Five on Friday: Startups, Starz and Strategy

Featuring Fair, SoftBank, Tubi and Microsoft

Five on Friday: Startups

Source: Bigstock Photo

Before you prepare to ring in the new year, take a look at these hot subscription topics. In this week’s Five on Friday, beauty retailers grow their U.S. online sales by an impressive 24 percent, digital startup Fair gets a $385 million investment from SoftBank, Starz markets to former subscribers with a special deal to lure them back, Tubi offers an ad-supported video-on-demand model for cord cutters who don’t want to pay for a streaming subscription service, and Microsoft’s restructuring this year has paid off.

 

 

U.S. Beauty Retailers Grew Online Sales by 24 Percent in 2017 

 Starz and Strategy

Source: Bigstock Photo

In today’s news, we wrote about beauty box Julep’s laying off of 102 employees because parent company Glanasol had filed for bankruptcy and will be acquired by AS Beauty. This seems to be the exception rather than the rule, at least according to Digital Commerce 360 who reports that U.S. sales for beauty retailers grew nearly 24 percent in 2017.

Glossier was the top seller in the online beauty category with growth of 275 percent, according to the Internet Retailer 2018 Top 1000. Online sales represented 97.1 percent of total sales for Glossier in 2017. Subscription company Harry’s Inc., an online-only subscription service focused on men’s grooming products, also had a stellar year with web sales growth of 95 percent in 2017. Now available in Target and Walmart stores, Harry’s sales are likely to grow even more in 2018. Dollar Shave Club had a good year as well, with growth of 30 percent in 2017.

Read more about the growth of online beauty sales in the U.S. on Digital Commerce 360.

Digital Startup Fair Gets $385 Million Investment in Latest Funding Round 

Five on Friday: Startups

Source: Fair

Just one month after announcing its partnership with AutoNation, digital startup Fair announced a $385 million investment in its latest funding round. Japanese technology firm SoftBank Corp. led the round. Exponential Ventures, CreditEase and G Squared also providing in this Series B round. According to Auto News, the new funding will help Fair to expand its platform globally and to accelerate the company’s partnership with Uber.

Through the partnership, Uber drivers are able to choose an Uber-eligible car through the Fair app without having to obtain a car loan or lease.

“We believe [Fair’s platform] unlocks tremendous value for customers and will create new partnership opportunities across the transportation industry more broadly,” said Lydia Jett, senior investor at SoftBank Investment Advisers and investment adviser to the SoftBank Vision Fund, in a Fair statement announcing the funding.

This is Fair’s sixth funding round, bringing total raised to date to $1.5 billion. Fair has partnered with 3,000 dealerships across the U.S. and it has more than 20,000 users. Its partnership with AutoNation will further broaden Fair’s reach and allow customers to subscribe to vehicles without a long-term commitment.

Learn more about Fair on the company website. Learn more about the latest funding round at Automotive News or Crunchbase.

Starz Standalone Subscription Service Offers $1 Deal to Past Subscribers 

We all know that it costs less to keep a subscriber than to acquire a new one, but what do you do if you’ve already lost them? Email them incessantly until they block your email address? Beg them to come back through direct mail offers? Or maybe just offer them a screaming deal? Starz is trying the “screaming deal” approach, reports Cord Cutter News. Starz is emailing former subscribers with a very special offer – six months of streaming video content including original programming, movies and more for $1.

 Starz and Strategy

Source: Starz

If you aren’t a past subscriber, you are not eligible for this deeply discounted offer, but Starz is offering a special holiday deal. Through December 31, subscribers in the U.S. can try Starz for free for seven days. After that, they pay $5 a month for the first three months. After the introductory offer expires, the service automatically renews month-to-month at the current price unless it is cancelled. The current price is $8.99 a month, and the Starz app includes HD content, unlimited downloads and unlimited streaming and the app can be accessed on multiple screens simultaneously.

The Starz standalone service, which launched in 2016, includes Starz Play, Encore Play and MoviePlex, all in one subscription. Subscribers can register up to four devices and watch TV shows or movies at home or on the go using their iPhones, iPads, Kindle Fire tablets of phones, Android devices, Apple TV, Amazon Fire TV and Fire Stick, Android TV, Roku, Xbox One, most smart TVs and a handful of other devices.

Is Starz really that desperate for subscribers? It doesn’t seem like it. According to parent company Lionsgate’s most recent financial report, Starz has a total of 25.1 million domestic subscribers, including 1.3 million new subscribers, but Lionsgate doesn’t specific how many of those are cable subscribers versus OTT subscribers.

“We’re pleased to report a strong quarter with robust free cash flow and outstanding growth at Starz,” said Lionsgate CEO Jon Feltheimer in a November 8 news release.  “Our great results at Starz reflect our slate of hit premium programming, strong over the top subscriber growth and retention, and healthy gains in our MVPD business.  Coupled with the global expansion strategy we have begun to execute, we see a very clear path to outsized value creation for our platform.”

Tubi Offers an Alternative to Paid Streaming Video Subscriptions 

If you’re a cord-cutting movie buff but not a Starz subscriber, you can always get your fix through a subscription streaming video service like Amazon Prime, Netflix or Hulu. But have you heard about Tubi? Tubi is an alternative to paid services, reports Jeff Ewing for Forbes. In fact, Tubi offers free streaming movies and TV through an ad-supported video-on-demand (AVOD) model.

According to the Tubi website, after registering, you can watch thousands of movies and TV shows anywhere, anytime and always for free. Tubi can be accessed on Android and iOS devices, Roku, Apple TV, Amazon Fire TV, Xfinity X1, Xbox, Samsung smart TVs, Sony smart TVs, PlayStation, on the web and other supported devices. In addition to popular titles like those featured below, Tubi boasts movies not available on Netflix like True Grit, In Time, The Fighter, Hugo, Zodiac, Babel, The Adventures of TinTin and others.

There are a few catches, of course. First, you will see ads in exchange for avoiding a monthly subscription fee. Also, not all devices support Tubi, and not all programs are available on all devices. Lastly, there is no ad-free version, at least not yet, and you may see ads before, during and after your program. Why an AVOD model? Tubi answers that on their FAQs page.

“Advertising on our platform is required in order to keep our content free to you and continue licensing the content you love. Over time, this will help us bring you more great cost-free content,” Tubi says. “Our goal is to maintain a great user experience while still offering an opportunity for advertisers to work with us.”

Five on Friday: Startups

Source: Tubi

Microsoft’s 2018 Reorganization Has Paid Off

In March, Microsoft CEO Satya Nadella announced a major reorganization of the software giant. The reorg shifted the company’s focus away from the Windows operating system and centered it around Microsoft’s strongest business units: office productivity software, artificial intelligence and cloud technology.

 Starz and Strategy

Source: Microsoft

“Over the past year, we have shared our vision for how the intelligent cloud and intelligent edge will shape the next phase of innovation. First, computing is more powerful and ubiquitous from the cloud to the edge. Second, AI capabilities are rapidly advancing across perception and cognition fueled by data and knowledge of the world. Third, physical and virtual worlds are coming together to create richer experiences that understand the context surrounding people, the things they use, the places they go, and their activities and relationships,” wrote Nadella in an employee memo.

“These technological changes represent a tremendous opportunity for our customers, our partners – everyone. With all this new technology and opportunity comes a responsibility to ensure technology’s benefits reach people more broadly across society. It also requires that the technologies we create are trusted by the individuals and organizations that use them. Today’s announcement enables us to step up to this opportunity and responsibility across all our Solution Areas,” added Nadella.

According to Quartz, this reorganization has paid off, putting Microsoft back on top of the tech giants as the world’s “most valuable public company.” The company’s first quarter results of fiscal year 2019 bear this out, with double digit increases in all three business segments:

  • Revenue in Productivity and Business Processes of $9.8 billion, a 19 percent increase year-over-year
  • Revenue in Intelligent Cloud of $8.6 billion, a 24 percent increase year-over-year. Not only is this growth impressive, but Microsoft’s cloud business has a run rate of $27 billion, reports Quartz.
  • Revenue in More Personal Computing of $10.7 billion, a 15 percent increase year-over-year

Another key metric to watch is Microsoft’s (NASDAQ: MSFT) stock value over the last year. On December 28, 2017, the company’s stock price was $85.72 per share. As of 7:59 p.m. EST yesterday, Microsoft stock was valued at $101.18 per share, in spite of the recent fluctuations of the Dow Jones Industrial Average. That’s an 18 percent increase in a year’s time. Not too shabby.

In his analysis of Microsoft for Quartz, Dave Gershgorn concludes with the following:

“The year ahead looks bright for the 43-year-old company. It’s likely to hit the coveted $1 trillion in market cap, which Apple and Amazon both touched for a short while in 2018. And with a level of enviable sustained growth, 2020 might look just as bright,” writes Gershgorn.

With Nadella at the helm, it is hard to imagine Microsoft could fail to meet or exceed expectations.

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