An early founder of Netflix is now the CEO of MoviePass, a startup trying to rethink the movie space. The company has just launched a high profile effort to upend the traditional pricing model for movie tickets. It wants to let viewers see up to one movie per day at almost any theater (including new releases) for just $9.95 per month. The company says it will pay theaters back for the price difference in tickets. The idea is to get more people going to theaters and then monetize the user data they collect on the attendees. Profiting from such a model is a long way off, and may face the additional hurdle that AMC, the largest theater chain in the US, wants to block the company out of its theaters because it fears it will undermine pricing.
FINSUM: We think AMC is being too close minded about this. Movie tickets have gotten massively more expensive in recent years and if tickets were cut, they would get much higher volumes and more concession (food) sales, and could benefit from monetizing increased data for studios.
There is an interesting trend going on behind the scenes of the current retail apocalypse. Despite store closures and bankruptcies happening at an accelerated—almost break-neck—pace, a lot of the dying firms are quickly being reconfigured and reopened. That is because a specialist class of private investors has emerged that specializes in buying recently defunct store chains and converting them into online-only models. The firms usually buy the companies in bankruptcy auctions and then retrofit their warehouses to be ecommerce distribution centers. The key is to do it quickly before the company’s core customers lose interest.
FINSUM: Some big names are going through this process right now—like American Apparel. Interesting to see how the sector is evolving.
Apple’s monumental earnings announcement from earlier this week continues to ripple through markets. Within CEO Tim Cook’s often evasive comments following the earnings release, there were a couple important hints. One is that Apple may be working on a new line of home robots to help consumers with household cleaning and chores. The other is that Cook hinted that Apple may follow through on President Trump’s announcement that the company will open US manufacturing facilities. While his comments were unclear, he did make indications.
FINSUM: A big new line of products (aside from the massive chance in self-driving cars), would be very interesting from Apple. On the US manufacturing side, we think opening some US facilities would be great for the company’s image.
The retail industry is in a severe state of flux. Amazon and ecommerce have upended the traditional way of the doing business, and US malls are saddled with way too much retail space. The sector is in the midst of trying to reinvent itself, but the industry is changing so quickly that former retail spaces cannot keep up. Stores are unwilling to sign longer-term leases, and the financial woes of malls are inhibiting the speed of makeovers.
FINSUM: The industry is in a very troubled state and based on the prevailing conditions it seems like a big wave of mall bankruptcies (in addition to brands) is going to sweep across the country. REITs in danger?
The president seems to have done a very good job putting Apple in an awkward spot this week. Trump recently said publically that Apple CEO Tim Cook had promised him the company was set to build US manufacturing facilities. The comments have put pressure on the company to follow through on its apparent word. However, the awkwardness comes as it does not appear that Apple has any real plans to do so. It is also intensified by the announcement of Foxconn, one of Apple’s biggest suppliers, that they will open US facilities. Apple has declined comment.
FINSUM: Apple is a well-loved consumer company, but Trump seems to have raised focus on the Apple’s near 100% outsourcing of its supply chain. One wonders how much the heat may grow to bring some jobs back home.
One of the big changes coming to the structure of the trading and asset management businesses is that research is increasingly being split out on its own. Directed by European regulations, costs for research can no longer be bundled with trading commissions. This has led to a scramble by research providers to figure out how to price their now stand-alone research. Now, big banks are reportedly locked in tense negotiations with the clients as they are asking firms to pay $1m per year for access to their research. Fund managers think prices will come down.
FINSUM: This change could be headed over to the US soon, so something to keep an eye on. If banks are able to charge high fees, it could lead to a change of direction for the whole industry.