A portfolio company story: Choovie

An investment banker and an economist walk into a cinema.

2 years later, Co-Founders Sonya and Shane get accepted into the Skalata Ventures program, pivot their business model, increase their access in customers from 20,000 to 2 million and create three additional revenue streams.

This is a detailed look into Choovie’s journey before, during and after the Skalata Ventures seed investment program. It details their challenges, opportunities and the fantastic results they achieved through the program.

How it all started

Founded by Sonya Stephen and Shane Thatcher, Choovie’s vision is to make movie night, every night. The concept for the business was developed when Sonya and Shane attended a movie one evening and found that they were the only people in the cinema. Curious as to how many other cinemas fared, they examined the market further and were surprised to find that most cinemas had far more empty seats than filled.

After some detailed research, they discovered that on average cinemas in Australia only booked a 17% attendance rate.

Unlike other industries with perishable inventory like tourism and hospitality, dynamic pricing in cinema was limited to “Cheap Tuesday’s”. In other words, pricing tickets according to demand was very unsophisticated. Sonya and Shane established Choovie to solve this problem.

Applying for SV

By the time Choovie started the Skalata Ventures program, they had spent 2 years and raised $1m in funding to build a B2C platform offering dynamically priced tickets to their customers. They had success in signing up 60 independent cinemas across Australia but had not been able to access the majors (Village, Hoyts, Event and Palace). This meant that their reach was limited to regional areas as urban areas were dominated by the major cinema groups

Struggling to grow their consumer platform at the desired rate, Sonya and Shane had commenced discussions with a loyalty program provider with an eye to white-labelling their technology to provide customer groups with access to dynamically priced movie tickets.

With Choovie on the cusp of a major growth spurt, the team was keen to apply to Skalata Ventures to help ensure that they were best placed for growth. Sonya and Shane wanted to:

• Ensure they had the right business infrastructure in place to manage rapid growth. This included a sales and marketing process, product development framework and a highly functional operating plan and performance measurement in place.
• Ensure that they were challenged on the key business opportunities that they had identified. Sonya and Shane wanted to work with supportive but independent advisors who would be able to challenge and push them on key issues.

“Initially we thought we might be too advanced for a program like Skalata Ventures, but upon speaking with the team we realised that they could help with a number of critical challenges that we were facing as we prepared to scale.”

- Sonya Stephen, Co-Founder of Choovie.

Enter Skalata Ventures

Over the course of the program, Choovie was successful in accomplishing several breakthroughs which significantly increased their market opportunity and decreased the risk of their business. We’ve highlighted a few of them below.

Major Accomplishments

i. Pivoting business model

Upon commencement of the program, Choovie was a one-product business, offering dynamic pricing via their B2C platform.

With the support (and constructive criticism) of the coaches, Choovie identified that their existing assets were underutilised and that it was possible to expand their product offering.

Choovie pivoted to focus on a B2B platform offering loyalty programs access to dynamic pricing and a vastly improved customer experience. During the program, Choovie confirmed a deal with Suncorp to allow all of Suncorp’s customers access to cheaper movie tickets via their platform. Choovie is now in advanced negotiations with several ASX100 companies to provide a similar service.

A crucial part of this pivot was looking more carefully at the products offered by the major cinema networks and discovering these could be sold on the platform.

As a result of this, Choovie increased the number of cinemas on its platform by over 300%, the number of movie sessions from 4,000 to 28,000 per week and built the largest network of cinemas in Australia (an incredibly valuable network).

Perhaps most outstanding was the increase in access to customers, which resulted from this business pivot, from 20,000 to 2 million customers.

ii. Creating three additional revenue streams

Choovie identified three additional revenue streams that they were uniquely placed to create given their software capability and the many years spent establishing the largest cinema network in the country:

1. SAAS fees — Choovie’s original revenue stream came from booking fees when its customers booked tickets via the platform. However, with a shift in focus to become a B2B solution to loyalty programs and other corporates came an ability to attract additional fees for the use of the platform. Working with the Skalata coaches helped them identify not only the baseline fee opportunity but that the platform already had several other capabilities that could be monetised in more premium offerings. These fees will provide a more stable and reliable revenue base from which to grow.
2. Loyalty points & gift vouchers — loyalty markets effectively operate with three forms of currency: discounts, points and gift vouchers. Creating a discount movie ticket offering opened the door to loyalty markets in both points and vouchers, both markets which offer higher margin potential than discounts alone.
3. Advertising — in creating a national network of cinemas and partnering with major brands and loyalty programs Choovie was creating indirect access to millions of movie fans all over the country. These various networks are attractive to advertisers in a number of different ways — whether it be a movie distributor promoting a new film or a corporate looking to reach regional customers.

The impact of this was a five-fold expansion of their market opportunity, a more lucrative business model, and a dramatically de-risked and simplified execution.

iii. Important Accomplishments

Other important accomplishments achieved by Choovie over the course of the program include:

1. Building their internal technology team, developing a product roadmap and rapidly increasing their speed to develop new products and features.
2. Establishing an internal performance management system using the objectives and key results framework(OKRs) which helped the team set far more ambitious goals and monitor their performance objectively.
3. Confirming their vision “make every night, movie night”, making their company narrative much more compelling to their stakeholders.

Summary

Sonya and Shane came into the Skalata Ventures program with open minds, ready to take on challenges that were presented to them and prepared to test the market opportunities for their business.

They recognised that they had significant momentum with the business and that there was more work to be done to achieve exponential growth into the future.

By the time they had exited the program, Choovie had:

• Developed a clear and compelling vision for their business (which was helpful in rallying the team, clients and other stakeholders)
• Matured from a one-product company to a multi-product company which significantly increased its market opportunity
• Built the organisational infrastructure that allowed them to execute far more quickly and capably than before
• Increased the operational cadence and expectations upon themselves to build a significant and sustainable company

“We came into the program with confidence in our underlying opportunity and an awareness that we needed help to build a business that could truly make the most of that opportunity. By throwing ourselves into the program 100%, we were able to extract the maximum benefit that it had to offer. Today we have a crystal-clear vision of where we need to go and are fully equipped to build a business bigger than we ever thought possible”

- Sonya Stephen, Choovie Co-Founder & CEO

We are confident that Choovie is well placed to scale their company and achieve their long term ambitions. We’re excited to welcome Choovie into the Skalata Ventures Alumni and look forward to watching them continue to grow.

Find out more about Choovie here

Stay up to date with Skalata Ventures or apply for our 2020 program here.