business news in context, analysis with attitude

by Kevin Coupe

Some stories have emerged from the entertainment industry this week that I think offer some lessons for retailers…

• The New York Times reported that AMC Theaters, the nation's second-largest chain, "has agreed to a pilot partnership with MoviePass, a three-year-old company focused on letting people attend a movie a day for one monthly fee … In January, AMC theaters in Boston and Denver will begin working in concert with MoviePass to offer monthly subscription packages for $45 and $35. More cities will be added later. "

Essentially, this is the Netflix model. AMC is betting that by offering a monthly MoviePass, it can encourage young people - who have been staying away from traditional theaters - to go to the movies rather than embrace alternative entertainment options.

I've always been a big fan of the subscription model. I don't just use it with Netflix, but also with Amazon's Subscribe & Save, for Starbucks coffee, for my barber (pay one monthly fee, get my hair cut as often as I like), and even for my underwear (I get a fresh supply once a year). And I think that - to use a word I've been employing a lot in recent months - what AMC is trying to do is create a kind of ecosystem that will embrace and nurture and even nourish its customers.

I think they'll have to be careful. To a great extent, theaters are at the mercy of the movie studios. If movies are good, they do better than when movies are crappy. But AMC is taking a path that I think a lot of businesses would do well to consider…

• The Wall Street Journal reports that "NBC is launching a live stream of its broadcast network, part of a broader effort at parent NBCUniversal to make more of its content available online via computers and mobile devices." To access the online stream, users will have to demonstrate that they already have a cable subscription (which is unlike what CBS and HBO is planning).

But what this indicates is that a traditional business model is acknowledging that the next generation of consumers is not going to source content in the same way as previous generations; they have no loyalty to traditional models, and want things when they want them , how they want them, and where they want them. Savvy businesses - whether in the network TV business or in retailing - need to look beyond traditional boundaries and models and figure out how and where to be relevant.

• Finally, there is the story about the hacking of Sony's internal website, the exposure of millions of documents (including inflammatory emails, budgets, and film scrips) and the decision to cancel the release of The Interview, the comedy about the attempted assassination of North Korean leader Kim Jong-un that seems to have prompted the hacking, not to mention threats of violence against theaters that show it.

This is too complex to go into here (and I'll probably have more to say about it next month, once things have calmed down and we know more about the source of the threats). But I do have some thoughts…

The hacking tells us that anyone and everyone is vulnerable, and companies need to be very careful about security. In addition, executives need to be vigilant about what they say in emails, because it is entirely possible that the messages could be exposed to the light of day.

As for The Interview, my guess is that whoever is behind the hacking has made a tactical error. Most of the early reviews for the film have been negative, even scathing, and they've turned what might have been a forgettable movie into a cause. (Good lesson: Choose your battles wisely.)

I must admit to being conflicted about the decision to cancel the film's release. On the one hand, I hate the idea that these hackers have managed to successfully disrupt how a major business operates, and think that Sony should not have knuckled under. But, there were serious threats being made, and I cannot imagine any responsible business wanting to do something that would put employees and customers in danger. Just from a business point of view, I'm not sure the studio or the theaters had much choice … and I hate that.

But again, there's a business lesson. Because I suspect that the hacking community has just been enabled. It is hard to know what the next target will be. And it is not hard to imagine that if hackers/terrorists are willing to go after movie studios, they'll also be willing to go after any major public business.

All Eye-Openers, I think.
KC's View: