Hollywood studios have a problem: Revenues are declining in the digital age and piracy in particular is taking a chunk out of the bottom line.
Vancouver's Bill Mainguy believes he has a solution. His Vancouver start-up, Reelhouse, is working on a direct-to-consumer distribution platform for the big studios based on a model he initially developed to help independent filmmakers. His seven-person team has been in Los Angeles for the past three months shacked up in a house à la early-days Facebook and working with Warner Bros., to build an online retail hub for the big studios.
"We come in and say: 'We're going to turn your distribution model upside down, and this is how you guys are going to survive in three to five years without your market decreasing or shrinking.' That's captivating them," Reelhouse's 28-year-old CEO and co-founder said.
They've been developing the model as part of Warner Bros.' inaugural Media Camp accelerator program, which works with entrepreneurs who are creating products and services designed to benefit the entertainment industry. Reelhouse is constructing a site that engages viewers through all stages of a film's release: announcements, trailers, ticket sales for the theatrical release and, finally, the ability to stream or download the film after its run in theatres.
Throughout, subscribers could be fed "breadcrumb updates" and offered behind-the-scenes footage, interviews, interactive experiences and merchandise. A social networking component would connect users with other viewers and enable them to follow friends, taste-makers, even directors, to see what films those people are watching and liking. The platform would ideally be open to all studios, because audiences don't know or care which studios have produced which films.
The system, says Mainguy, is designed to increase viewer engagement and give audiences an enhanced experience that they can't get from a pirated copy of the film. Studios could increase transactions – selling views, downloads and licenced merchandise – and gain access to valuable data about their customers.
"If the idea is we're trying to create this richer, deeper experience, and their platform is a way to do this, then that's very interesting to us," says John Attanasio, vice-president of global product marketing at Warner Bros. "From what we've seen, their platform is unique. It's a rich experience and there aren't a lot of companies out there that have something like that."
Mainguy points out Reelhouse is borrowing aspects of his model from other sectors – music, publishing and especially gaming, which is his background (he used to work for Electronic Arts).
There are existing competitors with online distribution platforms for film, such as Distrify and VHX.tv, and until the Reelhouse studio version gets out of development and into real-world use, there's no way of telling whether it really is a better mousetrap. But the company has at least piqued Warner Bros.' interest. "There are some things that they're doing that are different from some of the mainstream options that are out there," says Attanasio, who has acted as a mentor and main point of contact for Reelhouse during the accelerator program.
Reelhouse.org was originally developed last year – it launched in November, 2012 – to help independent filmmakers self-distribute their productions. The site is designated for quality films and videos, so visitors are able to find good content without having to sift through a bunch of cat videos.
"So many people have fantastic stories … It's such a shame that they're having to just put it up on YouTube, and that's the best that they can do," Mainguy told The Globe and Mail during an earlier interview last spring, when the company was operating out of office space borrowed from social media analytics firm HootSuite in Vancouver.
On the indie version of Reelhouse – which is still in beta – filmmakers can earn income by charging for views, downloads and merchandise, and they can solicit funds from viewers who are interested in supporting future projects. For that service, the site takes a six-per-cent transaction fee.
Reelhouse got a boost shortly after it launched when it partnered with Sundance Artists Services to become a preferred platform for the film festival's institute alumni. Meanwhile, through a personal connection, Mainguy was able to napkin-sketch his idea for a Warner Bros. executive, who was intrigued and suggested he apply for the studio's Media Camp. Reelhouse was one of five start-ups – and the only one from Canada – accepted.
Using data from its indie platform, Reelhouse was able to demonstrate to Warner Bros. that, on average, its viewers engage in 14.6 additional activities beyond watching the film itself. "This isn't just 14.6 clicks," Mainguy explains. "These are actual tangible actions that we interpret as them wanting more, other than just clicking the video to play."
Last week, Reelhouse pitched its plans and Mainguy fielded questions at a gathering of entertainment industry executives in L.A. for the Media Camp's demo day. "We've been able to create a lot of traction with the studios," he said shortly after arriving back in Vancouver. "Now we've got to really roll up our sleeves and execute all the stuff that we're planning."
Mainguy says Reelhouse is close to signing a deal with Warner Bros. to proceed to the pilot-project stage. The next job, on the heels of HootSuite's successful venture capital fund-rasing this week, will be to raise $1.5-million from investors (in addition to the $1.2-million they raised initially) to help finish building what Mainguy hopes will some day become the go-to retail site for film fans.
"If we succeed in [the pilot], which we're very confident we're going to do, that's when it turns from 'Wow, this is a great idea that everyone's excited about' to 'This is proven.' … That's when it will change from an idea to potentially the way everyone's going to be consuming their video."