Five on Friday: WiFi Subscriptions, Credit Scores and Restructuring

While the battle for the White House wages on, we’re focusing our attention on the subscription world. This week, Planet Fitness announces third quarter results and a digital-only subscription test and WarnerMedia announces a restructuring and related layoffs. Also, through its Boost program, Experian will start tracking timely subscription payments to improve credit scores, developer Epic Games is considering a monthly subscription plan for Fortnite, and American Airlines reveals a new WiFi subscription plan.

Planet Fitness Q3 Revenue Drops, Company Announces Digital-Only Fitness Membership

Last week, Planet Fitness reported its third quarter financial results, including total revenue of $105.4 million, a 36.8% decrease year-over-year. The company also reported a net loss attributable to Planet Fitness, Inc. of $3.1 million, or $0.04 per diluted share, compared to net income of $25.8 million, or $0.31 per diluted share, for the third quarter of 2019.

Planet Fitness is testing a new digital-only fitness membership. Image courtesy of Planet Fitness.
Planet Fitness is testing a new digital-only fitness membership. Image courtesy of Planet Fitness.

Revenue in all three business segments – franchise, corporate-owned stores and equipment – saw decreases during the quarter. The company says the significant revenue decreases are due to the temporary closures of Planet Fitness gyms during the COVID outbreak. Now more than 95% of Planet Fitness locations have reopened. In addition, the company saw reduced membership levels, and fewer equipment sales to franchise owners.

On a positive note, however, Planet Fitness disclosed it is testing PF Plus, a digital-only fitness membership. For $5.99 a month, members can access PF Plus through their mobile app. Some content is available for free, but PF Plus will include more premium content such as digital fitness classes that users can do at home.

“We view our stand-alone digital membership as a gateway to our traditional bricks-and-mortar membership, not a replacement for it, and this provides us with an opportunity to further engage inside and outside the gym, the ability to provide even more content for an additional fee to introduce prospective members to the brand,” said Chris Rondeau, Planet Fitness CEO, in the November 6, 2020 earnings call.

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“During the testing phase, we will assess consumer feedback on content and usability to perform any broader rollout plan. Longer term, digital content could potentially strengthen our value proposition to members throughout expanded or bundled offerings potentially in adjacent categories,” Rondeau added.

WarnerMedia Announces Layoffs as Part of Corporate Restructuring

WarnerMedia is the latest entertainment and media organization to report layoffs. The company is expected to lay off between 5% and 7% of its 25,000 employees. That means 1,250 to 1,750 people could lose their jobs, primarily in North America, says The Hollywood Reporter. The layoffs are part of a reorganization that new CEO Jason Kilar announced this summer. Like Disney, WarnerMedia is focusing on the company’s direct-to-consumer streaming video subscription business, investing in HBO Max which launched at the end of May.

Kilar notified staff via email.

“Today, we have arrived at a number of difficult decisions that are resulting in a smaller WarnerMedia team,” said Kilar. “This is a function of removing layers and the impact of consolidating previously separate organizations.”

“To our colleagues who are leaving, I wish there were words to lessen today’s pain. Your contributions are a permanent part of this great company and today’s news does not change that,” Kilar added. “I am extremely thankful for all that you have done for this team and this mission. I hope that at some point you will look back on all of it with immense pride.”

Several of the organization’s top leaders will be among those leaving WarnerMedia, including Scott Rowe of Warner Bros. TV; Lisa Gregorian of WBTV; and JP Richards, co-president of Warner Bros. marketing. In August, about 500 employees lost their jobs. They were also part of the restructuring, reports TheStreet.

WarnerMedia brands include HBO Max, Warner Bros., HBO, TBS, TNT, TruTV, CNN, Cartoon Network, DC, Adult Swim, Mondo TV, Crunchyroll and Boing, among others.

Experian to Boost Brits’ Credit Scores Based on Timely Subscription Payments

This summer, Experian added Netflix subscription payments to help consumers in the U.S. raise their credit scores by making on-time payments. That free service is now available to consumers in Great Britain through Open Banking. Going back 12 months, the service will also include council tax payments, streaming services like Netflix, Spotify and Amazon Prime, and payments into savings and investment accounts, according to Money Expert.

Experian expands its Boost program to help consumers raise their credit scores by making timely subscription payments.
Experian expands its Boost program to help consumers raise their credit scores by making timely subscription payments. Image by Bigstock Photo.

“Experian wants people to get credit where credit is due. We are always pushing the boundaries of innovation for two key reasons – to give consumers more control over their financial lives, and to ensure lenders have the information they need to make informed, responsible decisions,” said Clive Lawson, MD, consumer services for Experian.

“There’s never been a more important time for people to engage with their credit scores and Experian Boost will help them to do this. We are incredibly excited to provide this ground-breaking, free service now to help build better financial futures for consumers in the UK,” Lawson added.

Experian estimates that 51% of people who use the service will see an immediate increase in their credit scores, and more than 1 in 10 Brits can move up to a new credit score category (e.g., poor to fair or fair to good) by using this new service, reports Finextra. The maximum increase in a credit score is 66 points, but no customers will see their scores drop.

Fortnite Is Considering a Subscription Model

Developer Epic Games is considering offering Fortnite as a monthly subscription. According to Tech Radar, Epic Games has been surveying members to determine their interest at price levels ranging between $5 and $18 per month. The game is currently free to play, though players can access new cosmetics, gear and characters through in-app purchases. A subscription would give gamers 1,000 V-Bucks (virtually currency) monthly, access to each season’s battle pass which is about 950 V-Bucks), and early access to brand-new cosmetics. Slash Gear said readers are asked to rate from 1 to 10 how much they like the subscription offer.

This issue is separate but likely related to Epic Games’ lawsuit against Apple for banning Fortnite from the App Store. Apple removed Fortnite from the App Store because it says Epic Games had violated the store’s terms of service. Epic Games’ issue is having to pay the 15 to 30% Apple tax on in-app purchases. By offering a subscription option, Epic Games would add a new revenue stream to Fortnite which would help compensate the developer for losses sustained by no longer being in the App Store.

Testing, of course, is always a smart bet for subscription companies. Find out what your potential subscribers want and what they are willing to pay for it, and then deploy tests to see what the market will bear. Early indications show an interest by players in a subscription option that gives them added benefits and, for die-hard players, might even save them money from their in-app purchases.

Developer Epic Games is considering a subscription option for Fortnite, a free game that includes in-app purchases.
Developer Epic Games is considering a subscription option for Fortnite, a free game that includes in-app purchases. Image courtesy of Epic Games.

American Air Reveals New WiFi Subscription Plan and Added Perks to AirPass Program

American Airlines wants to make travel a little more attractive by rolling out a new WiFi subscription plan. The plan, which started November 10, features domestic high-speed WiFi for frequent flyers who want to save on WiFi charges which normally start at $10 per flight. The new subscription plan will cover short- and medium-haul destinations in the United States, Canada, Mexico, the Caribbean and Central America. Regardless of whether a plane is equipped with Gogo, Panasonic or Viasat equipment, the subscription plan will work.

This plan replaces the Gogo monthly subscription plan. Customers will be advised how to make the switch to the new plan. Eligible customers are AAdvantage members and have an email and primary credit card with a U.S. billing address associated with their AAdvantage account.

In addition to the new WiFi subscription plan, American Air has upgraded its AirPass program as well. AirPass is a pre-paid membership with fixed rate fares, no change or cancellation fees, premium seating, Five Star service, VIP benefits and more. While some benefits are only available to those who fly American, AirPass can also be used with some airline partners including Finnair, Iberia and Japan Airlines. Individual and shared memberships start at $5,000 per person.

As an added bonus, American Airlines is offering free holiday movies (no WiFi purchase needed) and holiday playlists via Apple Music.