung true for me. The big sellthrough retailers such as Best Buy, Walmart and Target, as well as many of the big studios, haven’t been the most entrepreneurial and have been less in need of what we do as a trade association. Today we are back to an organization of mostly indie or entrepreneurial companies — along with many established companies. We’re back to having lots of engagement and a strong vibrant community. 

Looking back, it’s been lots of fun, and most of all, I’ve made lots of friends — and if I didn’t move out to Los Angeles for this gig at what was then the VSDA, I’d never have met my wife. Julie. And, I think I’ve made an impact on the industry that I love over the years. (Actually, Redbox co-founder Mitch Lowe wrote that my original Stop & Shop store-in-a-store concept was the inspiration for Redbox.)

The best thing about all of this is that it isn’t over. Today’s industry isn’t what we knew as “home entertainment” — it’s blended with the extension of the broadband and cable industries and linear programming into OTT, and it is still in its formative stage with a hunger for education, collaboration and networking. And as long as I’m still challenged and having fun, I’ll be in it — transitioning and pivoting, just as I’ve always done.

Netflix, Redbox Veteran Mitch Lowe Says Discovery Is Biggest Challenge in New Entertainment Landscape

Discovery is the biggest challenge facing the new entertainment landscape of endless choice, said Netflix co-founding executive and former Redbox president Mitch Lowe.

“I think if anybody can figure out how to solve this problem for big segments of the population, it’s a real big opportunity in the business, and no one’s doing it,” he said during a keynote presentation for the OTT.X@Pipeline 2020 online conference Dec. 9.

“On one side, people say they want all the choices in the world, but on the other they go, ‘But I don’t want to spend time wading through them,’” he noted. “[At kiosk rental company Redbox] we found that when we created that light box, that has I think 66 box arts on it, that was the maximum people could go through. Anything more and anything less was counterproductive and in fact constrained consumption.”

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He also pointed out limitations of computer algorithms in helping consumers find what they want to watch, noting one algorithm he remembered that recommended that folks who watched Willy Wonka would like to watch The Shining.

Discovery is key because “people don’t want to work hard to find something good, but they also don’t want to spend their time watching something that they end up turning off,” he said.

Recalling his early days as a video store chain owner and president of OTT.X’s predecessor the Video Software Dealers Association, Lowe said his experience talking with customers informed his later, groundbreaking career path.

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“What I learned one on one with customers was how they think about entertainment,” he said.

In fact, he noted, he met Netflix founder Marc Randolph at a video convention.

“If you look at my career at Netflix, I was really the video guy,” he said. “I was the guy who knew the entertainment industry.”

In a callout to the video store industry veterans at the online conference, he said, “It’s really wonderful to be back with so many familiar people. I think this is kind of a little bit of a homecoming.”

Asked about Warner’s recent decision to send new releases to its streaming service HBO Max concurrent with theatrical release, Lowe bemoaned the potential damage to the theater business.

“I absolutely love the experience in movie theaters,” said Lowe, who was also at one time CEO of MoviePass, a now-defunct theater ticket subscription service.

He noted the importance of a shared experience in theaters, where the audience can jump in tandem at a horror film or laugh together at a comedy.

He touted the subscription model for theaters, which some chains such as AMC have instituted.

“In the end, the entity or the business that has that one to one relationship with the consumer is the real winner,” he said, and that’s “why companies like AMC did not like companies like MoviePass getting between them and their customer.”

Ex-Helios and Matheson Analytics CEO Looking to Buy MoviePass Assets

Former Helios and Matheson Analytics CEO Ted Farnsworth just doesn’t know when to quit.

A day after stepping down as CEO of the parent to shuttered MoviePass ticket subscription service and related businesses (MoviePass Films, Moviefone), Farnsworth reportedly is cobbling together a group of investors to buy select MoviePass assets.

According to The Wall Street Journal, which cited HMNY internal documents, including Farnsworth’s resignation letter, the executive eyes continuing MoviePass Films, which generated several original releases starring Bruce Willis.

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Whether Farnsworth — a longtime MoviePass cheerleader along with the service’s CEO Mitch Lowe — would bring back MoviePass is unclear.

Ted Farnsworth

Launched in 2017, the $9.95 monthly ticket service offered subscribers daily access to a non-3D theatrical screening. At its peak, MoviePass had more than 3 million subscribers eager to take advantage of a business model that hemorrhaged money.

The service sought to make deals with exhibitors who were paid face value by MoviePass for every ticket used by subscribers in exchange for user data.

Chains such as AMC Theatres, Regal Cinemas and others wouldn’t bite, opting instead to launch competing ticket services.

Despite several attempts to re-invent the MoviePass business model, investors pulled the plug on HMNY shares — especially after two reverse-stock option split attempts.

Whether investors would line up behind Farnsworth for another edition of MoviePass remains to be seen. HMNY could also sell the assets to a third party.

MoviePass to Shut Down Sept. 14

Subscription theatrical movie service MoviePass will shut down Sept. 14 at 8 a.m. (EST), according to a letter from CEO Mitch Lowe on the site.

“Over the past several months, MoviePass worked hard to relaunch its groundbreaking subscription service and recapitalize the company,” he wrote. “While we were able to relaunch the service for some of our subscribers with an improved technology platform, our efforts to recapitalize the company have not been successful to date.”

He wrote that subscriptions will be refunded.

“MoviePass will be providing subscribers with appropriate refunds for their period of service already paid for,” he wrote. “Subscribers will not need to request a refund or contact MoviePass customer service to receive a refund. Subscribers will not be charged during the service interruption.”

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The future of the service remains uncertain, according to the letter.

“At this point, we are unable to predict if or when the MoviePass service will continue,” Lowe wrote.

Owned and operated by Helios Matheson Analytics, the service at its peak generated more than 3 million subscribers paying $9.95 for daily access to theatrical releases.

MoviePass Suspends Service Indefinitely

Fiscally challenged MoviePass suspended service midday July 4 for an indefinite period of time to revamp its app.

The eight-year-old movie ticket subscription pioneer, in an email to subscribers, said the stoppage was in order to “provide the level of service you deserve.”

“We have listened and we understand the frustrations of our subscribers,” Mitch Lowe, CEO of MoviePass, said in the July 3 email. “We plan to make this improvement by utilizing an enhanced technology platform, which is in the final stages of completion.”

During the shutdown, MoviePass will not take on new subscribers. Existing subs will be credited for the number of affected days once the service continues.

Owned and operated by Helios Matheson Analytics, the service at its peak generated more than 3 million subscribers paying $9.95 for daily access to theatrical releases.

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The business model quickly proved unsustainable as MoviePass paid exhibitors face value for each ticket consumed by subscribers. Unable to reduce ticket fees and market subscriber data to exhibitors, the service hemorrhaged money — losing $329.3 million, on revenue of $232.3 million in 2018.

In March Helios said it received nearly $6 million in funding from an unidentified investor.

“There’s never a good time to have to do this,” Lowe said. “But to complete the improved version of our app, one that we believe will provide a much better experience for our subscribers, it has to be done.”

Regardless, movie subscription service appears here to stay as exhibitors grapple with burgeoning over-the-top video competitors.

AMC Stubs A-List service has more than 800,000 subs, while rival Regal Cinemas is working on its own branded service. Atom Tickets and Cinemark have separate subscription plans in place.

 

 

MoviePass Reportedly Sinks to 225,000 Subscribers

MoviePass, the fiscally-challenged theatrical ticket subscription service, has reportedly shed about 90% of its peak of more than 3 million subscribers from June 2018.

According to BusinessInsider, which cited internal data obtained from the former high-profile service, MoviePass has generated just 13,000 new subs since launching an “uncapped” plan in February affording subs daily access to a theatrical screening for $9.95 monthly fee.

The new plan, which was a reboot of a previous price point that attracted 100,000 subs in 48 hours after launching in 2017, also enables MoviePass to throttle frequent users.

MoviePass owner Helios and Matheson Analytics disputes the subscriber tally, calling the data “incorrect” without elaboration.

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Regardless, the MoviePass business model paying exhibitors face value for every movie ticket consumed by subscribers remains financially unsustainable.

The service hemorrhaged hundreds of millions of dollars, sending HMNY stock into a nosedive. Company shares were delisted from Nasdaq earlier this year.

MoviePass co-founder Stacy Spikes

Stacy Spikes, who co-founded MoviePass in 2011, sold it to HMNY in 2017 and was fired from the company in 2018, told BusinessInsider the $9.95 price point was never intended to be permanent.

“[It was] thought of as a promotional thing, in a way celebrating HMNY buying us. But we hit 100,000 [subs] in 48 hours. So I’m like, ‘OK, turn it off. We reached our goal,’” Spikes said.

The executive concluded that $12.99 was the least MoviePass could charge, while a $75 option including Imax and 3D screenings was considered as well.

“But the overriding voice [at HMNY] was, ‘No, this is awesome, look how fast we’re growing.’ And it was this moment of ‘but $10.’ It doesn’t fly. Now the plane is falling,” Spikes said.

In fact, when HMNY CEO Ted Farnsworth and MoviePass CEO Mitch Lowe were photographed joyfully in front of an AMC Theatre on Times Square after surpassing 1 million subs, Spikes had a different reaction.

“That photo changed [MoviePass’] relationship in the marketplace,” he said. “The tone turned it more adversarial [with exhibitors]. Up to that point, MoviePass had been the underdog champion for going to the movies.”

Indeed, AMC Theatres, which had initially been supportive of MoviePass under CEO Gerry Lopez, became increasingly less so under new CEO Adam Aron.

Aron made it a point to repeatedly question the MoviePass business model on fiscal calls and in press releases – despite generating millions in revenue from MoviePass subs.

Last year AMC launched the AMC Stubs A-List subscription service, which has generated about 700,000 subscribers paying $19.95 monthly for access to three screenings weekly in any format.

AMC recently raised prices to $21.95 or $23.95 depending on the market subscribers live in.

Spikes says the initial success of MoviePass, AMC Stubs A-List and Cinemark’s service underscores market demand for a subscription business model.

“The good side was cinema had not been taken seriously since Netflix really got its footing,” he said. “So what I liked about that was this had risen to the zeitgeist of conversation. Seventy-five percent of [MoviePass] members were under the age of 26. Cinema was an event people cared about again. So while there is a sadness around the brand, I was happy to see that this is front and center.”

MoviePass Parent Names Consultant as Interim CFO

Helios and Matheson Analytics March 22 announced the appointment of Robert Damon as CFO, replacing Stuart Benson, who resigned from the parent of the MoviePass theatrical ticket subscription service March 15 to take another job.

Robert Damon

Benson’s departure followed the disclosure HMNY had incorrectly recognized about $5.9 million in revenue from MoviePass subscriptions that had been suspended.

Damon, who has worked as a consultant to HMNY for a year, was chief accounting officer for SFX Entertainment for three years through 2016. Previously,  he was Katz Media Group CFO for 17 years.

HMNY earlier this month revised its third-quarter net loss to $146.6 million — nearly 7% more than a loss of $137 million originally reported. For nine months of the fiscal year, HMNY lost $256.3 million, 3.8% more than a loss of $246.7 million.

CEO Ted Farnsworth and Benson said measures have been taken to avoid future accounting issues, including implementation of software upgrades to provide “real-time” information for managing and accounting for subscriptions, including subscriptions that are terminated or suspended.

“Members of the company’s management have discussed the matters with Rosenberg Rich Baker Berman, P.A., [HMNY’s] accounting firm,” Benson wrote in the filing.

 

 

MoviePass Restores $9.95 Daily Screening Plan

With senior management exiting and its parent’s stock de-listed, fiscally challenged MoviePass is bringing back the infamous daily theatrical access plan for $9.95 monthly that helped generate millions of subscribers — and generate hundreds of millions of dollars in losses.

Of course there’s a catch. Subscribers who pay upfront for a year get the same $9.95 rate MoviePass allows users to one theatrical screening daily. The rate increases to $14.95 on a month-to-month basis. MoviePass also offers a $19.95 plan with fewer screening limitations.

“We are — and have been — listening to our subscribers every day, and we understand that an uncapped subscription plan at the $9.95 price point is the most appealing option to our subscribers,” Ted Farnsworth, CEO of parent Helios and Matheson Analytics, said in a statement.“While we’ve had to modify our service a number of times in order to continue delivering a movie-going experience to our subscribers, with this new offering we are doing everything we can to bring people a version of the service that originally won their hearts.”

Whether the service can sustain the old pricing remains to be seen. MoviePass pays exhibitors face value for every screening subscribers attend. Without breaks on ticket fees or some sort of revenue sharing, MoviePass loses money when subs regularly go to the movies.

 

MoviePass Reinventing Business Model — Again

With its corporate (Helios and Matheson Analytics) parent’s stock delisted, theatrical ticket subscription service MoviePass is again attempting to reinvent its business model and relevance — this time without relying on exhibitor cooperation and revenue.

Following the previously announced MoviePass Entertainment Holdings integrating film production and exhibition, MoviePass said it plans to implement a new business model that prioritizes “self-generated” revenue.

Specifically, the fiscally-challenged ticket service plans to focus on “technological innovation” and “high-quality” content production through MoviePass (theatrical subscription service); MoviePass Films (original content production company) and Moviefone (multimedia media information and advertising service).

“Spending the last several months analyzing the many different aspects of our prior business model, in terms of what worked and what didn’t, I believe we’ve been able to illuminate the path forward,” Ted Farnsworth, CEO of HMNY, said in a statement.

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MoviePass CEO Mitch Lowe said the ticket service has gained a “tremendous amount” of insight into moviegoers and the industry over the past 18 months.

Indeed, the service, which launched to much fanfare offering consumers daily access to a theatrical screening for a monthly $9.95 fee, could never financially pay for the loss leader business model without exhibitor help — which the service never received.

As the fiscal losses mounted, HMNY’s stock plummeted. Exhibitors AMC Theatres and Cineworld launched their own ticket subscription services.

MoviePass, however, has apparently been successful in content production.

MoviePass Films, through co-founders co-founders Randall Emmett and George Furla, continue to generate films, including dramas with Bruce Willis (10 Minutes Gone) — the first of three titles with the actor, and Al Pacino and Meadow Williams in current production, Axis Sally.

In addition, Border, a Cannes-winning film MoviePass Films co-distributed with Neon Rated, was nominated for an Academy Award for Best Makeup and Hairstyling.

“We now have a winning combination that we believe will drive consumers to our films and re-energize casual moviegoers to go more often and see great films in local theaters,” said Lowe.

 

MoviePass Looking to Raise Prices, Restore Consumer/Investor Trust

MoviePass, the beleaguered theatrical ticket subscription service, is set to roll out new monthly pricing plans it hopes will financially stabilize the service and restore investor confidence in corporate parent Helios and Matheson Analytics, among other goals.

In an interview with Variety, MoviePass CEO Mitch Lowe said the new tiered pricing plans – ranging from the existing $9.95 to $24.95 – would be dependent on where subscribers lived.

As a result, consumers living in rural areas would likely see no change to the $9.95 fee (dubbed “select”) affording access to three movies per month at select times, while moviegoers in major markets such as Los Angeles and New York would pay $14.95.

A $19.95 “red carpet” option – which mirrors the fee of a competing service from AMC Theatres – enables rural subscribers access to three screenings at any time in any format (Imax, 3D, 2D). The option costs $24.95 in major cities.

“We have a lot to prove to all our constituents,” said Lowe. “We don’t just have to prove ourselves to our members, we also have to prove ourselves to the investment community, our employees, and our partners.”

Indeed, the service’s well-chronicled missteps largely revolved around an unsustainable business model that paid exhibitors full price for every ticket consumed by subscribers paying less than $10 per month for daily access to a theatrical screening.

With MoviePass unable to convince exhibitors to share in the financial risk in return for enhanced foot traffic and sharing user data – the latter triggering data breach concerns – the service began to hemorrhage money and alienate consumers and investors.

In HMNY’s most-recent fiscal report, the company reported a loss of $137 million and just $6.2 million in cash available. The parent’s stock is worth pennies and in risk of being delisted by Nasdaq – despite a reverse-stock split last summer. A planned second reverse-stock split was abandoned after failing to generate enough shareholder approval.

“Expectations weren’t met,” said Rodes Ponzer, head of marketing. “The creative memes and the consumer vitriol, we understand it. We told customers [theatrical access] was un-limited and we didn’t meet their expectations. Now we’re going to set their expectations properly.”