Paul Yanover has not visited Fandango’s Beverly Hills headquarters since March. While holed up at his home office the past seven months, he’s seen the company’s core business — selling movie tickets— crash to virtually nil.
It’s “certainly not the most fun spot to be in, in the back of 2020,” acknowledges Yanover, the longtime president of NBC-Universal’s Fandango. The group cut back as part of NBCU’s companywide layoffs in August with a “small amount of cost-cutting,” Yanover says.
But the executive remains optimistic that once theaters reopen in a bigger way in 2021, Fandango’s movie-ticketing business will rebound, benefiting from pent-up demand. In the meantime, Fandango has shifted its focus to building up its home-entertainment streaming strategy. The big development here: its mid-pandemic closing of the deal to acquire Vudu, the digital movie and TV service, from Walmart in July. “We literally couldn’t get the deal teams in the same room together,” notes Yanover.
NBCU doesn’t break out financials for Fandango (in which WarnerMedia retains about a 25% stake). But parent company Comcast’s financial filings provide a glimpse into the carnage. For the six months ended June 30, revenue in the NBCU filmed entertainment segment’s “other” category — of which Fandango is a major piece — plummeted 40.8%, from $503 million in 2019 to $298 million this year. Asked whether Fandango’s movie-ticketing sales have dropped to a negligible amount, Yanover says, “You’re in the right neighborhood.”
A silver lining for Fandango is that revenues from Vudu and the FandangoNow transactional VOD platform are up more than 30% year over year in 2020, according to Yanover. That has included the company’s best-selling sales of premium titles like “Bill & Ted Face the Music” and Universal Pictures’ “Trolls World Tour.” The company’s Rotten Tomatoes reviews site has also pivoted due to the dry spell of theatrical releases, expanding its content coverage in streaming and at-home releases.
After COVID hit, “we just powered forward on our strategy to have a broad-based, diversified platform around the discovery and fandom of entertainment,” Yanover says.
Fandango has been readying for the consumer shift to streaming since 2016, when it bought M-Go, the transactional movie and TV digital storefront, from DreamWorks Animation and Technicolor (and rebranded it FandangoNow). Combined, Vudu and FandangoNow represent the third-largest transactional VOD service in the U.S., according to market researcher NPD. Apple’s iTunes and Amazon Video are the two biggest TVOD services.
Vudu brings Fandango a large and loyal audience (Yanover won’t say exactly how big it is), as well as a deep bench of more than 150 engineers and other employees who remain based in Sunnyvale, Calif. The service adds a larger catalog lineup, its free-to-watch ad-supported streaming business and support for hardware devices like Sony’s PlayStation. “We’ve had FandangoNow for a number of years, but it hasn’t been at the same scale we are able to accomplish with Vudu part of this network,” Yanover says.
Together, Vudu and FandangoNow offer more than 150,000 new release and premium event movies, catalog films, 4K Ultra HD titles and next-day TV shows.
Fandango eventually expects to merge Vudu and FandangoNow into a unified offering. “Long term, we don’t intend to have two applications that are largely duplicative in function,” Yanover says, adding, “We feel really strongly about the Vudu brand having a lot of consumer value.”
Fandango’s streaming strategy has never been more critical as it tries to survive the “multiplex massacre,” says Jeff Bock, box office analyst with Exhibitor Relations. At this point, “‘FandangoNow’ stands for ‘now more than ever,” he says. “I’m sure they never suspected it would be their primary moneymaker.”
In a signal of how NBCU sees Fandango’s future, CEO Jeff Shell in August moved Fandango out of the filmed entertainment group into the newly created direct-to-consumer and international group under Matt Strauss, who also oversees Peacock. “It’s great to be part of an organization that talks how we talk,” Yanover says of the change.
As part of the NBCU group that includes Peacock, Yanover says, “We will remain always the neutral marketplace we are — but we will look for those synergistic moments where we get closer to Peacock and other parts of the company.”
During the pandemic, Yanover has tried to raise morale by holding regular all-hands virtual meetings. Fandango also offers online yoga and meditation classes three times weekly. The exec has tried to keep his team focused on the big picture rather than despairing over the studios’ constantly shifting movie-release slate. As he recently told a colleague: “You have to go to keep your eye on the horizon line. Do not look down at the water — because you’re going to get seasick.”
Fandango’s business comprises multiple brands, including Vudu, FandangoNow (purchased in 2016), MovieTickets.com (acquired in 2017), Rotten Tomatoes and Flixster (acquired from Warner Bros. in 2016), the Movieclips YouTube channel (acquired in 2014), and Fandango Rewards.
Overall, Fandango reached 60 million unique visitors per month (per Comscore), has more than 80 million followers on social media and YouTube and has agreements to sell tickets for 33,000 movie-theater screens nationwide. The Fandango app has been downloaded 120 million times, according to the company.
Through the multiple acquisitions over the years, Yanover has been steadily building Fandango into a direct-to-consumer entity that caters to entertainment fans through the entire lifecycle of their consumption: From watching trailers and reading reviews, to buying tickets, and streaming TV shows and movies at home. “We have this full complement of offerings,” he says.
Yanover says there’s strong synergy between Fandango’s transactional VOD and ticketing businesses — well, there was before COVID struck, and he expects the flywheels to start spinning again once theaters reopen on a bigger scale. Per Fandango, 68% of its ticketing customers have purchased or rented movies through TVOD, while 34% of Vudu customers attended a movie theater at least three times in the 90 days prior to COVID.
Regardless of how consumers opt to get their Hollywood fix, Yanover argues, Fandango is well positioned to deliver. But he’s betting people will flock back to cinemas in droves soon enough, once the “unnatural” absence of theatrical runs reverses course.
“I am confident that there is a massive appetite for first-run content. We may see an explosion [of moviegoers],” Yanover says, adding: “I can’t wait to get out of my house.”
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