IZZY Stream Israel launches worldwide SVOD channel
7 June 2020
Tel Aviv based IZZY Stream Israel, a new subscription video on demand (SVOD) channel for Israeli features, documentaries and tv series, was launched on 21 May. Worldwide subscribers will have unlimited access for the equivalent of US$4.99 per month (after a free 3 day introductory period) or US$49.99 per year with no contract commitment. On 5 June, US-based customers were offered 42 features and shorts totalling about 34 hours of programming. (Some titles are not available in all markets.) A press release promised that ten hours will be added each week. The service is currently offered on internet-connected devices, in English or with English subtitles. Subtitle options in French and Spanish are planned. The professional streaming platform they use can be supported by optional smart tv streaming applications such as Apple TV, Android, Roku or Amazon Fire TV as their business grows.
“A pre-launch sales drive secured 2,500 subscribers with an additional 2,500 in the two weeks since then.”
Co-founder Josh Hoffman, a Los Angeles-born marketing consultant who has moved to Israel in 2013, confirmed to JFR that a pre-launch sales drive secured 2,500 subscribers with an additional 2,500 in the two weeks since then. Of these, roughly 80% are in North America, about 20% in the UK, Europe and Australia with a smattering elsewhere (“someone in Uruguay and somebody in Hong Kong.”) Hoffman believes there is a worldwide market of 10m people who ‘love’ Israel, 25m who ‘like’ it and 65m who do not have particular affinity to the country but are interested in great content. On that basis, he is aiming to attract 1%, or one million paying subscribers, within the next two to three years. While Hoffman’s target may sound aspirational, achieving even one tenth would see annual revenues in excess of US$5m, or more if IZZY is successful in raising subscription prices to US$9.99 per month.
IZZY’s Instagram channel features clips and trailers of featured content.
Hoffman hopes to capitalise on a US trend where consumers are rejecting expensive multi-channel cable packages. According to him people do not want to pay $100 a month for 1,000 channels of which they are only ever watching a few. Many are now instead choosing to pay only for their selection of specific content providers: general ones like Netflix or HBO and niche ones like the Disney Channel or Revry. A core strength of his service is its marketing expertise. Hoffman claims to reach 120,000 new prospects every week using social media. At this writing, IZZY’s Instagram channel has already attracted 2,353 followers. While this may sound modest, it is more than the more established Instagram channels of all major Jewish film festivals or niche VOD/SVOD services that might be regarded as competitors.
One of the challenges IZZY faces is getting quality content it can afford to pay for. In the press release, a partnership with a major distributor of Israeli documentaries and features, Go2Films was announced. Hedva Goldschmidt, Go2Films’ founder, is quoted as saying: “we are excited to promote a new player in the Israeli value world. We believe in IZZY’s vision and energy, to become a producer and supplier of remarkable content that brings more of Israel’s multicultural mosaic to the world.” However, on 5 June only two of the titles offered to US customers on IZZY’s channel were also listed on Go2Films’ website. Hoffman did not disclose the terms agreed with the licensors who were first to upload their content. The current offer to rights holders is a scale of between $0.10-$0.25 for each unique title streamed, depending on the number of plays. IZZY will not offer guaranteed income. At the same time it does not require exclusivity. Licensors can opt to exclude availability of their products in certain regions to protect existing clients. They can also withdraw their titles with a 30 day notice.
“A film-maker would need to attract 13,749 plays in order to earn the $2,000 fee of a single film festival screening licence. ”
At that level it might be difficult to attract quality content. At a Zoom meeting hosted by the Israeli Directors’ Guild to introduce the service on 2 June, Limor Pinhasov, the Directors’ Guild chairman, argued that Hoffman’s intention to build his channel on the back of such low royalty payments was unfair. According to him, a film-maker would need to attract 20,000 plays (actually 13,749) in order to earn the $2,000 fee of a single film festival screening licence. Hoffman countered that IZZY is offering supplemental income for content that has exhausted it’s initial revenue streams. He also hinted that when IZZY starts financing its own productions in the fall, they will favour creators with a proven track record on their service. To JFR he added that IZZY’s fee structure is generous when compared to other SVOD channels such as YouTube or Amazon. According to their Prime Subscription rate card of 1 May 2020, Amazon Prime currently offers a royalty range of between US$0.01 and US$0.12 per title per hour streamed on their channel in the United States depending on the title’s performance in the streaming territory. Hoffman is committed to actively marketing the titles - something that these SVOD competitors do not.
IZZY Stream Israel’s co-founder Josh Hoffman.
Traditionally, Israeli distributors who specialise in local productions with international appeal have been able to command relatively high licensing fees from their captive theatrical Jewish film festival clients. Some of these festivals launched or sponsored niche Jewish VOD services in recent years. These play a role in supporting their brands with their theatrical attendees. Examples include San Francisco’s JFI on Demand, Britain’s UK Jewish Film on Demand and Australia’s Jewish International Film Festival selection on Classics at Home. The professional streaming platform favoured by these channels is Vimeo on Demand, which has a marginal set-up cost but might extract US$2.20 in fees and taxes out of a US$10 VOD rental. (These fees vary depending on the list price and the renter’s location.) The balance is normally split between the service operator and the licensor. IZZY’s low royalty structure compares unfavourably with the share the rights holders can earn via sales on these channels per play. It seems unlikely that titles could happily co-exist on these services and IZZY. Hoffman thinks that VOD channels will lose out to SVOD services because consumers do not want to pay for individual films. He may have a point, given that a single VOD stream on a niche Jewish VOD service can cost as much as IZZY’s current monthly subscription. The sector is growing. On March 25, US-based Strategy Analytics forecasted that the COVID-19 crisis is expected to add 5% to global SVOD subscriptions this year. In a letter to shareholders, Netflix noted it has added 15.7m subscribers in the twelve months to 31 March, significantly more than the numbers it expected.
IZZY is not alone in offering SVOD Israeli content. Niche US Distributor Menemsha Films recently launched Chai Flicks, a SVOD channel featuring many back catalogue titles. On 5 June the site listed 61 Jewish-themed films of which more than a third were Israeli. Membership costs US$5.99/m or US$66/pa after a 14 day trial. The Toronto Jewish Film Festival Foundation’s J-Flix service offers Canadian viewers 130 free Jewish-related (including some Israeli) titles and adds new ones every month. Subscribers to Amazon Prime and Netflix can already stream some Israeli productions for no additional cost.
“The turmoil that the COVID-19 crisis has brought to traditional distribution networks may work in IZZY’s favour. ”
The turmoil that the COVID-19 crisis has brought to traditional distribution networks may work in IZZY’s favour. Nevertheless, given the limited number of major rights holders in Israel and their dependence on the Jewish film festival market, it seems likely that in the medium term Hoffman may have to offer them substantially more per play to entice them to upload quality content on his site.
Whether licensed or commissioned, content is not the only cost faced by IZZY. There are a few professional streaming providers for this sort of service. The one used by IZZY charges $1 per subscriber per month plus payment transaction fees. That alone eats over 22% of their subscription revenue. IZZY may also be liable for sales taxes, which are always included within the set subscription price . The additional cost to upload content to their channel is relatively low, but can add up if there is a frequent turnover of programming. Digital Rights Management that may help protect content from piracy is an expensive optional feature as are the apps that enable the content to be delivered on smart tvs.
“Some niche global SVOD channels, like Revry.tv offer free access for to users willing to view advertising in addition to a premium subscription level priced similar to IZZY’s to these who are not. ”
If their venture is successful, IZZY may have another opportunity. Some niche global SVOD channels, like Revry.tv offer free access for to users willing to view advertising in addition to a premium subscription level priced similar to IZZY’s to these who are not. It is a tricky proposition. They would need to build audience numbers first to entice advertisers and then consider how many of their paid subscriptions will switch to the free option.
Hoffman’s partner in this venture is Buenos Aires native Jessica Cohen, now in Tel Aviv and working at the Israeli Ministry of Foreign Affairs. Their venture, started in February of this year is currently self-funded, but they are seeking venture capital seed investors. Hoffman is confident in attracting them as he feels his proposition “ticks all their boxes”.