Why movie ticket startup Choovie is choosing equity crowdfunding in its bid to fill Australia’s empty cinemas
Wednesday, July 11, 2018/
Cinema ticket-pricing startup Choovie is targeting $700,000 in a equity crowdfunding raise, as co-founder Sonya Stephen embarks on a mission to “put bums on empty cinema seats”.
Founded in April last year, the startup provides a third-party marketplace for cinema tickets, with a dynamic pricing models altering the cost of your night out depending on demand.
The app matches consumer data on location with the profiles users provide, the genres they like, and their usage patterns, to match movie-goers to available seats with “Netflix-style notifications”.
According to Stephen, in Australia only 17% of all available cinema tickets are sold, and Choovie aims to address that problem and “bring people back to the cinema”.
Based in Melbourne, Choovie started out with a beta testing model to prove the concept of the idea. But Stephen tells StartupSmart it wasn’t just a case of testing the theory in the city; she and co-founder Shane Thatcher wanted to make sure it worked in regional and remote locations, too.
“Occupancy varies greatly,” Stephen says. It depends on the location, the day of the week, school holidays and even the weather, and Stephen says they therefore needed to “make sure we had a variety of different cinemas,” she says.
Now, the startup has almost 50 partner venues, is onboarding between six to eight more every week, and has sold over 1 million cinema tickets since its launch.
According to Stephen, Choovie members visit the cinema as average of 13 times each year, compared to Australia’s national average of 3.5 times a year, and are also more likely to spend on snacks and drinks when they get there.
The beginning of the story
The co-founders has today launched an equity crowdfunding campaign through Equitise to raise $700,000, in a bid to make shareholders out of its customers, and customers out of its shareholders.
Crowdfunding is “new and exciting, which Choovie is as well,” says Stephen, who says the funding method will mean the startup gets “double value for marketing dollars”.
“We can get our fabulous loyal customers to become shareholders,” she says, adding that there is “no more powerful way to build confidence and build customer numbers”.
The founders did consider seeking out venture capital funding instead, and have built some good relationships with investors through “conversations we have had and will continue to have”.
But for now, Choovie is focusing on its customer base.
“You need to make sure that you create value in your offering, not only from the commercial perspective, but strength in your shareholder offering,” says Stephen.
So far, the startup has been funded by family and friends, including angel investment from Chris Morris, the founder and former chief executive of Computershare.
The funds gained from the crowdfunding campaign will go towards Choovie’s continued expansion across Australia, and eventually to other countries.
It will also help Choovie to build up its subscriber base, and Stephen says the startup has some “very strong” partnerships in the pipeline, including with a ride-sharing company, a major bank and a fast-growing retailer.
While she’s tight-lipped on the specific companies, for now, she says they have partnered “due to synergies of what our niche market is”.
Choovie may have rolled out nationally now, but it hasn’t always been an instant hit. One pitfall the startup has encountered on it’s journey is the need to have cinema partners in the areas where it has subscribers, something Stephen says is a “really fine line that we walk”.
When the beta app launched in April, she says, “within a matter of two days we had 10,000 subscribers, and a lot of those were in a city where we didn’t have a cinema”.
“We had to be very careful in the early days not to annoy our customers,” she says.
Somewhat predictably, Stephen and Thatcher also faced challenges from cinema owners who did not immediately share their vision. However, Stephen maintains Choovie is “not disruptive, but collaborative”, because it ultimately supports ticket sales.
“People’s fear of change is fundamentally one issue we always come across,” she says.
There are “a lot of misconceptions about what [Choovie] is,” she adds. When some people hear ‘demand-based pricing’, the assume ticket prices will surge for popular screenings. Stephen says this isn’t the case.
“We operate within the pricing parameters,” she says, and “cinemas remain in control of what goes on the platform”.
When the founders pitch Choovie to cinemas, Stephen says they actually have a 90% hit-rate, “but it takes time”.
“There needs to be time to get people comfortable with the concept,” she adds.
Similarly, some cinemas have expressed concern about Choovie holding data on their customers, in terms of their demographics and the films they want to see.
However, again, Stephen reassures that Choovie will share the data with the whole film industry, saying: “If there was more data shared, the whole industry would be better off.”
Finally, Stephen says there has been resistance from bigger cinema players, which claim they can do the same thing themselves.
“We specialise in data, analysis of that data, and cutting-edge technology,” she says. “Their business is owning and running a cinema.”
“When you combine those things, there’s something very powerful in that … when you break that down, most cinemas don’t even have an IT department,” she adds.
Not all glitz and glamour
When it comes to fundraising, Stephen says in cases where business-to-consumer interaction is an important part of a startup’s offering, “crowdfunding is a great way to go”, and “a really exciting avenue to explore”.
However, she warns the startup journey is a difficult one, whichever route you choose.
“When you invest so much, emotionally and financially, of your own self, you need to be resilient to the bumps, because they’re daily,” she says.
“You need to have grit and determination , if you really believe in something you have to dust yourself off a lot.”