Can the Criterion Channel’s strategy work?
First, let’s establish some basics on the Criterion Channel:
Launched spring 2019
Focus: comprehensive arthouse. 2000+ films in the library, with great depth in classics and rotating selection of recent domestic and international indie films
Criterion Channel is operated by Criterion, a 30+ year old DVD distributor (originally laserdiscs). Their core, larger business is special editions of arthouse films.
Pricing: $10.99/month or $99.99 annually
Subscribers: no public estimate. My estimate: 75,000-100,000*
Value Proposition
Criterion’s value proposition might be summarized as all the arthouse you could ever want.
It addresses a very specific need within the broader desire for on-demand home entertainment. Criterion is for people who want handy access to not just a few but a lot of arthouse films, especially classics.
Criterion charges a somewhat premium price of $10.99/month for this depth compared to $5-9 for many other niche services.
In exchange you get not just the library but the film education to go with it in the form of curated lists, scholar interviews, and filmmakers extras.
Value Chain
Content
For a streaming service the dominant component of the value chain is the content. This breaks down into the owned library (if any), the rented library, and original content (if any).
Criterion has a large owned library of Janus Classics and the 1,000+ films it has released as DVDs via the Criterion Collection. This gives their library permanent, stable depth which is important to the core cinephile audience and ensures even superfans never run out of things to watch.
It produces low cost original content in the form of filmmaker and scholar interviews and commentary. This is of limited market value, but is valued highly by Criterion’s core audience. It serves to deepen audience interest in the rest of Criterion’s unique content and spurs further viewing. I’d be willing to bet that watching film extras is highly coordinated with retention.
This enables Criterion to spend wisely on its rotating content. Criterion can focus on renting films that are cheap, but highly valued by the audience. Their themed curation approach enables further patience and flexibility around licensing. Criterion is never desperate for new content by a particular time.
Their DVD business brings another useful asset in the form of relationships with filmmakers and scholars who trust the Criterion brand. This facilitates the steady production of extras that appeal to Criterion’s core audience and make the library increasingly unique.
Marketing
These cozy relationships with arthouse mini-celebrities give Criterion the power of influencer marketing for the target audience. Clips from interviews with hot filmmakers make for popular social media content. “Watch Wes Anderson’s 10 favorite films on Criterion this month” makes for an appealing hook to people who want to feel hip but haven’t subscribed yet.
Criterion’s organic social media presence also serves this strategy. Their accounts are paens to great film, leaning heavily on striking (and free) screencaps or poster images from the classic films. This keeps marketing costs cheap while titillating film lovers.
Technology
Ironically for streaming services, technology has become a small factor in success. It’s an area where you can lose customers with poor reliability or ineffective design, but technology alone won’t draw and retain customers.
Still, the streaming app/website is the storefront for a streaming service and the design does shape how customers feel about the product and thus how they value their subscription.
The design of the Criterion app is well tailored towards their core customer. The home screen splits real estate between individual films with themed collections of films. The various themes (Directed by Edward Yang, Italian Neo-Realism, 70s Horror, Black Lives, Greek Shorts) map onto film lovers’ common methods of discovery. The individual films are often structured as collections with attached scholar interviews or other bonus features that play after the film ends. Film descriptions are lengthy with details of interest to the cinephile audience.
There’s probably some room for Criterion to further tweak the app design to enhance the film education and curation experience. Criterion’s competitor Mubi has taken film education further on their desktop site and for each film links to critical reviews and related essays in the Mubi film blog.
A more unique approach leveraging Criterion’s industry relationships would be hosting occasional exclusive live discussions or Q&A sessions with scholars and filmmakers.
Something they might experiment with is loading brief scholarly introductions in front of the films rather than hiding it as an after-film addendum. Art house cinemas frequented by the core Criterion audience often have a programmer or film scholar introduce a film. It seems possible that the audience might be excited by the addition of that to the home viewing experience.
Ecosystem
There is one extremely obvious and simple technology investment Criterion needs to make: combining the login systems for Criterion.com and the Criterion Channel.
This investment will pay itself back quickly by unlocking Criterion’s potential as an integrator.
Remember that Criterion’s core business is DVD/Blurays. Their CEO’s statements in the press indicate the DVD business is still “by far, the most important part of our financial picture.”
Bringing together their DVD and streaming experience creates many opportunities on both parts of the business.
Market new DVD releases based on streaming habits. If I've watched multiple Orson Welles films recently, I'm a solid mark for a new Criterion Edition of a Welles film.
Create, sell, and target shirts/totes/posters and other merchandise based on streaming habits
Offer discounted channel subscriptions to DVD purchasers to build lock-in
Sell DVD releases early to Channel subscribers
Use streaming data to guide decisions on what films to offer as DVDs
These tactics can turn the Criterion subscription into a complete film experience that operates as an ecosystem. The streaming feeds the DVD/merch business which in turn feed the streaming business which funds the creation of more exclusive content like filmmaker Q&As that the audience loves. This imbues Criterion with increasing power as brand with loyal customers.
*Criterion’s predecessor Filmstruck reportedly had 50,000-100,000 subscribers. Mubi claims 9 million! but operates in 195 countries while Criterion is US/Canada only so far. AMC claims 3.5-4 million total between Shudder, Urban Movie Channel, Acorn TV, and Sundance.
At only 1.5 years old and US/Canada only, I would guess Criterion has picked up most or all of the Filmstruck subscriber base but not greatly exceeded. If they were much beyond 100,000 the revenue would likely start to exceed the DVD business which the CEO recently said is still much larger.