Indie powerhouse

“Subscription is becoming the dominant form of content consumption, the market is growing really fast and we are growing with it, in fact, we’re growing faster than the market,” says Efe Cakarel, founder of niche cinephile streaming service MUBI.

The enthusiastic Turkish entrepreneur, whose passion for film is palpable as he talks through every aspect of his streaming service, has every reason to be confident.

His London-based company is now the fourth largest SVoD player in the UK, and debt-adverse Cakarel has managed to get there without burning through billions on content and licensing deals.

At the beginning of 2018 the 11-year old company, which started out at the same time as Netflix, finally broke even, recording a 45% hike in revenue in last year with forecasts of an 80% rise this year.

“We’re now in profit – which is huge in this business,” says the CEO.

“Netfix is burning $2bn a year right now. It had subtle advantages that allowed them to access the capital markets in a way we can’t.

“They are also pursuing a very risky but very solid growth strategy. I’m a big fan of Netflix but at the same time more growth is going to come from independent players like us over the next six months,” he adds.

The site has a constantly refreshed, highly curated platform offering a select 30 art house films per month. It now has over 100,000 subscribers and plenty of traction to back up Carkarel’s prediction.

High profile users include the Coen brothers and Nicolas Winding Refn, an investor in the company, while filmmaker Paul Thomas Anderson allowed the service exclusive digital rights to one of his features following its theatrical release.

Next year also sees the service - which is available in 11 languages - expand into India, thanks to a partnership with Times Bridge, the investment arm of The Times group.

“India is a huge market and in such early stages of development. It’s also an audience that loves film so there are many reasons to be there – and to have the backing of such as strong player is key,” says Cakarel.

Multiple players
But as the SVod market grows in many territories, so does the competition - it’s easier and more cost effective for rivals to launch niche-streaming services – either on their own platforms or via Amazon Channels.

Cakarel however argues that there’s room in the market for more than one specialised service as viewers start to ditch their pay-TV packages.

“In the US, the percentage of internet users is 67% which has eclipsed those that had cable in their homes (61%). That’s the tipping point for me.”

He adds that among millennials that gap is wider: 77% have access to streaming services while 57% have access to pay TV channels.

“This demonstrates a fundamental shift in how we access content,” he says.

In this context, the bigger the market share Amazon and Netflix have the more opportunities there are for MUBI.

“I’m happy that Netflix and Amazon are getting bigger. If Netflix is in 80% of households then they won’t be able to please everyone. If you’re interested in films from Hungary, then one package isn’t going to satisfy you. So we’re already seeing people pick up multiple SVoD services.”

He points to research this year which revealed that more than half of US households subscribe to at least two SVoD services; by 2020 this is expected to climb to 62% - with 19% subscribing to three or more services.

The real challenges that MUBI faces, Cakarel adds, are the same as those which all content providers face and are focused on content and distribution.

“Number one is content. This is an incredibly capital-intensive business. You could easily spend hundreds of millions of Euros like CanalPlay did, with the Canal Plus brand behind it, and still go out of business. So you need to get the content right.”

In order to scale up MUBI realised that this content not only needed to fit with its brand, but it also needed to offer exclusive access to it. Three years ago, the specialised service began to invest in content at an earlier stage. This included picking up the UK rights to films in competition at festivals and releasing a number of titles theatrically followed by a launch on MUBI’s streaming service.

“It’s a perfect partnership – someone who understands the production and someone who understands distribution - we get together and finance the whole thing ourselves.”

On one hand Cakarel is cautious: “if you get it wrong you could be losing a lot of money,” but on the other it has not stopped him from wanting to move the company even further up the content value chain.

The platform is about to embark on a new role as producer, by investing in two co-productions with Martin Scorsese’s production company Sikelia and Call Me by Your Name producer, RT Features. Both features are by first time filmmakers: Danielle Lessovitz’s Port Authority and Antoneta Alamat Kusijanovic’s Murina.

“This is our House of Cards moment,” he says. “Call Me by Your Name was made for $4m and grossed $40m. If we can make these kinds of films available exclusively to our platform, we could really move the needle.”

Rather than having creative input into the films themselves, Cakarel views MUBI’s role as that of a marketer and a distributor.

“It’s a perfect partnership – someone who understands the production and someone who understands distribution - we get together and finance the whole thing ourselves.”

Distribution feeds into MUBI’s second challenge. “How do you build your brand and get people to watch your content without spending hundreds of millions of dollars?” he points out.

“The way most people are going to consume movies is either in cinemas or via subscription-based streaming services. Everything else in between is going to disappear”

To some extent MUBI has managed to achieve this organically, creating a community of film enthusiasts, which is rapidly developing into a robust social media platform for independent cinema where users watch, share and discuss films. However, this summer it launched its first major ad campaign in the UK and the US with a series of subway posters.

Another major initiative to launch this summer was a new cinema plan, MUBI Go, which rewards subscribers with free cinema access to one film selected by MUBI per month.

It’s the culmination of a year’s work, approaching all the major distributors and small independent cinema networks and partnering with them.

Cakarel is keen to distance the initiative from the ailing ticketing start up Movie Pass, which allowed subscribers pay a month fee to see an unlimited number of movies in most cinemas in the US.

“We don’t believe that Movie Pass is sustainable model - it doesn’t work for $9.99 a month while paying full price to the exhibitors for each ticket.

“But what we’re really good at is curating and programming so our members show up with their MUBI app, show their QR code and go and watch our selected film at any cinema in the UK.”

MUBI is also retaining its presence at film festivals, most recently in a rare partnership with the Cannes Film Festival as its exclusive online partner which saw the platform launch a retrospective of films that played during this year’s festival in May.

“Merging on and offline experiences now remains key for us,” he says. “It creates benefits for our members and we think the way most people are going to consume movies is either in cinemas or via subscription-based streaming services. Everything else in between is going to disappear.”