Little-known Viewster scores big with free movies and TV shows

There’s a new kid in town, and it’s racking up video views: Zurich-based online video startup Viewster is set to announce Thursday that it managed to break into comScore’s (S SCOR) list of the Top 50 U.S. video properties for the first time in February, attracting more unique viewers than Sony’s (s SNE) Crackle and the video sites of both ABC (S DIS) and Fox. (S NWS)
Altogether, Viewster attracted 8.3 million unique U.S.-based viewers in February, who viewed close to 200 million videos on the site. That’s pretty impressive for a site that lists titles like Mother’s Day Massacre and Saving Flipper as its most popular titles.
“Clearly, we don’t have the depths of content of a Hulu,” admitted Viewster CEO Kai Henniges during an interview Wednesday. But that hasn’t stopped his company from making inroads with audiences worldwide, thanks to an offering that combines free content with a presence on a wide variety of platforms.
However, Viewster’s business plan wasn’t always about free content. The company, which was founded in 2008, initially looked to make money with B2B services for other publishers. In 2010, it switched to a consumer-facing offering, with the plan to charge consumers for VOD content. Except, no one wanted to pay.
Looking back, Henniges says that paid VOD was “a horrible experience for users.” That’s why the company decided to give everything away for free for six months, just to see what happened. Unsurprisingly, consumers loved it. Surprisingly, content owners were up for experimenting with free as well, as long as they still got paid. “We almost stumbled upon the free model,” said Henniges.
These days, Viewster is still offering paid views for consumers who want to view movies offline on mobile devices, but roughly 90 percent of the company’s views and revenue comes from free, ad-supported content. Viewster offers a total of 6000 titles across its different markets, including fare from Warner Bros. that it licensed last summer for Europe, the Middle East and South-East Asia.
In a way, Viewsters model is similar to that of companies like Viki that utilize content arbitrage to cheaply license movies and TV shows for out-of market viewing. In the U.S., Viewster is starting to focus on Telenovelas, Japanese Anime and other populate niche content. “Internationally, we can be more bold,” explained Henniges, adding that his company was “in the import-export business of content.”
Viewster’s special advantage is that it has a very large device footprint, with apps on 20 connected TV platforms as well as Android (s GOOG) and iOS. (s AAPL) However, getting the viewers to find and actually use these apps has proven to be a challenge. Social discovery simply doesn’t work on a connected TV, where there’s often no way to discover content without browsing through an app. “They are all like islands, these apps,” said Henniges.
Getting viewers to install mobile apps can be challenging as well, but also very rewarding: Henniges told me that his company is seeing a lot of growth and engagement particularly on tablets. Currently, Viewster gets about 25 percent of its views from mobile, he explained, with only five percent coming from connected devices. But the web is still king, with 70 percent of all views.
That’s why Viewster plans to double down on its web audience through more curation and personalization this year. The company, which currently employs 35 people, also plans for some moderate headcount increase, but Henniges made it clear that he doesn’t want to go crazy. Viewster raised around $3M in funding from Germany’s Creathor Ventures and used that money conservatively. “We can’t spend our money into the market,” acknowledged Henniges. And, judging from the latest audience numbers, it doesn’t have to.