Succeeding in the Streaming Era with Efe Cakarel (MUBI)

Thank you that was good All right welcome fa Thank you how are you doing excellent Thanks good great uh so you've got movie Which is probably one of the oldest Surviving uh streaming media Services Yeah we've been around for 12 years yes Yeah which is amazing that in itself is A feat uh it's been it's been a rocky Road I would say from from there to here For the whole industry yeah uh obviously Much changed Um but do you want to just kind of talk A little bit about uh you know what Makes you unique and how how you serve Your customers now that's sort of Different from everybody else yes sure So Um streaming took off very significantly Over the past couple of years you know 10 years ago the consumer experience When you wanted to watch a movie was you Get in your car and drive down to the Nearest Blockbuster yeah right that was Just 10 years ago Um yeah well and um And of course in a you know in in a World where uh sort of Netflix really Won the game Um in order to survive in a world where Netflix exists and and then now Amazon And apple and Disney and so on and so Forth you need um a very clear Differentiation right and our

Differentiation uh is a young uh small Independent startup is um We are a curated platform so we hand Pick every single film that we show Right evacuation is sort of like I mean Netflix uses creation a lot right they Curate your your home page or your feed So the word is used a lot yes and no I Mean they they rely obviously a lot on Algorithms which when it comes to film Doesn't quite work Um I mean look I can Based on metadata I can identify for Example that you like Eastern European Films from 80s with murder and sex in it Right and I I can give you two films With that category and one you would Like and the other one you would Completely hate right um so algorithms Is very difficult to get unlike music Which works uh it doesn't work with film So that's why you're really frustrated And uh with this incredible amount of Choice of content that you're Overwhelmed with and and you often have A very bad experience in searching Finding something you want to watch Right Um so what movie is I mean our model is We only show one film a day each film Stays for 30 days so there is always 30 Films you can watch right every day one

Film comes one film goes out so it's a Constantly rotating library of amazing 30 Films it's like the your favorite Video store the steps fix right you go There you don't care if they have Thousands of DVDs you know there is a Knowledgeable girl behind the counter You go and you ask you're in the mood For I don't know an action a romantic Comedy She picks a DVD from the staff's picks You've never heard about the movie often You trust you go home you watch it You're delighted right and you go back To the same goal I mean movie is that Girl behind the counter and that's kind Of like uh so I think that's an Interesting thing because we mentioned Blockbuster like that was a part of what They offered right like to varying Degrees of success depending on who's Working I guess but it wasn't that part Of the the experience that people sort Of rebelled against when they turned to Streaming services right it was like That's a convenience feature yeah and That went away along with the Distribution method and everything else But you've found a way to kind of like Bring that back and reintroduce yeah Well it's working Um How well is it working Uh you know quite a long journey right I

Mean we've been we've been around for 12 Years the first seven eight years was Very challenging You know we were trying to become a Netflix or independent film right at Some point we realized that that's too Niche of a market to really really scale Okay so movie is about great Cinema and Great Cinema is um uh first of all we Only focus on movies whereas the rest of The ecosystem shifted heavily towards TV Series which is a actually a much bigger Business Um We we we focus on we focus on movies and It's it's great Cinema and great Cinema Is also studio so we started to also Show much bigger films I don't know if You've seen Joker recently but that is a Film as big as it gets and it's pure Cinema right and belongs to movie so we Actually started to appeal to a much Much wider audience over time and yes Over the past three four years things Have been I've been doing really well so I have a sort of a side question but you Mentioned the Joker cinema right so just I'm curious what do you think of uh Scorsese's comments on kind of Marvel And that not being Cinema yeah I have a Lot of respect for us Scorsese and I Completely agree with him that what Marvel produces is Um

Pure entertainment and um and it's not Cinema as we would describe it and That's what movie focuses on so you Manage to see any of the Thor movies or Whatever no like you will never see Transformers 4 on movie because that was A bad film bumblebee though that one was Kind of but to see like this is I think Important and this is the key Differentiator in a world where no one Stands for anything yeah We stand for something we say this is a Good film right I think that's really Refreshing and that's why we were able To uh really survive and grow next to These guys I mean I'll give you any give You a give you an anecdotal example look We Raised only 25 million dollars right That's that's like two episodes of the Crown it's not even the season no yeah I Think it's most rounds we get are that Size the earlier rounds right like That's just one round yeah and like and Netflix is going to span this year 13 Billion dollars on content and they're Gonna burn Three and a half billion dollars like Burn as in cash coming in or is Cash Going out which is a key metric Um anyway so this is a very difficult Business to crack uh as an independent Because all these other guys who really Managed to survive and grow their legacy

Business was doing something else right Like Netflix was an incredibly Successful DVD rental business When they got into this they already had More than 10 million subscribers who Were paying them 14.99 a month on average yeah and they Try to take them off the balance sheet And they realized no no we got to put Them back in because it makes too much Of a difference yeah and and they were They were already generating a few Hundred million dollars in free cash Flow Um Amazon makes their business doing Something else Apple This is something else Disney makes Marvel movies so all these guys could Afford to put billions of dollars in Play uh so as a young startup this is a Very difficult business to crack so That's why you've seen all these Streaming companies and VOD companies Over time coming and um and going yeah And only a very few really survived so I Mean you've talked a bit about how you Do it but give us some real specific Advice about how you actually manage to Make it both sustainable and still Operate in that same field where they're Spending like just how did you ran and Spend it what do you how do you allocate Where you put money so if if you think About our model of showing only one film

A day Um To five movies a year right I don't need Tens of thousands of hours of content so That's one two I'm licensing only 30 day Windows instead of the whole year so Instead of spending say in a place like Germany 200 million dollars a year on Having a Netflix equivalent Library I Need to spend two three million dollars A year and I can show you one great film After another right Um so that business you know business Model Advantage is key Um we are incredibly efficient with that We spend right now About 18 dollars Per subscriber on content in a given Year Netflix spends more than 90 okay Um even at their scale of 150 million Subscribers okay so that's one two Um we are a small very product Engineering driven team and we've built Everything in-house and our Infrastructure uh cost is incredibly low We even built our own CDN I mean who Does that except Netflix and Google Um so our infrastructure cost is about Four dollars per subscriber per year Whereas Netflix is about 10. Um anyway so we are a very lean machine And our gross margin is 64 percent in This business that's insane yes I mean Netflix is up is less than 20 Spotify is

Less than 10 right so that allows us to Uh to really grow a very healthy Meaningful business and today mubi is Cash flow positive wow yeah that is So when your cash flow positive it's Amazing because we are uh the revenue Growth is over the past three years We've been growing our Revenue uh more Than 70 percent year on year every year And it's like tens of millions of Dollars in Revenue so it's not like a Few hundred thousand and is that all Coming from it's all coming from Subscribers so when you have a business That is growing and last year we more Than 100 growth when you have a business That is growing hundred percent Plus And your cash flow positive because you Could raise a whole bunch of money and Burn a lot of money to grow a Top Line Like that but to grow like this Profitably uh is is really incredible so When that happens Um Something really incredible happens in An organization when you're cash flow Positive and you're growing fast you you Really start thinking long term Um you make Um because when you are burning money And you have a run way of six months 12 Months whatever like you have to raise Capital in order so you make sub-optimal Decisions uh on

Um uh on on Capital allocation and also Operations because you need you need to Survive you need to show your investors Certain metrics that they care about so That potentially they could continue to Back you raise money and so Um whereas when you don't need to ever Raise any money Um and you don't have a run rate you you Know you first of all you're not Spending your time raising money you're Spending all that time Um on growing your business and you make Longer term decisions and you are Planning things and it's just been an Incredible incredible stage when that Happened for us yeah so let's talk about Some of those things you are investing In so like International expansion is One that yeah you've done you've opened Up new markets this year yeah uh Distribution and production too yeah Yeah those are all very similar things Like a lot of the big players do those Same things yeah so let's let's talk About them I mean this our core Market We are based headquartered in London uh UK is our biggest Market in UK we are The fourth biggest uh streaming service Right so there's Netflix Amazon sky and Then us Um and we are now look we looked at us As a an incredible opportunity for us in U.S no one knows about us which is a a

Huge opportunity for us right we could Be 10 times bigger just in U.S by doing What we do in uh in in UK and Germany And France also very organically with Zero Dollars that is spent on anything Marketing people operations nothing it's Just been growing nicely So this year we made a conscious Decision to actually start Geographically expanding we have looked At Asia we launched in Southeast Asia Starting in Malaysia in June and we just Launched in India about two weeks ago I Think India is one of the most Incredible Uh streaming markets in the world and it Will be over the next 10 years it will Take us a couple of years to figure that Out but it will be quite incredible So you can afford to think in those Timelines yes I can I mean movie is Going to be 100 years right so you can you can Really um I mean at least that's what we Think as a team so you know I I make 10-year decisions Um like that I mean India over the next Decade is going to be a really Incredible place And I can also afford to burn money in Growing our business in India right Right right so I can actually you know Significantly invest in that opportunity

So that's important geographically Expand continue to build your brand Um and um and coming back to what you Said about distribution and production What moves the needle in streaming Business Is having new films Exclusively available on your platform In an earlier window So if I had the Irishman on movie right Now That's when that's when you take off Having even the Irish men Three years from now on your platform so These are kind of movies that we have I Mean you know we are showing all the all The best films after they are theatrical And pay TV window on movie it makes a Difference but nothing like when you Have them right after theatrical or or Day and date In order to do that you either produce The whole film which we can't afford Right now uh the Irishman was 150 Million dollars yeah okay Um or Independently produced films they Premiere in places like can film Festival Sundance Berlin Toronto you Watch these films premiere uh and if you Think it's going to do well in your Country you buy all rights for your Country so the new film by Pedro madawar Would be in Ken and it was pain and

Glory and Sony bought it in U.S been in Italy back in France Hopscotch in Australia Mongrel in Canada and so on And so forth and we started to buy films Like that for UK so we built a Distribution arm and we are releasing Films theatrically and then they come Exclusively on movie yeah and is that is The theatrical is that significant to Your business when you make those Theatrical releases or is that just sort Of part of a deal it is it is it is very Important that we have to build those Capabilities because that's the only way That I could ensure that I can show a Film exclusively on movie in an earlier Window right Um and we have a very significantly Growing distribution arm of the business In UK and U.S and we are very friendly To Cinemas like we actually Want these films to be seen on the big Screen yeah yeah we think it's very Important is it theatrical as a very Important part of the whole promotion And exposure of the film before they Come to move and also in the mind of the Consumer If a film does really successful Theatrically and comes on to movie it's Almost like it's more premium if I just Put it State on movie was there Something wrong with this film you're Gonna have that qualification first and

But then but eventually we have to be Producing right in order to create uh a Meaningful differentiation You have to be producing your own Content so we started to actually Produce this year our one production we Just got the call from uh Sundance as You might know so our film is selected To to compete in Sundance which is Insane in this 3 000 films apply they Chose 16 films and our film is one of Them So I think over the next couple of years Um we are going to be playing more and More in this field and eventually We want to be producing uh something Like the Irishman and but how does that Affect your cost mechanics does it Really because it seems like you are you You've achieved you know uh cash flow Positive yeah oh shoot so does it really Throw a wrench into that when you start Looking at it because the the value that These films can create for movie is very Significant I mean look And it's existential I'll give you an Example one of my favorite films last Year was the favorite This film I will never be able to show on movie no Matter how much money I put on the table Because Fox who produced this film who's Now owned by Disney is not going to License this film to anyone so I won't

Be able to show Netflix also no matter How much money they put yes and if I Want to show your goslatimos who's the Director jorgos latimus's next film on Mubi I have to produce it That film was about 20 million dollars Budget Um I can do the math on the incremental Number of subscribers that that could Bring and how if I had the two 20 Million dollars and I could finance that Film I should right I mean because if You if you look at our unit economics People pay us 11 dollars a month that's our price Point 9.99 Euros 999 pounds you know 10.99 dollars in U.S and they stay on Average 14 months on movie at the moment Okay that's your attention that's our Retention which is really healthy it's About the same with Spotify which is Really cool because Spotify is like the Gold standard in premium subscription no One cancels their premium subscription Uh on Spotify Um and my gross margin is 64 you do the Math we have 90 to 100 dollars Uh lifetime value on the customer okay And um And it costs us at the moment about Twenty dollars to acquire our customers That's our customer acquisition cost Yeah yeah it's incredibly healthy uh Healthy numbers so if I had content like

That the unit economics Works in such a Way that I could really scale this Business but you can't do it also with One you need to do it with a couple so You need to really deploy about 100 Million dollars a year at our stage on On content but we are getting to a stage Where we will be able to go raise that Kind of capital over the next 12 to 18 Months Um and we can see a very clear path to How we can generate a very significant Return on that investment which I'm Obsessed about like you know if you it's Clear I have I mean return on invested Capital is what we we look at here the Number one rule of business is to stay In business yeah yeah yeah it's not Growth uh it's not staying forward until You acquired it yeah without growth you Want people to raise capital I totally Get it uh but you need to be in business First before you do anything so every Decision that we make from Paid Acquisition to a partnership to Launching in a new territory to a film That we green light Um what is the return on this on this uh You know invested Capital that's great Yeah I think we're out of time but this Is that's fantastic discussion I think Great advice for all the entrepreneurs Here so thank you very much thank you Very much thank you


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