Sramana: In 2007 you decided to move forward with your plan to disrupt the industry. What were your thoughts?
Tobias Bauckhage: In 2007 the tech industry was back on its feet. Social media was becoming mainstream. We saw a few opportunities. We felt we had a good understanding of how the film industry worked. We knew enough to try to disrupt a bit. One thought was to create an independent distribution label to provide digital distribution for films that were from independent producers. We would accumulate the Internet rights to those movies as well so that we could offer them online. We could also license our catalogue to others.
At the same time we started Moviepilot where the idea was to connect the audience to the studios and producers. There was no backchannel for them to have conversations directly, which are crucial to social marketing. I knew that the movie industry would take four to five years to produce a movie. They would spend $100 million on creating a movie and marketing it, and then they had 48 hours to be successful. The first weekend a movie comes out determines how much success they will have in theater distribution, DVD sales, licensing, and so on. The first weekend defines everything. I don’t know of another industry that has such a crucial entry.
With Moviepilot, we wanted to build a community around movie data. We gave them trailers, artist info, and other things that cinema fans want. On the other hand, we were able to understand how the audiences were building up. We got feedback from different organizations before the movie even came out. We wanted to create a place where we could categorize people and what they were excited about. We were highly influenced by companies that used recommendation engines so that we could make recommendations to users. That was how we started out in 2007.
We had a massive amount of space to grow and freedom to add additional features. We were able to create a personalized experience. We were only doing this in Germany for German offerings. We knew that business area very well. There were not a lot of startups in Germany at that time that would have gone after a global market.
Sramana: What was the business model of Moviepilot?
Tobias Bauckhage: Our community started with movie nerds. They provided great reviews and ratings. That allowed us to build a great recommendation engine. That created our brand and engagement on the site. Our initial users averaged 200 reviews a piece. Users were not paying for the recommendation service.
When it came time to create a business, we did so by licensing our intelligence, generally through a branded licensing arrangement. We licensed our recommendation technology to smaller players in the market. That was a high margin business. We had subscription deals and we had transaction deals in play.
Sramana: How many movies get produced in Germany?
Tobias Bauckhage: About 100 movies a year. It is the fifth biggest market in the world. We have the same US studios as well. Overall about 30% of the movies are German films and German content. Comedy is the biggest genre.