After seeing the phenomenal success of Louis C.K., who took the plunge in 2011, skipped the middlemen, and sold his one hour comedy special direct to fans online for just $5 a pop, Casey Pugh and Jamie Wilkinson, the founders of VHX, realized it was time for a change.
The time had come for them to shift the focus of VHX from helping people find and share videos online to helping independent filmmakers and video artists find new ways to sell their work and connect with their fans directly through their own websites.
“… their task was to prove that you didn’t have to be Louis C.K. to sell directly to fans. Pugh and Wilkinson become gleeful when they talk about the challenges faced for filmmakers in the digital era.
“Everyone’s after the ultimate download and consumption experience for the home,” Pugh said. “A lot of traditional media companies aren’t adapting.” (Indiewire)
As part of their new mission, VHX tried a “powered by” VHX experiment with Aziz Ansari’s DANGEROUSLY DELICIOUS standup comedy special in March 2012.
Several others soon followed, including INDIE GAME: THE MOVIE, one of the first Kickstarter funded films. These experiments helped VHX make their point.
“Before, the Internet was where you went if you couldn’t get a distribution deal,” Wilkinson said. But now, “creators are realizing that they no longer need the distributors to reach an audience… Creators are coming around and realizing that people are really happy to open their wallets.” (Ryan Lawler, Techcrunch)
Pugh and Wilkinson weren’t the only ones intrigued by the possibilities of direct-to-fan distribution. Investors were too. In 2013, VHX received a $3.2 million round of funding led by Union Square Ventures, with additional funds from William Morris Endeavor, and others, including Lerer Ventures, Lowercase Capital, and Alexis Ohanian, all of whom also participated in the original $1.25 million seed round in 2012. Why did these companies and individuals invest in the fledgling VHX?
“Their [Union Square Ventures] reasoning was because they too see the current model as outdated: “Most of these video distribution options available today are outdated. They were designed before channels like Tumblr, Twitter and Facebook even existed.
The filmmaker’s role is secondary to the marketplace, and the creator has no direct relationship with the fans and customers of their product. As a result, new methods and opportunities to distribute content have opened.” (Hollywood Reporter)
Filmmakers using VHX to power their sites are finding a number of advantages. For one, the relationship VHX has with filmmakers is a revenue-sharing relationship only. It’s non-exclusive. Filmmakers retain the rights to their films. Eventually, VHX promises to give filmmakers a better split than the standard 70 – 30. Rather than reaching fans through branded sites, such as Apple’s iTunes or Amazon, filmmakers using VHX connect through their own websites, powered by VHX, using their own themes, designs, and branded material. Films are uploaded and managed by the filmmakers themselves. Social media, google analytics, search engine optimization, geo-location tracking, online help features and many more are all integrated into the VHX package. Fans can stream or download HD films anytime, DRM free, across a variety of devices, from individual filmmaker sites.
According to the VHX blog,
“Overall the private alpha platform has launched 60 releases to 300K happy customers … With its new funding, VHX will grow the Brooklyn-based team, open up its publishing platform, and launch apps for numerous devices.” (Brandy Dale, Technical.ly)
This all sounds pretty good, but what does the future look like for VHX?
“In the last year, the company said, it has generated gross sales of $2 million …. [but some] people have looked at the DIY video market and decided there’s less there than they thought. IAC’s CollegeHumor/Connected Ventures group, for instance, spent a bunch of time last year preparing to launch their own video production/distribution platform, but scuttled it after deciding there wasn’t enough money and/or margin there … No problem, said VHX co-founder Jamie Wilkinson, who said VHX can prosper by servicing “tail” and “torso” content makers — not just the guys you’ve heard of … “There’s a huge amount of content that those guys aren’t thinking about,” he said. “But that’s the stuff that’s been super successful for us — it’s low touch, with a great audience.” (Peter Kafka, AllThingsD)
What do you think? Would you be willing to give “powered by” VHX a try?