In Search Of A Business Model

“Sounds good, but… how are you going to make money?”

If you’ve ever pitched your business, asked for funding or applied to a startup contest, you’ve heard this question more than once. And unless you’re making millions in revenues there is a fair chance you don’t have a good answer to it. 

Nothing to worry about! Startups are businesses in constant search of a business model, so take your time. However, it’s good that you realize it and plan for constant change from the very beginning. For my company, Filmaster, it took us 3.5 years to get to the working model followed by the first significant deal.

Here is our story.

Filmaster provides cloud-based personalization and analytics solutions for the entertainment industry. Our clientele consists of cable providers, VODs, IPTV platforms and cinema chains. Our ecosystem looks more or less like this:


Filmaster.TV ecosystem

It’s nicely visualized on the infographics above. Watching data as the input, personalized recommendations and reports as the output that our customers pay for. But… how did we come up with all this? Did we have this vision in mind when setting up the company three years ago? Hell no! We wanted to be 

tumblr for movie reviews.

The original idea behind Filmaster (May 2009, when launched) was to give movie lovers a platform to blog about their favorite films and discuss opinions with each other. We hoped to generate traction by getting big names blog on our platform and commercialize on ads and blog addons (WordPress.com model). 

As you might expect, the film blogging model didn’t quite work out. People preferred their own blogspot. So, we moved on to become 

Pandora for movies.

Jakub Tlalka, now our co-founder and CTO, then a new hire straight from University of Warsaw, coded a movie recommendation algorithm which took advantage of all the user ratings we have gathered during the first year. The idea was to serve movie lovers with personalized suggestions about movies to watch in nearby theaters and on TV. We wanted to make money by selling highly targeted personalized ad campaigns based on the same algorithms. Film distributors would be paid for actions completed by our users, e.g. watching a film trailer on YouTube, liking a movie fanpage on Facebook or following it on Twitter. We wanted to “decant” fans from one movie to another like Zynga did with their games. We started getting traction and became a respected source of relevant movie recommendations. But it did not get us millions of users we needed to make the plan work. So, we pivoted again, to become

Foursquare for film. 

This was the time mobile started to really take off. With the release of our iPhone app at SXSW 2011 we envisioned people checking-in to screenings and reviewing the films on their way back from the theaters. We wanted to commercialize the data we gathered by selling specialized reports about movie consumption in selected regions, as well as predicting the movie potential success based on the instant ratings of early viewers.

The check-in pivot got us lots of media coverage and some traction, we reached 50k users, and experienced much more engagement, but were just a bit too late. GetGlue already secured the number one position for movie check-in apps at that point and Foursquare itself soon added cinema checkins to specific screenings making Filmaster a less attractive option. The whole check-in market suddenly started to look smaller and overhyped. We decided to move on.


Filmaster has almost become a movie discovery game, once!

At this point we had an engaged community of film buffs, millions of movie ratings and powerful recommendation algorithms. Not many startups get this far. Still, we had no money left on our account, so we were left with two options:

  • sell the company for the technology and the data,
  • get more funding and pivot, again.

We went for the latter. We figured out that we have two key assets: crowd-sourced data and the advanced algorithms. We decided to build on top of them and make Filmaster TV industry’s default

personalization platform in the cloud.

In July 2011 we took 200k EUR from HackFwd and focused strictly on B2B. We hired two additional algorithm ninjas straight from University of Warsaw (having a CTO with great connections in one of world’s best universities is priceless!) and spent a few months travelling to industry events, talking to customers (read more about those here) and building the personalization cloud based on their feedback.

We started Filmaster in 2009. We earned our first significant money from the B2B service this Summer, three years and four pivots later. Would it be possible without the long and windling road we travelled? Not a chance! Filmaster’s cloud is fueled by the data from multiple sources including Filmaster’s consumer apps, customers, (social) media monitoring and curation. If we haven’t started as a consumer service, we would not have had the data, which is now our unfair competitive advantage over the companies that only provide the algorithms.

Now that we proved we can provide real value to our customers, we need to focus on attracting more paying TVs, VOD providers and cinema chains to make the company not just profitable but globally recognized and truly successful.

Always be looking for new revenue sources!

Remember the image from the top of the article? It shows our big vision. And we’re only half way through.

The personalization platform that we developed processes the collected data in the cloud and provides a recommendation service through the API to our business customers. What we’re building now is the analytics platform — also requested by our media customers — which uses the same data to provide additional services to the industry, services that go way beyond personalized recommendations. This will enable Filmaster to produce Nielsen-like reports faster and cheaper, as well as provide innovative services like automated television programming, tools enabling buyers find better content, and personalized advertising!

I’m very excited about this vision — I think it actually requires a separate post. The point I’m trying to make here is that running a startup means you have to always be looking for new potential revenue sources. You also can’t be afraid of change. Pivoting is good. It may lead you and your company to places you haven’t expected to explore, whereas sticking to the original idea almost never leads to success.

So:

  • know your advantages,
  • pivot smartly,
  • don’t run out of money,
  • and find the business model that will work for you.

Learn more about Filmaster’s personalization services for IPTV and VOD at filmaster.tv



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