Interview: Rakuten TV co-founder Josep Mitjà on building a new place to buy and rent movies
James R | On 21, Mar 2018
Inside VOD: We take you behind the scenes of the video on-demand industry by interviewing key figures in the streaming world.
This Sunday saw the 22nd Empire Awards take place in London, with Rakuten TV sponsoring four of the biggest awards on the night. It may be the first time that film fans have encountered the streaming website, but it has been a growing presence in UK living rooms for several years.
With the marketplace for buying and renting films online increasingly crowded, we speak to Co-founder and Chief Operating Officer Josep Mitjà to talk the importance of brand awareness, the shift towards closing the theatrical window in Hollywood and how they’re competing for viewer attention.
We catch up with Josep as he’s recovering from the evening’s celebrations.
“It was great,” he enthuses. “The people at Empire did a great job. And on a personal front, to be able to see the stars up close is always amazing. We help bring movies to the homes of the consumers, so to be able to have the opportunity to meet with the people who make them is really cool. And on the business side, our slogan is “Your Cinema at Home”, so the idea is that we deliver the cinema experience in the home of the users, and, of course, being associated with a brand like Empire, it makes a lot of sense for us.”
Branding is vital for any VOD service to stand out, with every streaming service not only competing with rivals, but everything else on the Internet threatening to steal users’ attention. Rakuten TV’s sponsorship, which it says may be extended for multiple years, is the first time in eight years the Empire Awards have been associated with a brand other than Jameson Irish Whiskey, while Rakuten also recently became the sponsor of FC Barcelona – the latter echoing the strategy employed by property website Zoopla, whose sponsorship of West Bromwich Albion helped it to become a household name.
Originating in Spain, Rakuten TV wasn’t always known by that brand: it began life as Wuaki.tv back in 2009. In 2012, though, the Japanese online giant came knocking, and Wuaki.tv joined Rakuten.
“This is a business where scale is really important.”
As a founder of the company, was that a big step for Josep to take?
“Being part of the Rakuten family was very important,” he explains. “We started the business in 2009, 2010, and at that time, there were a few independent players like us, like blinkbox in the UK. In general, there has been a huge consolidation, because this is a business where scale is really important. Being part of Rakuten, which, by the way, is a Japanese company, so it has very a long-term strategy, allows us to really build the business in a proper manner.”
The resources of a larger company combined with a chance to harness a wider brand’s clout proved just the ticket for Rakuten’s plans for expansion.
“Rakuten had already acquired several business outside of Japan, including Kobo, the eBook business, and each of us were trading under different brands. This is very expensive, so at the end, we decided to inter-align all our brands to a common goal.”
In July 2017, when the sponsorship with FC Barcelona began, Wuaki.tv doubled down on its parent company’s name, officially relaunching as Rakuten TV. Today, it has over 4 million users across Europe and operates in 12 countries, including France, Germany, Italy, Austria, Belgium, the Netherlands and Portugal.
That growth has been fuelled, in part, by a narrowing focus from the VOD company: when Rakuten TV first launched in the UK, it operated both a subscription and a buying and renting arm. That, however, proved too costly to maintain, with rights snapped up by such rivals as Netflix and Amazon Prime Video.
“We were able to acquire a good number of users, but it was just expensive to keep that position,” says Josep. “It’s trying to find something that works well with consumers and is sutainable from a financial point of view. ”
In the transactional VOD sector, though, things are just as tough, with giants such as Amazon and Apple already owning a significant share of the market. Sky Store, too, has capitalised on the pay-TV’s sizeable audience of existing customers to become a major purchase and rental player.
Scaling up rapidly, then, is just as important. That’s true of content: Rakuten TV has signed deals with all the major distributors to build its library. It has also placed an emphasis on securing 4K copies of films where possible. But just as vital is physical presence: you can have all the Ultra HD movies you want, but people need a way to see them.
“We are focusing a lot on 4K, so we have the largest 4K catalogue in Smart TVs.”
In recent years, Rakuten TV has launched on Roku boxes and Google Chromecast, as well as iOS and Android devices. It is currently absent from Amazon Fire TV, although Josep says they are “looking into it” and “always revising” their decisions on which devices to support. The streaming service’s focus, rather, has been getting ahead of the game by jumping straight onto televisions.
“Our real focus is Smart TVs,” he says. “We have a very good, long-standing relationship with all Tier 1 manufacturers. We are focusing a lot on 4K, so we have the largest 4K catalogue in Smart TVs – I’m talking about movies, not documentaries, etc.. When we think about ‘Cinema at Home’, what we want is that people can find basically any new release in a simple manner, with an easy interface, ensuring there are subtitles, dubs, original versions, and these type of things people want, plus the best possible quality for home viewing.”
Pricing is another factor that can make or break a transactional VOD platform. In an age where people increasingly enjoy the affordability and convenience of a monthly subscription, finding the sweet spot where people are willing to pay a one-off additional fee is no easy feat.
Josep is keenly aware of the fine line between a transaction and a missed opportunity: “It’s not that we have hard data, but more or less, our research indicates that psychological pricing is below £10. To own a movie, people don’t want to pay more than 3 times the price of renting it. In general, people have this simple rule that they are not going to watch a movie more than 3 times, so if an acquisition is 3 times more expensive than the rental, the intent to purchase decreases.”
“We believe that with long windows, the only winner is piracy.”
The other threat, of course, is the ever-present danger of piracy. Debates have long been going on in Hollywood about how to bring movies out on digital platforms much faster than the current rate, shortening the traditional window that separates theatrical and home entertainment.
“We believe that with long windows, the only winner is piracy,” says Josep. “I think that people want to go to cinemas because they go out and it is an event, but they also want to watch movies at home. I don’t think these are necessarily cannibalising each other. And from a studio point of view, they make a big investment in promoting the content when it’s on in theatres, but then this fades out as time passes. Four months later, most of this investment is worthless, whereas if you shorten the window, you can keep theatres happy and at the same time, consumers can enjoy the content sooner and they have a real place to pay for it. Otherwise, like I say, piracy.”
The difficulty comes in trying to please everyone in the industry, as cinemas fear that shorter windows will lead to lower box office takings. A premium VOD window is the likely middle-ground between a simultaneous day-and-date approach and the old-school window, but should distributors give exhibitors a cut of the online profits? How much more should the online price be?
“I think that having premium windows is something that make sense,” agrees Josep. “Imagine that prices are double the current prices, it’s still very affordable – I believe that in these premium windows, people are ok to pay £2 or £3 pounds more for access to content. And as much as we want to have the lowest possble price, we understand that it’s not always possible. What we want is to bring cinema to the home of the people, and do it in the most affordable manner.”
How soon does Rakuten TV expect an agreement to finally be reached?
“What everyone is telling is when we are in Hollywood is that it’s going to happen soon, and it’s going to happen sooner not later,” he replies. “We’ve been hearing this song for a long time! But we believe it will happen because it makes sense. You will see there are more and more experiments in this direction, so we’re looking at what’s coming and we’ll be able to support it.”
Rakuten TV, though, is in no rush, keeping the focus on the immediate day-to-day priority of keeping users happy.
“This is a marathon, no?” he adds. “So it’s about doing your job well on a daily business, and people building the routine of staying with you. We measure on a weekly basis customer satisfaction and we have very good satisfaction levels. This, at the end, is what drives our work and also our growth.”
Almost 10 years after launching, Rakuten TV is now the largest platform in Europe for the purchase and rental of streaming movies on Smart TVs. The marathon continues.
For more on Rakuten TV, visit http://uk.rakuten.tv