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An Equity deep dive on Patreon
The popular TechCrunch podcast Equity this week launched a new series called Equity Dive, wherein a host interviews the writer of the latest edition of the Extra Crunch EC-1.
If you’ve ever wanted to know everything there is to know about Patreon, the platform that connects creators with fans and their wallets, then this is the show for you. TechCrunch Silicon Valley editor Connie Loizos speaks with Eric Peckham who spent hours upon hours meeting with the Patreon team to learn its origin story and the ins and outs of its business practices to get the company to where it is today.
As Eric says:
The way to think about how Patreon has evolved is I see it in kind of three stages, which was this initial crowd funding platform, and then evolving beyond that to try and be a destination platform for consumers where there would be great content that you just go to Patreon to find and you go to discover creators, kind of a marketplace model. They moved away from that. That was somewhat of a gradual shift and essentially the decision was it’s not good to be stuck in this game of trying to be yet another destination platform for consumers competing with YouTube and Instagram and every single media site out there. Really the opportunity and mission underlies our work is about helping creators and enabling all these independent creators to sustain themselves and to build thriving businesses.
They shifted, they now describe themselves as a SaaS company actually, which is very different from framing yourself as kind of a consumer destination. The long and short of it is they see this opportunity, which is a growing market of independent creators around the world who are building fan bases, and for that particular type of SMB they want to provide essentially the full suite of tools and services that they need to run their businesses.
For access to the full transcription, become a member of Extra Crunch. Learn more and try it for free.
Connie Loizos: Hi, I’m Connie Loizos and I’d like to welcome you to our first Equity Dive. Once a month we’re going to be dedicating an entire episode to a deep dive into the life of one company. This month I’m joined by Eric Peckham, who has reported extensively on the crowd funding membership platform Patreon. Hi Eric.
Eric Peckham: Hey Connie, excited to be here for the first Equity Dive.
Connie Loizos: Same, so Eric you and I ran into each other first in Berlin but we don’t know each other very well. I’d love to hear more about you. You’re based in LA, and from what I understand you are a media industry analyst. Is that correct?
Eric Peckham: Yes, so I cover through both my own newsletter Monetizing Media, the happenings of the global media and entertainment industry. It’s kind of a very business minded lens on media and entertainment.
Connie Loizos: Well I read your extensive coverage on Patreon and it was really impressive, and I wondered considering how much you wrote, is this sort of a long interest of yours this company or how did you decide to settle on this for your first deep dive for TechCrunch?
Eric Peckham: Yes, it was an exciting process digging into this. We made a short list of exciting companies, a lot of unicorn companies or late stage startups we thought were about to become unicorns, and Patreon jumped out for a number of reasons. One is as someone who runs his own newsletter I have had subscribers to that newsletter suggest creating a Patreon. I’ve looked into it before, so I had a little bit of a creator perspective of just wanting to better understand Patreon and other options in the market. I think from a bigger picture, more of a Silicon Valley perspective, Patreon’s a really fascinating company. They’ve raised over $100 million from top PC firms like Index, CRV, they’re the dominant player in this space they’re targeting, but it’s kind of them versus just the big social media platforms. There isn’t the startup that’s comparable in size to it and it’s really trying to own this whole territory of independent content creators, surveying them with different business tools or services.
Connie Loizos: It is really interesting to think the David and Goliath story involves a $100 million venture backed startup versus, as you say, I know these big players Facebook, YouTube. Let’s start at the beginning, so you decided on Patreon for reasons that I can certainly understand now. How did you set about pitching them on this idea? Because obviously you were going to need a lot of access to them, a lot of their time.
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The team behind Baidu’s first smart speaker is now using AI to make films
The HBO sci-fi blockbuster Westworld has been an inspiring look into what humanlike robots can do for us in the meatspace. While current technologies are not quite advanced enough to make Westworld a reality, startups are attempting to replicate the sort of human-robot interaction it presents in virtual space.
Rct studio, which just graduated from Y Combinator and ranked among TechCrunch’s nine favorite picks from the batch, is one of them. The “Westworld” in the TV series, a far-future theme park staffed by highly convincing androids, lets visitors live out their heroic and sadistic fantasies free of consequences.
There are a few reasons why rct studio, which is keeping mum about the meaning of its deliberately lower-cased name for later revelation, is going for the computer-generated world. Besides the technical challenge, playing a fictional universe out virtually does away the geographic constraint. The Westworld experience, in contrast, happens within a confined, meticulously built park.
“Westworld is built in a physical world. I think in this age and time, that’s not what we want to get into,” Xinjie Ma, who heads up marketing for rct, told TechCrunch. “Doing it in the physical environment is too hard, but we can build a virtual world that’s completely under control.”
Rct studio wants to build the Westworld experience in virtual worlds. / Image: rct studio
The startup appears suitable to undertake the task. The eight-people team is led by Cheng Lyu, the 29-year-old entrepreneur who goes by Jesse and helped Baidu build up its smart speaker unit from scratch after the Chinese search giant acquired his voice startup Raven in 2017. Along with several of Raven’s core members, Lyu left Baidu in 2018 to start rct.
“We appreciate a lot the support and opportunities given by Baidu and during the years we have grown up dramatically,” said Ma, who previously oversaw marketing at Raven.
Let AI write the script
Immersive films, or games, depending on how one wants to classify the emerging field, are already available with pre-written scripts for users to pick from. Rct wants to take the experience to the next level by recruiting artificial intelligence for screenwriting.
At the center of the project is the company’s proprietary engine, Morpheus. Rct feeds it mountains of data based on human-written storylines so the characters it powers know how to adapt to situations in real time. When the codes are sophisticated enough, rct hopes the engine can self-learn and formulate its own ideas.
“It takes an enormous amount of time and effort for humans to come up with a story logic. With machines, we can quickly produce an infinite number of narrative choices,” said Ma.
To venture through rct’s immersive worlds, users wear a virtual reality headset and control their simulated self via voice. The choice of audio came as a natural step given the team’s experience with natural language processing, but the startup also welcomes the chance to develop new devices for more lifelike journeys.
“It’s sort of like how the film Ready Player One built its own gadgets for the virtual world. Or Apple, which designs its own devices to carry out superior software experience,” explained Ma.
On the creative front, rct believes Morpheus could be a productivity tool for filmmakers as it can take a story arc and dissect it into a decision-making tree within seconds. The engine can also render text to 3D images, so when a filmmaker inputs the text “the man throws the cup to the desk behind the sofa,” the computer can instantly produce the corresponding animation.
Path to monetization
Investors are buying into rct’s offering. The startup is about to close its Series A funding round just months after banking seed money from Y Combinator and Chinese venture capital firm Skysaga, the startup told TechCrunch.
The company has a few imminent tasks before achieving its Westworld dream. For one, it needs a lot of technical talent to train Morpheus with screenplay data. No one on the team had experience in filmmaking, so it’s on the lookout for a creative head who appreciates AI’s application in films.
Rct studio’s software takes a story arc and dissects it into a decision-making tree within seconds. / Image: rct studio
“Not all filmmakers we approach like what we do, which is understandable because it’s a very mature industry, while others get excited about tech’s possibility,” said Ma.
The startup’s entry into the fictional world was less about a passion for films than an imperative to shake up a traditional space with AI. Smart speakers were its first foray, but making changes to tangible objects that people are already accustomed to proved challenging. There has been some interest in voice-controlled speakers, but they are far from achieving ubiquity. Then movies crossed the team’s mind.
“There are two main routes to make use of AI. One is to target a vertical sector, like cars and speakers, but these things have physical constraints. The other application, like Alpha Go, largely exists in the lab. We wanted something that’s both free of physical limitation and holds commercial potential.”
The Beijing and Los Angeles-based startup isn’t content with just making the software. Eventually, it wants to release its own films. The company has inked a long-term partnership with Future Affairs Administration, a Chinese sci-fi publisher representing about 200 writers, including the Hugo award-winning Cixin Liu. The pair is expected to start co-producing interactive films within a year.
Rct’s path is reminiscent of a giant that precedes it: Pixar Animation Studios . The Chinese company didn’t exactly look to the California-based studio for inspiration, but the analog was a useful shortcut to pitch to investors.
“A confident company doesn’t really draw parallels with others, but we do share similarities to Pixar, which also started as a tech company, publishes its own films, and has built its own engine,” said Ma. “A lot of studios are asking how much we price our engine at, but we are targeting the consumer market. Making our own films carry so many more possibilities than simply selling a piece of software.”
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Talking the future of media with Northzone’s Pär-Jörgen Pärson
We live in the subscription streaming era of media. Across film, TV, music, and audiobooks, subscription streaming platforms now shape the market. Gaming and podcasting could be next. Where are the startup opportunities in this shift, and in the next shift that will occur?
I sat down with Pär-Jörgen “PJ” Pärson, a partner at European venture firm Northzone, to discuss this at SLUSH this past winter. Pärson – a Swede who now runs Northzone’s office in NYC – led the top early-stage investor in Spotify and led the $35 million Series C in $45/month sports streaming service fuboTV (which has roughly 250,000 subscribers).
In the transcript below, we dive into the core investment thesis that has guided him for 20 years, how he went from running a fish distribution to running a VC firm, his best practices for effective board meetings and VC-entrepreneur relationships, and his assessment of the big social platforms, AR/VR, voice interfaces, blockchain, and the frontier of media. It has been edited for length and clarity.
From Fish to VC
Eric Peckham:
Northzone isn’t your first VC firm — Back in 1998, you created Cell Ventures, which was more of a holding company or studio model. What was your playbook then?
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Snap CEO’s sister Caroline Spiegel starts a no-visuals porn site
If you took the photos and videos out of pornography, could it appeal to a new audience? Caroline Spiegel’s first startup Quinn aims to bring some imagination to adult entertainment. Her older brother, Snapchat CEO Evan Spiegel, spent years trying to convince people his app wasn’t just for sexy texting. Now Caroline is building a website dedicated to sexy text and audio. The 22-year-old college senior tells TechCrunch that on April 13th she’ll launch Quinn, which she describes as “a much less gross, more fun Pornhub for women.”
TechCrunch checked out Quinn’s private beta site, which is pretty bare bones right now. Caroline tells us she’s already raised less than a million dollars for the project. But given her brother’s success spotting the next generation’s behavior patterns and turning them into beloved products, Caroline might find investors are eager to throw cash at Quinn. That’s especially true given she’s taking a contrarian approach. There will be no imagery on Quinn.
Caroline explains that “There’s no visual content on the site — just audio and written stories. And the whole thing is open source, so people can submit content and fantasies, etc. Everything is vetted by us before it goes on the site.” The computer science major is building Quinn with a three-woman team of her best friends she met while at Stanford, including Greta Meyer, though they plan to relocate to LA after graduation.
“His dream girl was named ‘Quinn’ “
The idea for Quinn sprung from a deeply personal need. “I came up with it because I had to leave Stanford my junior year because I was struggling with anorexia and sexual dysfunction that came along with that,” Caroline tells me. “I started to do a lot of research into sexual dysfunction cures. There are about 30 FDA-approved drugs for sexual dysfunction for men but zero for women, and that’s a big bummer.”
She believes there’s still a stigma around women pleasuring themselves, leading to a lack of products offering assistance. Sure, there are plenty of porn sites, but few are explicitly designed for women, and fewer stray outside of visual content. Caroline says photos and videos can create body image pressure, but with text and audio, anyone can imagine themselves in a scene. “Most visual media perpetuates the male gaze … all mainstream porn tells one story … You don’t have to fit one idea of what a woman should look like.”
That concept fits with the startup’s name “Quinn,” which Caroline says one of her best guy friends thought up. “He said this girl he met — his dream girl — was named ‘Quinn.’ ”
Caroline took to Reddit and Tumblr to find Quinn’s first creators. Reddit stuck to text and links for much of its history, fostering the kinky literature and audio communities. And when Tumblr banned porn in December, it left a legion of adult content makers looking for a new home. “Our audio ranges from guided masturbation to overheard sex, and there’s also narrated stories. It’s literally everything. Different strokes for different for folks, know what I mean?” Caroline says with a cheeky laugh.
To establish its brand, Quinn is running social media influencer campaigns where “The basic idea is to make people feel like it’s okay to experience pleasure. It’s hard to make something like masturbation cool, so that’s a little bit of a lofty goal. We’re just trying to make it feel okay, and even more okay than it is for men.”
As for the business model, Caroline’s research found younger women were embarrassed to pay for porn. Instead, Quinn plans to run ads, though there could be commerce opportunities too. And because the site doesn’t bombard users with nude photos or hardcore videos, it might be able to attract sponsors that most porn sites can’t.
Evan is “very supportive”
Until monetization spins up, Quinn has the sub-$1 million in funding that Caroline won’t reveal the source of, though she confirms it’s not from her brother. “I wouldn’t say that he’s particularly involved other than he’s one of the most important people in my life and I talk to him all the time. He gives me the best advice I can imagine,” the younger sibling says. “He doesn’t have any qualms, he’s very supportive.”
Quinn will need all the morale it can get, as Caroline bluntly admits, “We have a lot of competitors.” There’s the traditional stuff like Pornhub, user-generated content sites like Make Love Not Porn and spontaneous communities like on Reddit. She calls $5 million-funded audio porn startup Dipsea “an exciting competitor,” though she notes that “we sway a little more erotic than they do, but we’re so supportive of their mission.” How friendly.
Quinn’s biggest rival will likely be outdated but institutionalized site Literotica, which SimilarWeb ranks as the 60th most popular adult website, 631st most visited site overall, showing it gets 53 million hits per month. But the fact that Literotica looks like a web 1.0 forum yet has so much traffic signals a massive opportunity for Quinn. With rules prohibiting Quinn from launching native mobile apps, it will have to put all its effort into making its website stand out if it’s going to survive.
But more than competition, Caroline fears that Quinn will have to convince women to give its style of porn a try. “Basically, there’s this idea that for men, masturbation is an innate drive and for women it’s a ‘could do without it, could do with it.’ Quinn is going to have to make a market alongside a product and that terrifies me,” Caroline says, her voice building with enthusiasm. “But that’s what excites me the most about it, because what I’m banking on is if you’ve never had chocolate before, you don’t know. But once you have it, you start craving it. A lot of women haven’t experienced raw, visceral pleasure before, [but once we help them find it] we’ll have momentum.”
Most importantly, Quinn wants all women to feel they have rightful access to whatever they fancy. “It’s not about deserving to feel great. You don’t have to do Pilates to use this. You don’t have to always eat right. There’s no deserving with our product. Our mission is for women to be more in touch with themselves and feel fucking great. It’s all about pleasure and good vibes.”
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Atom Tickets to challenge MoviePass with a subscription ticket platform for theaters
MoviePass may still be trying to figure out how to make a movie ticket subscription service financially viable, but it can be credited for at least correctly identifying consumer demand for such a thing. There’s now a market for movie tickets by subscription from it as well as rivals like Sinemia, AMC Stubs A-List, Cinemark Movie Club, and — as of yesterday — newcomer Infinity. Now you can add one more: Atom Tickets, which is today announcing a platform that will allow theaters to build their own movie ticket subscription services.
The idea here is that the exhibitors themselves — not startups — should be involved in establishing the business model that’s right for them. Atom Tickets will instead provide the underlying technology and support that makes such a thing possible.
The new platform, called Atom Movie Access, will be offered to exhibitors across North America. It provides a fully digitally booking platform for subscribers through the Atom Tickets app. That means subscribers can also take advantage of Atom Tickets’ other benefits — like reserving seats in advance, inviting friends through their contacts, pre-ordering concessions for quick pickup where available and checking in using a phone instead of paper tickets.
On the back end, Atom Tickets will also handle the payment processing, customer service, fraud detection and anti-abuse measures. The latter is particularly important for movie ticket subscriptions, as MoviePass noted that as much as 20 percent of its customers were abusing the service, which significantly contributed to its financial issues.
In addition, the platform will allow subscribers to be able to make complex transactions in-app, like redeeming a free movie while also buying full-priced tickets for a guest in one sale. It also supports things like being able to choose between an included free screening or saving it for later, the company says, and allows for the creation of differently tiered plans. For example, there can be plans for both individuals or groups and tiers for standard and premium movie formats.
“Atom Tickets is an innovative ticketing platform that enables exhibitors to reach and engage new and incremental audiences,” said Matthew Bakal, chairman and co-founder of Atom Tickets, in a statement about the launch. “We’ve always believed in being a valuable partner to exhibitors, starting with the core functionality of our app, which allows for marketing promotions at specific locations, integrating exhibitor loyalty plans and giving customers the ability to pre-order concessions. Now with Atom Movie Access, we’re thrilled to provide the technology that will enhance the direct-to-consumer relationship of moviegoers with their favorite theaters.”
There are still several unknowns about the new platform — most notably the pricing for exhibitors. In an interview with Variety, Bakal suggested it would not be prohibitive as Atom Tickets would instead take a cut of subscriptions. The report also noted that no theaters have signed up yet, but the pitching will begin in earnest at a trade show next week in Las Vegas.
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Digging into Apple’s media transformation
Extra Crunch offers members the opportunity to tune into conference calls led and moderated by the TechCrunch writers you read every day. This week, TechCrunch Editor-in-Chief, Matthew Panzarino, offered his analysis on the major announcements that came out of Apple’s keynote event this past Monday.
Behind a series of new subscription and media products, Apple has set the stage for one of the largest transformations in the company’s history. Matthew touches on all of Apple’s major product initiatives including Apple’s new credit card, its push into original content, its subscription gaming platform, and its subscription news service, which features Extra Crunch as one of the debut publications.
“I don’t think many of the things that Apple announced here, on an individual basis, are earth-shattering. I think it shapes up to be a really solid, nice offering for people with some distinct advantages but at the same time it’s not breaking huge molds here. I think the same thing applies across all of the offerings that they put out there.
I just felt that together, it’s solid but not scintillating and we need to see how they develop, how they launch, and then what they do with these platforms…
…Seems relatively straightforward. However, some of the stuff people have glossed over is very intriguing.”
Matthew goes into more detail on why he didn’t view the announcements as individually earth-shattering, and why he sees compelling opportunities for Apple to position its offerings as a symbiotic ecosystem. He also goes under the hood to discuss some of Apple’s overlooked competitive advantages in media and to paint a picture of how Apple’s new product lines might evolve in the long-term.
For access to the full transcription and the call audio, and for the opportunity to participate in future conference calls, become a member of Extra Crunch. Learn more and try it for free.
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Apple TV+ makes Facebook Watch look like a joke
Apple flexed its wallet today in a way Facebook has scared to do. Tech giants make money by the billions, not the millions, which should give them an easy way to break into premium video distribution: buy some must-see content. That’s the strategy I’ve been advocating for Facebook but that Apple actually took to heart. Tim Cook wrote lines of zeros on some checks, and suddenly Steven Spielberg, JJ Abrams, Reese Witherspoon, Jennifer Aniston, and Oprah became the well-known faces of Apple TV+.
Facebook Watch has…MTV’s The Real World? The other Olsen sister? Re-runs of Buffy The Vampire Slayer? Actually, Facebook Watch is dominated by the kind of low-quality viral video memes the social network announced it would kick out of its News Feed for wasting people’s time.
And so while Apple TV+ at least has a solid base camp from which to make the uphill climb to compete with Netflix, Facebook Watch feels like it’s tripping over its own feet.
Today, Apple gave a preview of its new video subscription service that will launch in fall offering unlimited access to old favorites and new exclusives for a monthly fee. Yet even without any screenshots or pricing info, Apple still got people excited by dangling its big-name content.
Spielberg is making short films out of the Amazing Stories anthology that inspired him as a child. Abrams is spinning a tale of a musician’s rise called Little Voice Witherspoon and Aniston star in The Morning Show about anchoring a news program. And Oprah is bringing documentaries about workplace harassment and mental health.
This tentpole tactic will see Apple try to draw users into a free trial of Apple TV+ with this must-see content and then convince them to stay. And a compelling, exclusive reason to watch is exactly what’s been missing from…Facebook Watch. Instead, it chose to fund a wide array of often unscripted reality and documentary shorts that never felt special or any better than what else was openly available on the Internet, let alone what you could get from a subscription. It now claims to have 75 million people Watching at least one minute per day, but it’s failed to spawn a zeitgeist moment. Even as Facebook has scrambled to add syndicated TV cult favorites like Firefly or soccer matches to free, ad-supported video service, it’s failed to sign on anything truly newsworthy.
That’s just not going to fly anymore. Tech has evolved past the days when media products could win just based on their design, theoretical virality, or the massive audiences they’re cross-promoted to. We’re anything but starved for things to watch or listen to. And if you want us to frequent one more app or sign up for one more subscription, you’ll need A-List talent that makes us take notice. Netflix has Stranger Things. HBO has Game Of Thrones. Amazon has the Marvelous Mrs. Maisel. Disney+ has…Marvel, Star Wars, and the princesses. And now Apple has the world’s top directors and actresses.
Video has become a battle of the rich. Apple didn’t pull any punches. Facebook will need to buy some new fighters if Watch is ever going to deserve a place in the ring.
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MoviePass parent’s CEO says its rebooted subscription service is already (sort of) profitable
Two days after MoviePass announced the return of the company’s unlimited ticket plan, Ted Farnsworth, CEO of its parent company Helios and Matheson Analytics, sat down with TechCrunch to offer insight into the state of the beleaguered service.
According to the executive, MoviePass Uncapped is already seeing positive results. While he didn’t share concrete numbers, he says that sign-ups have increased “well over 800 percent in the last few days. And that’s conservative.”
Asked what it would take to make the company’s subscription business profitable, Farnsworth says, “Well, it’s profitable right now.” As for when it turned the corner, he added, “I will tell you this, because it’s out there: MoviePass has actually paid Helios back money over the past several months, towards the loans that they have. So, that gives you an idea of when we really started focusing on getting rid of the 20 percent of the abusers.”
Important caveat: A Helios & Matheson spokesperson later clarified that Farnsworth meant MoviePass’ subscription business is profitable on a revenue-per-subscriber basis. In other words, it’s not losing money on subscriptions, but the business unit isn’t necessarily profitable when you take overhead and debt into account.
The plan marks a return to the initial unlimited model that helped turn MoviePass into a household name in the past year. But that success arrived with a massive price, as the service began hemorrhaging money. MoviePass withdrew the unlimited plan and began reworking its plans on what seemed to be a weekly basis.
In July, at the height of what was supposed to be the Summer of MoviePass, the service experienced an outage as it struggled to pay bills. Helios secured a $5 million loan from creditors Hudson Bay Capital Management in order to turn the lights back on.
WEST HOLLYWOOD, CA – FEBRUARY 24: Ted Farnsworth attends the 27th annual Elton John AIDS Foundation Academy Awards Viewing Party sponsored by IMDb and Neuro Drinks celebrating EJAF and the 91st Academy Awards on February 24, 2019 in West Hollywood, California. (Photo by Jamie McCarthy/Getty Images for EJAF)
“I think the big SNAFU there was the credit card company,” the executive explains. “When one company sold to the other, we had been doing business with them for four years. They decided it was too much credit for them and literally call the credit line on a Friday night and I do a personal guarantee on a Saturday.”
However things might have gone down on the back end, the optics of such a situation were clearly less than ideal. MoviePass’ struggles were very public from the beginning, as part of a publicly traded company. A literal shut down for the service appeared to be just the latest sign that the too good to be true service was exactly that.
And while Farnsworth admits that the company would have benefited from a bit more privacy, he claims that he never had any doubts about MoviePass’ future, even as he negotiated with creditors for a fresh cash injection.
“There were no moments in my mind where I thought it would go down. In my mind, I thought it was too big to fail,” he says. “You created a household name in less than a year. I think any time you have something like that, where you’re going to run into issues from sheer growth. Our investors did well investing along the way. The investors believed in us and they still do. We knew we had to slow it down to get in front of the fraud side because there were so many moving parts. It was moving so fast.”
It’s that “fraud” that was at the center of MoviePass’ woes, says Farnsworth. MoviePass’ initial downfall, he believes, was the product of too many users “gaming the system.” He believes the total number of users that fall into that category to have been around 20 percent of the overall subscriber base.
It was a minority, certainly, but still a sizable figure, given that, by June of last year, that total figure had exceeded three million. By that point, the service also comprised around five percent of U.S. box office receipts. Much of the past year has been spent attempting to plug holes in the subscription service as the MoviePass boat began rapidly taking on water.
To be clear, “gaming the system” doesn’t just mean watching a lot of movies — Farnsworth says he’s happy to have “hardcore” users, even if they’re buying way more than $9.95 or $14.95 worth of tickets. Instead, his concern is users who are doing things like sharing their subscription or just using a MoviePass ticket to use the theater’s restroom — something surprisingly common in places like Times Square, where public bathrooms are hard to come by.
One of the primary fixes, Farnsworth says, is utilizing mobile tracking to ensure that subscribers are, in fact, using the service as intended, and looking for “red flags” like constantly changing the device using the app. Users are already required to enable location-based tracking in order to enable ticket purchase. This will utilize that to ping the ticket purchaser’s location, in order to make sure that they’re actually attending the movies for which they’ve purchased tickets.
“For instance, another issue is where people would go to the theater, they’ll pick up the ticket, they’ll hand their ticket to the kid or their child or their friend or whatever it is … and the person that’s paying the subscription goes back home or whatever they do,” he says. The new strategy: “When the movie starts, 30 minutes later [we’re] able to ping them inside the theater, just to make sure they still are at that theater.”
Looking ahead, Farnsworth says that the days of constantly changing pricing and restrictions are over, and that the company is committed to the unlimited plan. In fact, in his telling, the goal was always to get back to the unlimited plan — it was just that MoviePass had to figure out how to cut down on fraud to make the plan work.
At the same time, he says MoviePass’ film studio will also be an important part of the business. It has been overshadowed by the headlines about the company’s subscription struggles, but MoviePass Films has titles starring Bruce Willis, Al Pacino and Sylvester Stallone scheduled for this year.
MoviePass also invested in “Gotti,” and although the film was reviled by critics and only grossed $4.3 million at the box office, Farnsworth doesn’t see it as a failure.
“We never looked at Gotti as a money-maker” he says. “They only projected that it would do a $1.3 million in the box office here. Because then, when we pushed it with MoviePass, we took that up to five million. So, I mean, when you can take a movie — I gotta be careful here, but when you take a movie that might not be that great or perfect, and you can move that needle, [that] was always our theory of subscription.”
Check back later for our full interview with Farnsworth. Also, this post has been updated to reflect that MoviePass recently saw 800 percent growth in sign-ups (not subscribers), and to clarify Farnsworth’s remarks about profitability.
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Epic Games CEO says Apex Legends hasn’t made a dent in Fortnite
In the wake of Apex Legends, which has briskly grown to 50 million players, many have wondered whether Fortnite has felt the impact.
But Epic Games CEO Tim Sweeney told GamesBeat that Apex hasn’t really made a dent. Without being asked about Apex Legends, Sweeney said “an Apex Legends worth” of players have come over to Fortnite.
“We’re very close to hitting 250 million Fortnite players,” said Sweeney. “Since Apex Legends came out, we’ve gained an Apex Legends worth of Fortnite players, which is amazing.”
He went on to say that the only game that noticeably takes Fortnite gamers away from Fortnite is FIFA.
“We hit a Fortnite non-event peak twice after Apex was out,” said Sweeney. “We haven’t seen any visible cut into Fortnite. It’s a funny thing. The only game you can see where its peaks cut into Fortnite playtime is FIFA. It’s another game for everybody, wildly popular around the world.”
On the one hand, Apex only has about one-fifth of the players that Fortnite has. In a world where Netflix sees Fortnite as a greater threat than HBO, the scale of the two games isn’t comparable.
However, Apex is picking up some serious steam. It only took seven days for Apex to hit 25 million users (it took Fortnite 41 days), and one month to hit 50 million users (it took Fortnite more than four months).
As impressive as that is, it’s also to be expected that a game like Apex, a relative latecomer to the Battle Royale genre, would grow faster by reaping the benefits of the entire industry’s years of work and growth. It’s also worth noting that EA paid a pretty penny to successfully launch Apex Legends, with Ninja alone earning $1 million for streaming the game at launch.
“What Apex Legends has done is re-energized a lot of shooter players, people who come in and out of shooters depending on what’s popular,” said Sweeney. “It’s awesome to see other games picking up on battle royale, adding their unique spin to it and advancing the state of the industry.”
Adding a unique spin is exactly what Apex Legends has done. They’ve taken the fundamental building blocks of Battle Royale and the free-to-play model and tweaked them to be, in some ways, better.
Where play is concerned, Apex is a markedly team-oriented game, complete with a beautifully executed non-verbal comms system and a Jumpmaster mechanic to encourage teammates to land and play as a unit. Plus, Apex uses a hero system to give each character their own unique abilities.
This not only makes each fight interesting, but it gives Apex a different way to monetize beyond its recently launched BattlePass. The company just introduced its first new character, which can be unlocked with Apex Coins, the games virtual currency.
Only time will tell if Respawn and EA can build something as sticky as Fortnite, which has truly become a pop culture phenomenon. But there is one clear winner in this epic competition between Fortnite and Apex, and that’s gamers.
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Morphin instantly Deepfakes your face into GIFs
Want to star in your favorite memes and movie scenes? Upload a selfie to Morphin, choose your favorite GIF and your face is grafted in to create a personalized copy you can share anywhere. Become Tony Stark as he suits up like Iron Man. Drop the mic like Obama, dance like Drake or slap your mug on Fortnite characters.
Now after three years in stealth developing image-mapping technology, Morphin is ready to launch its put-you-in-a-GIF maker. While it might look like just a toy, investors see real business potential. Morphin raised $1 million last summer from Betaworks, the incubator that spawned Giphy, plus Founders Fund, Precursor, Shrug Capital and Boost.vc’s accelerator.
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“We believe in the future you’ll be able to be the main character in your own film. Imagine a super hero movie where you’re the main protagonist?,” co-founder Loic Ledoux asks. “That sounded like science fiction a few years ago and now with AI and computer vision we definitely see our tech going there.”
Ledoux also wants to reclaim faceswaps as something fun rather than a weapon for misinformation. “Deepfakes brought something pretty negative to computer vision. But it’s not all bad. It’s about how you use the tech to give people a new tool for self expressions and storytelling.” And since Morphin re-generates the whole clip from scratch with CGI animation, they look right at a glance, but clearly aren’t manipulated copies of the original video designed to fool anyone.
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Morphin started three years ago with the intention to build personalized avatars for games and VR so you could be a FIFA soccer player or Skyrim knight. Ledoux had started a 3D printing company to explore opportunities in scanning and modeling when he saw a chance to connect your real and virtual faces. He teamed up with his co-founder Nicholas Heriveaux, who’d spent 13 years working on 3D tech while modding games like Grand Theft Auto to insert his avatar and assets.
What they quickly recognized was that “People were just reacting to themselves on the screen,” ignoring the gameplay, Ledoux recalls. “Being able to see yourself as a hero was the underlying sentiment, so we focused on video completely.” Recognizable GIFs became its preferred medium, as they combine familiarity and the ability to convey complex emotions with a template that’s easy to personalize so they stand out.
Morphin’s tech no longer requires 3D scanning hardware and it works with just a regular selfie. You just snap a headshot, select a GIF from its iOS or Android app’s library and a few seconds later you have a CGI version of yourself in the scene (with no watermark) that you can export and post. “We wanted it to be super straightforward because we wanted people to relate to the content,” Ledoux notes. Over 1 million scenes have been created by 50,000 beta users, and each time a celebrity shares one of the GIFs Morphin has been sending them for marketing, scores of their followers demand to know which app they were using.
Morphin’s nine-person French team will have to keep innovating to stay ahead of avatar-making competitors like the ubiquitous Snapchat Bitmoji, Genies, Moji Edit and Mirror AI. Facebook, Microsoft and Google all have launched or are building their own avatar creators. But these typically live as 2D stickers or 3D AR animations you overlay on the real world. By using GIFs as a canvas, Morphin takes the pressure off your visage looking perfect and instead emphasizes the message you’re trying to get across.
The challenge will be for Morphin to become a consistent part of people’s communication stack. It’s easy to imagine playing with it and posting a few GIFs. But iconic new GIFs don’t emerge each day and without a social network to stay for, Morphin is at risk of becoming merely a forgotten tool. The app might need TikTok-style challenges like submitting the best personalized GIF to match a prompt or a GIF browsing feed to keep people coming back.
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Morphin isn’t racing to monetize yet, but sees a chance to sell longer premium video scenes à la carte or as an unlimited subscription. Ledoux eventually hopes to unlock new forms of storytelling beyond existing GIFs. There’s also a chance for Morphin to highlight sponsored clips from upcoming movies or TV shows. “In the long-term we’re more interested in the analogy of Lil Miquela and how people are interacting with digital characters,” Ledoux explains, citing a virtual pop star whose developer Brud recently raised at a $125 million valuation.
One of the most exciting things about Morphin is that it will allow people to take the spotlight no matter how they look. Often times certain races, genders and looks are unfairly excluded from starring in today’s most popular media. But Morphin could let the underrepresented take their rightful place as stars of the screen.
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