The biggest challenge for any SVOD service is being found by the audience. That presents an opportunity for a service with deep penetration in a defined market segment to aggregate complimentary services and resell them. That’s what Amazon Streaming Partners Program is all about. Ellation is taking the same approach with its new SVOD aggregation service.
Ellation announced it will launch a new SVOD aggregation platform targeting the fandom community, called VRV (pronounced Verve,) later this year. The company is well qualified to super-serve this audience, as its Crunchyroll anime service already reaches 750,000 subscribers.
VRV’s anchor tenant will be Crunchyroll, and will be complimented by partner services Rooster Teeth, Seeso, Nerdist Alpha, and Geek & Sundry Alpha. In addition, Frederator’s premium Cartoon Hangover offering will be exclusively available through VRV. The partners will bring many of their premium videos with them including Berserk, Cyanide & Happiness, Red vs. Blue, RWBY, and Bravest Warriors, and all new content as it becomes available.
In some ways, VRV will emulate the approach taken by Amazon with its Streaming Partners Program. For example, VRV will handle billing for the partner services, and will provide a unified content environment as well as a dedicated experience for each participating channel. Users will also be able to subscriber to partner service with one-click subscriptions.
However, there is one very important way that VRV deviates from the Amazon model: there will be a wealth of free content.
Each of the services participating will make content available free-ad-supported within VRV. I asked Arlen Marmel, who oversees Marketing and Distribution at Ellation, about the decision to use a mix of free and premium (or Fremium) subscription content in VRV. He said the availability of quality free content will be the principal reason people download VRV to their device. As soon as the app is installed users can immediately start watching content, without having to subscribe to anything.
Once users start to watch the content for free, the promise of ad-free viewing and a lot more content will provide the enticement to subscribe to a channel.
Getting people to download an app is one of the biggest challenges. Aside from the allure of free content, Mr. Marmel suggested some other reasons people might want to download VRV:
- Exclusive availability of some channels, like Cartoon Hangover
- Great video quality and experience
- Crunchyroll login credentials will work with VRV
At launch, VRV is guaranteed to be available on Xbox One. However, Mr. Marmel says it will be released on other popular TV and mobile platforms as well. This brought up the interesting question of how Ellation will handle the 30% cut of subscriptions taken by Apple and Google on their platforms. He pointed at the recent announcement by Sling TV that a customer using the service on Apple TV will not be able to subscribe through iTunes. Sling executives said Apple iTunes is not set up for the “mix-n-match” model Sling uses for adding content. Mr. Marmel pointed out that VRV will have a similar approach to Sling TV:
“Google Play and Apple app store billing arrangements are still in the early stages of supporting subscription services in a meaningful way.”
The truth of the matter is that SVOD services do not have the margins to be able to give Apple or Google 15-30% of subscription revenue. What Mr. Marmel politely characterizes as “early stages” is simply unrealistic.
On release, VRV will be available in the US only. However, given that Crunchyroll is available everywhere outside of Asia, it is no surprise that Mr. Marmel has global aspirations for the service:
“One of the things we saw at Crunchyroll is how hard it is to be a global SVOD offering from a payments perspective. We recognize that would be very hard for these SVOD services to accomplish. That’s one sliver of thing we bring at scale to our many partners”
That said, VRV will have to prove itself in the US market starting this fall before it can move on to foreign shores.
Why it matters
It is very difficult for smaller SVOD services to be found by the intended audience.
Services that already enjoy a substantial number of subscribers in a defined area of the market have an opportunity to help smaller complimentary services out, and make more revenue in the process.
Expect to see many more SVOD aggregation services launch focused on specific market niches.