VRV Is Modernizing The Bundle Approach For Niche Streaming Services

Amazon Channels are not cheaper by the dozen. You add a service, you pay for it. You add another service, you pay for that, too. VRV (pronounced like “verve”), though, takes both the a la carte and bulk-rate approaches.

If you want to subscribe to science service CuriosityStream, you can do that through CuriosityStream‘s app, Amazon Channels or VRV for $5.99 a month. If you want to subscribe to the foreign-film service MUBI, you can do that through MUBI’s app, Amazon Channels or VRV for $5.99 a month. If you want to subscribe to both or any of a dozen or so other channels that are partners with VRV, you’re better off subscribing to VRV’s VRV Select bundle for $9.99 a month.

VRV, which launched about a year ago, has recently added CuriosityStream and MUBI to its lineup of a dozen or so other services. Decider sat down with VRV GM Arlen Marmel to talk about the new additions, VRV’s value proposition, and why more is proving to be better when it comes to SVOD services.

DECIDER: VRV is probably better known to smartphone users than more TV-oriented viewers. Who’s your setup? Who’s your primary user?

ARLEN MARMEL: VRV is an aggregated video experience that brings together best-in-class niche streaming channels. If you think about the marketplace today, there’s Netflix that’s big, broad general entertainment somewhere between HBO and traditional TV. They’re trying to appeal to everyone on planet earth. At the other end, Amazon is selling a lot of services individually on Amazon Channels. We see an opportunity for a more curated experience, so we’re focused more on niches and fandoms and quirkier offerings.

VRV has a big emphasis on anime. Are you broadening out from that?

We’re part of Ellation, and Ellation’s other big product is Crunchyroll, which is anime and one of the largest niche services in the world. We’ve made deals with Funimation and Mondo, which are also animation, and that a great foundation to build out to other genres. Consumer interest in anime overlaps with comedy and science fiction and horror. We now have CuriosityStream, which is science and technology. We now have MUBI, which is international film. Our test for what makes sense for VRV is whether something is a significant niche where VRV can add joy.

VRV Select is your house product now and has some of its own content. Do you see that functioning something like an Amazon Prime Video that you add other services onto?

VRV is a series of channels. If traditional TV is MTV and VH1, VRV is Nerdist, Geek & Sundry, Rooster Teeth, Cruncyroll, Funimation, etc. VRV Select is our own channel, and we program it with extra content that’s only available to VRV subscribers. We’re using it to deliver exclusives like HarmonQuest that’s intended to be a complement to our partner channels. You can subscribe to any premium channel a la carte with the exception of VRV Select, which is the base of our bundle that includes every channel on the platform for $10 a month.

And some of that is on a freemium model where you watch some things for free and subscribe if you want more of it?

There’s a lot of free content across VRV, and the different channels choose what’s free and what’s premium. VRV Select also has both free and premium content.

So the value proposition of VRV Select is that you get the free and the premium, and you get all of the channels cheaper than they would cost a la carte.

Right. VRV’s premium offering is $10 a month, which gets you everything — Shudder, Funimation, etc. — plus VRV Select. It gets you every individual channel that VRV offers in one package. Those individual channels would cost roughly $50 a month if you subscribed to all of them individually on VRV or on their individual sites. Crunchyroll and Funimation alone would cost $11 a month outside of the bundle.

How does VRV’s business model allow you to keep adding services without going upside down on a per-user basis?

From a consumer standpoint, it’s $10 and you get access to everything. On the free content, we get some advertising revenue on that. On the bundle, our view is that we’ll be able to introduce more users to VRVs ecosystem by reducing the friction to subscribing to these different channels and offering one user experience and one billing point. We share 70 percent of our subscription revenue with the partner for a la carte subscriptions to the different services, and we share 70 percent of the ad revenue for free viewing with the partner that provides that content. For the bundle, we’re mostly doing fixed-fee deals that vary a lot by partner.

And that makes sense for your partner services?

Yes. As an observer of the transition that’s been happening in SVOD, I think it’s tough for a niche service to survive and thrive on their own. We’ve seen a number of them go by the wayside this year. These niche services sell directly to consumers and have have their own user experiences — plus merchandise and live events and whatever else they do — and VRV gives them a way to access a broader audience and pays them for that distribution to invest back into their own content.

Analysts and people from different services have told me that the bigger the content offering you have the more you can reduce your churn. Has that been your experience with VRV?

Oh, absolutely. We’re making that bet with VRV. Our individual content partners have a natural limit of total audience and a fixed amount of content they can produce on their revenue stream. Our message those those partners has been: “Do your own thing, but also participate with VRV where a consumer can get access to your content and other providers’ content.” And then we’re introducing product features like offline viewing and getting onto certain devices that are difficult for smaller services to do. We think that aggregation and a best-in-class product experience will increase engagement and reduce churn, which are imperative to survive in SVOD.

Seeso shut down this year, and Fullscreen is shutting down its SVOD service at the end of the year. Do you see any common limitations those two companies had that you look at and say, “Hey, let’s don’t do that”?

Those are not the only services to shut down, and they won’t be the last. I tend to think more in terms of what characteristics the services that are thriving — Crunchyroll, Rooster Teeth, WWE, DramaFever — have in common. They do one of two things. They either have a unique content pipeline in markets that are difficult to penetrate, or they’re making their own content that no one else can create. DramaFever has a pipeline for Korean shows than no one else can match, and no one else makes what WWE can make.

And VRV’s model is to aggregate those things.

Right, we’re trying to identify the brands that are doing those things really well and bring them onto a unified platform.

What kind of consumer behavior do you see as a subscriber uses VRV over time. Do they increase the number of minutes they’re watching a month, or is it a lot more inconsistent than that?

VRV launched just over a year ago, and what we’ve observed over time is that engagement goes up considerably the longer someone is a subscriber. Our premium subscribers watch an average of 45 minutes a day, which is significant when you think of VRV as a very new entrant in this space. Every time we add a new service to the bundle, we see those minutes tick up.

CuriosityStream and MUBI strike me as more mom-and-dad friendly than anime. Is the idea to age up your audience a bit and get multiple household members using the service?

We don’t necessarily think about it that way. We think about it more as where the natural content overlaps are what what kinds of additional content our base of subscribers want to see. They’re really interested in science content. They’re really interested in arthouse and foreign films. Our roots are in anime from Japan with subtitles, so it’s not a huge leap from that to foreign films with subtitles.

Is there a clear hit show on VRV Select? Is that HarmonQuest?

HarmonQuest has definitely been a great show and is a very logical fit for us. Dan Harmon as a creator really speaks to the VRV audience. He’s subversive, and he’s a fan of this kind of content. We’re talking to him about some other possible projects. We also have some animated films from GKIDS in VRV Select that does very well for us. We also have a series called Dofus that’s been a great performer for us. I think you’ll also see us use VRV Select to test future genres and channels to see if they resonate with our subscribers.

Are you at a price point on what you’re buying for VRV Select that you can go out and develop, or are you looking mostly at licensing things from producers who already have shows and films out there?

VRV Select has a lot of things with a significant price tag attached, so we’re doing everything from creating originals that live exclusively on VRV to scouring the globe for things we can license to working with YouTube creators who can up-level some of the things they’re doing to signing more emerging channels like CuriosityStream and MUBI.

Where is most of your viewing? Smartphones?

Gaming consoles are very important for us. We see a lot of viewing on PlayStation, Xbox, iOS, Android and web. We’re launching on Apple TV and on some of Amazon’s devices early next year.

I’ve seen 1.5 million active users reported. That’s your current number?

We have 1.5 million registered users and 1 million monthly active users, and we have not yet shared how many premium subscribers we have. It’s a fairly high percentage of the 1 million monthly users, and I think we’ll likely share that number sometime soon.

AT&T has a significant ownership interest in VRV. Are there particular benefits for AT&T customers to use VRV?

VRV and Crunchyroll are part of Ellation, and Ellation functions as a venture-backed entity with Otter Media as the sole investor, and Otter Media is a joint venture between AT&T and The Chernin Group. We talk to AT&T constantly about what we’re doing, and some of those are less visible things like ad sales. I think next year you’ll see some more visible partnerships between AT&T and Ellation.

Scott Porch writes about the streaming-media industry for Decider and is also a contributing writer for Playboy. You can follow him on Twitter @ScottPorch.