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Building a Video Business: The Film Detective— A Passion for Classic Films Author: Colin Dixon, Founder and Chief Analyst, nScreenMedia | Date: February 2018 How do you take an idea for a video service and turn it into an engaging experience and vibrant business? In this series of short papers, we talk to service owners and their video platform providers to find out how a passion for the video content is translated into the reality of the technological environment. Each paper tells the story of the service, discusses the challenges encountered in building it, and reveals the problem solutions that paved the way to success. This paper is made possible by the generous contribution of: www.Zype.com Story o f t he S ervice The Film Detective is a leader in film restoration and distribution, with thousands of hours of classic film and television. It has created its digital archive by restoring the movies from their original media and converting them to pristine digital form. Initially, this home video distribution company successfully sold DVDs to mass retailers. In the past ten years, however, that market has declined dramatically. In 2011, US consumers spent $14 billion to purchase and rent DVDs and Blu-ray disks. By 2017 the market had declined 51%, to $6.8 billion. Over the same period, the market for digital movies and shows has increased 240%, from $4 billion to $13.7 billion. Initially a successful classic film DVD distributor, The Film Detective quickly adjusted to the market’s shift toward online video distribution. This dramatic decline in physical media revenues forced the company to enter the online market for video distribution earlier than the Hollywood studios. However, the timing coincided with an emerging need for new services, such as Netflix and Hulu. The emerging SVOD segment was desperate for affordable quality content. According to Phillip Hopkins, CEO of The Film Detective: “Most of the studios would not participate because there were no revenue guarantees that they were comfortable with.” The Film Detective was in a perfect position to test the waters with over-the-top (OTT) video because the entire content library was already digitized. The company helped curate and manage content for some of the new SVOD services. Also, the company launched the first Hulu channel in 2008. In 2015, The Film Detective was ready to launch an SVOD service of its own. After talking with Zype at a trade show in early 2015, Mr. Hopkins and his team began to plan the service. From the very beginning, the team wanted to stay true to the archive roots of the company. That meant creating a carefully curated service that mined the best of the extensive archive. Building a Video Business: The Film Detective—A Passion for Classic Films | Page 2 Two Service Launch Challenges Preparing to launch a new service is always a challenging time for any video rights holder. Though The Film Detective had a head start because the content was already digitized, such a large library brought with it a special set of challenges. Metadata Quality According to Mr. Hopkins, ensuring that the video assets have If you don’t have good a good set of metadata1 is critical to the service’s success: metadata, people won’t be “You live and die by how good your metadata is. able to find your video. If you don’t get accurate, good, compelling information that’s a huge limitation.” Simply put, if you do not have good metadata, people will not be able to find the video. The Film Detective developed detailed metadata over the many years of the service. If a video provider has not made the upfront investment of building rich metadata, it is well worth the effort later on. Choice of Devices to Support Another issue was deciding which devices to support for the Because of the multitude of initial service. Ideally, a provider would be able to field a set of apps that cover every device. Unfortunately, that is just not platforms in use, it’s possible. For example, consider the challenges in reaching connected televisions. impossible for a provider to According to comScore, the most popular connected TV field a set of apps that cover platforms are Roku (16% penetration of US Wi-Fi households), Amazon Fire TV (14%), Chromecast (8%), and Apple TV every device. (6%).2 Also, 30% have a smart TV, and 28% a PlayStation or Xbox.3 These six primary TV devices have completely different app development platforms. That means the service provider must have at least six different versions of the app. Building a Video Business: The Film Detective—A Passion for Classic Films | Page 3 If the service provider decides to support the 30% of Wi-Fi homes that use a smart TV, that could add a lot more app versions. Since each top television manufacturer has a completely different app development environment, that could easily double or triple the number of apps required. Simply delivering on connected TVs is not enough. The service provider will need mobile and PC versions of the app, and this could double the number of apps required again. Delivering a video app across all the screens is even more complicated than that. Developers are constantly upgrading and improving the app platforms running on their devices. For example, there are six major versions of Android, the most popular mobile operating system. The differences between each version are significant, and apps will need to take account of them. The same is true for every connected device app platform in the market. This constant evolution of the underlying app platforms has two important ramifications for the service provider. Firstly, multiple versions of the Android app may be required for each of the major versions of the operating system (OS) in the market. Secondly, once an app is delivered on a platform, it will need to be revised each time there is another major release of the OS. As you can see, picking the initial set of apps is critical. Mr. Hopkins looked at analytical data on platform use from some bigger partners. That guided him to focus on the connected TV and to pick the top three streaming media players at that time (Apple TV, Roku, Fire TV) as the initial release platforms. Building a Video Business: The Film Detective—A Passion for Classic Films | Page 4 Building and Keeping Subscribers Having been immersed in the streaming video market from its birth, Mr. Hopkins has had plenty of time to observe some of the differences between the successes and failures. He says it is all down to flexibility and the ability to focus on the audience: “The services that are successful are the ones that are very nimble, and they are able to communicate directly with an audience that cares about content.” The Film Detective has spent an extraordinary amount of time cultivating a large following on social platforms like Facebook. The service now has 40,000 social followers and is leveraging those relationships in two ways. 1. Leading and encouraging the conversation around classic films and shows helps make The Film Detective central to the community that is its most likely audience. The conversation is a constant reminder to this large group that they need to subscribe to the service. 2. Listening to the social conversation helps inform The Film Detective team on how to make the service more engaging for existing subscribers. The team uses this information and the followers’ love for the content to program the service like a television network. Programming in this way keeps the content constantly rotating, so there is always something new for existing subscribers to explore when they come back. According to Mr. Hopkins, the ability to keep the experience fresh and to be able to market directly to the classic film community is critical to the success of The Film Detective: “There’s premium new content that Hollywood produces but then, in the world of everything else, you have to be really focused on your specific niche, but you also have to have the ability to market and promote.” The team leverages new releases to reach out to the community through social media to make the release date an event. An event creates a sense of urgency among the ranks of the interested but not yet subscribed. It also reinforces the value of the service to current customers. Building a Video Business: The Film Detective—A Passion for Classic Films | Page 5 Driving Future Growth Growing the number of subscribers to The Film Detective is the primary concern of Mr. Hopkins. His service provides a 14-day trial period before the $3.99-a-month subscription fee starts. Because that low pay wall still deters many online video viewers, he is also looking to add a free-ad-supported tier. Free-ad-supported viewing has many benefits for viewers and OTT service providers alike. Perhaps the most important, however, could be its impact on subscriber growth. Arlen Marmel, VP of Marketing and Distribution at Ellation, runs an aggregation service called VRV, focused on the fandom community. It provides both free and premium tiers of viewing. He looks at the free tier this way: “Free viewing is our funnel. We have multiple users watching for free, and that’s great because, from a business perspective, it is a low to no cost source of customer acquisition.”4 References 1 Metadata is the information that describes what the video is about, explains how it may be used, and provides any other pertinent details.

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