Cineverse CEO Basing Company’s Growth in Part on Horror Character ‘Art the Clown’

Streaming distributor Cineverse (formerly Cinedigm) is coming off a profitable fiscal quarter due in large part to the unexpected theatrical success of low-budget slasher movie Terrifier 2, which generated $15 million at the box office. The budding franchise, which has been extended to a third theatrical release slated for 2024, help jumpstart subscription’s to Cineverse’s Screambox streaming platform, among other revenue channels.

CEO Chris McGurk

Since the movie’s success, Cineverse initiated a reverse stock split, changed its name and sold $8 million worth of new stock to help funding the company. At the same time, Wall Street has been a tough sell, with the company’s stock trading below Nasdaq’s $1 minimum per share pricing, until the reverse stock split.

In a June 21 statement, CEO Chris McGurk said the company has been building its streaming channel and content portfolio, predominantly through M&A and strategic partnerships, which has upped the library to more than 70,000 titles.

“The net result of this has been the rapid growth of our namesake channel, Cineverse, which has already reached the Top 10 of all streamers in terms of title depth and breadth,” McGurk said. “Our reputation in the industry as a company that can successfully monetize channels and IP has grown alongside our library, with more than 650 partners ranging from Hallmark and Konami to American Public Media and All3Media.”

But it was horror character Art the Clown, who menacing presence in 2016’s Terrifier and last year’s Terrifier 2 that put Cineverse on the map with moviegoers and streaming consumers.

“That perception rose to a whole new level over the last two quarters on the back of [that movie],” McGurk said, calling Art the Clown this generation’s Jason or Freddy Krueger.

“I have been involved with the release of hundreds of films, both studio-level and independent, and I have never seen a movie that has had such a high ROI and enormous box office-to-marketing-dollar ratio,” he said.

The executive said Cineverse leveraged the 80 million visitors and billions of ad impressions across its portfolio of streaming properties to drive awareness for the movie and generated millions of dollars in earned media value on venues such as “Good Morning America,” “The Howard Stern Show” and “Saturday Night Live” through the effective viral and social marketing efforts of its Bloody Disgusting horror group.

The buzz more-than-tripled paid subscribers on the company’s Screambox horror channel. Most importantly, McGurk said the movie’s success created an industry-wide perception of major momentum for the company and underscored that Cineverse had become a key new destination to bring important IP.

The executive claims Cineverse has a “flood” of new partnership and M&A opportunities for “high value IP” over the past 90 days, which includes the Sid & Marty Krofft library.

“We are in the final stages of closing deals for one of the most loved, successful and profitable nonfiction television brands of all time, a highly valuable and recognizable children’s library of IP, and a seminal brand & library in the horror space,” McGurk said. “For these five deals alone, we beat out competing offers from at least three major studios and a major cable conglomerate.”

Cinedigm Changing Name to Cineverse in Business Reboot

Cinedigm May 22 announced it is rebranding its corporate name to Cineverse in an attempt to underscore the home entertainment distributor’s focus on streaming entertainment and technology.

Along with the corporate name change, the company’s stock symbol will also change from CIDM to CNVS, with its shares commencing trading on the NASDAQ Capital Market under the new symbol at the market opening on May 23.

Cineverse features content channels across every streaming model (FAST, AVOD, SVOD), in addition to a library featuring more than 60,000 movie and TV titles. And a podcast network of an estimated 70 million downloads across 28 podcasts.

Chris McGurk

“We have come a very long way from the Cinedigm of 10 years ago, which specialized in digital innovation within the cinema industry,” CEO Chris McGurk said in a statement.

McGurk said the renamed company, in addition to shoring up its stock price, plans to continue expanding its media library, currently at over 60,000 titles, focusing on niche genres, including horror and indie films.

“Our recent investments and acquisitions have enabled us to become a leader across multiple entertainment genres, spanning anime and Asian entertainment, to faith and family, and many other genres,” he said.

McGurk believes the new company name more accurately reflects the evolving business market and media brand operating at the intersection of entertainment and tech innovation.

Cineverse last year launched Matchpoint, a streaming technology and content distribution platform that offers a unified content management, preparation, delivery, programming and analytics solution incorporating AI and machine learning to automate tasks.

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Cineverse says Entrepreneur Magazine and FUBU, among other brands, recently selected Matchpoint on a software-as-a-service (SaaS) basis to establish their streaming businesses.

“A key part of the company’s vision is to celebrate culture through entertainment, storytelling and innovation,” said Erick Opeka, chief strategy officer and president of Cineverse. “We already do this with our channel portfolio, providing a platform for storytellers to reach a broader audience, while connecting communities of fans — wherever they watch — with content that they often cannot find elsewhere as other major streaming services cut back on their content offerings.”

Cinedigm CEO Expresses Faith in Company’s Streaming Future

Cinedigm chairman/CEO Chris McGurk is staking the future of the Los Angeles-based home entertainment distributor/digital operator on faith-based content and streaming video.

Facing an underperforming stock price and growing investor concerns, McGurk March 2 issued a shareholder letter looking to reassure Wall Street that the company is firing on all cylinders — underscored in part by plans to repurchase 10 million worth of common stock through the next 12 months.

Chris McGurk

“We believe that purchasing undervalued Cinedigm shares is a superb investment strategy for the company,” McGurk wrote, adding that he, as owner of more than 2 million shares, “understand[s] the frustration that all our shareholders are feeling now.”

While Cinedigm’s current share price hovers around 50 cents (well below Nasdaq’s $1 minimum), McGurk says analysts who study and follow Cinedigm have targeted the company’s stock price at from $2.25 to $5 per share.

To get there, Cinedigm this week acquired two faith and family media properties, Dove.org and Christian Cinema, the eighth acquisition in the past two years. Both properties, McGurk believes, will help Cinedigm capitalize on a growing faith-based entertainment industry across movies, reviews, news, podcasts, ratings for films, TV shows, video games and online content, among other distribution channels.

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“This past weekend’s box office success of [Lionsgate’s] Jesus Revolution demonstrates the huge opportunity in this important and growing entertainment segment,” McGurk wrote.

Through transactional VOD platform Christian Cinema, Cinedigm hopes to replicate the fiscal success it has with its Bloody Disgusting horror platform, which saw the theatrical release of Terrifier 2 defy box office odds and segue into a successful digital retail run.

“We are now well-positioned to compete in two of the hottest genres in Hollywood,” McGurk wrote.

Separately, the launch of ad-supported streaming video aggregator Cineverse, backend technology provider Matchpoint, Cinedigm Ad Solutions and the Cinedigm Podcast Network support his contention the company can reach more than 50% in annual streaming revenue growth and $150 million in revenue within four years while also significantly improving margins and attaining sustained profitability, he wrote.

Cinedigm currently sits on a content library of 60,000 indie movies and TV shows, including 25,000 titles added this year.

“[We aim to become] the Spotify of independent film and TV,” McGurk wrote.

The executive said the Matchpoint platform in January not only delivered 9,000 titles, comprising 50,000 content assets, into the streaming ecosystem, but the platform also facilitates content management, content preparation, content delivery, programming, video streaming apps and analytics.

“For perspective, that is 2.3 times the total number of movies on Netflix or 7.2 times the number of movies on Hulu that we processed in just a single month,” McGurk wrote, adding that Cineverse now has more than 19,000 titles available to buy, rent, stream with ads, or subscribe to commercial-free.

“Our goal is to have hundreds of thousands of titles over the next 30 months that, like Spotify before us, are expertly hand-curated or easily searched,” he wrote.

Cinedigm shares were up 4 cents in midday trading.

OTT.X Summit: Cinedigm’s Chris McGurk Says Entertainment Companies Must Quickly Embrace Change

Looking over his long career, Cinedigm chairman and CEO Chris McGurk said adapting to new ideas and technologies quickly is key to successfully navigating the entertainment marketplace.

Speaking during an Aug. 31 presentation at the OTT.X Fall Summit in Los Angeles, he noted that over the years, “The one constant has been profound change.”

“In a business where the only thing for certain is rapid technological change, you’ve got to be ready every year or every two years to revisit your business model,” he said.

He recounted several key experiences during his career that involved embracing new ideas. At the Walt Disney Co. in the early 1990s, he was tasked with visiting tech giant Steve Jobs to discuss distributing Toy Story, with its innovative CGI animation. At the time, Disney was focusing on highlighting its traditional animation business.

“It was going to be the engine that was going to drive the company,” McGurk recalled, adding, “The fact is, there was a huge, raging debate going on whether we should distribute Toy Story or not.”

In a meeting with Jobs, he recalled telling the tech giant, “Some people at Disney don’t want to do this deal because they consider it blasphemy.”

“Some people at Disney are idiots,” Jobs replied, McGurk said.

McGurk noted, “We embraced the new technology and look what happened.”

In a later experience at MGM, he recalled the studio’s successful shift from trying to compete with the major studios on theatrical releases to instead focus on a newfangled product: DVD.

“We looked to technology as the answer, and right at that point the DVD business was beginning to take off,” he said. Thus, MGM made theatrical a “secondary business” and “built an operation that could squeeze more money out of DVD than everybody else.”

At Cinedigm, McGurk embraced new tech as well. After going through a transformation to a streaming company a few years ago, executives began to see that competing in the subscription business might be a “losing proposition for us” with the big players in the market.

“We began looking at the growth of connected TVs and the enhanced lean-back experience,” he said. That shifted the thinking to the free ad-supported model that the company now champions.

“I think we launched our first FAST channel in 2018,” he said.

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Now, big players are getting into the ad-supported model, including Netflix, where executive Reed Hastings had always eschewed ads as hurting the streaming experience.

“He’s eating crow now,” McGurk joked. “But in the long haul, they’ll do just fine.”

Ad-supported streaming has a bright future, he said.

“It’s a given that the ad dollars flowing into the streaming business are going to escalate,” he noted.

Cinedigm plans to sidestep the big players.

“Our strategy is to let the big guys kill each other why we launch channels that are complementary,” he said, noting that the company has channels that are “very targeted at a very specific fan base,” such as the Bob Ross channel.

He sees coming consolidation among the big streamers.

“Those that have big debt loads and are thumbing their nose at the creative community … they’re not going to be around,” he said.

The days of just gathering loads of subscribers and pleasing Wall Street are ending, he said. Profitability and cash flow have become key.

“They look at it differently than they looked at it a year ago,” he said, noting “we were profitable last year.”

Engagement is also important so that streamers can serve up ads.

“We are trying to superserve these enthusiast fan bases,” McGurk said.

For instance, Cinedigm linked with Bloody Disgusting to beef up its horror content, with an accompanying podcast.

The Bob Ross channel, featuring the late painter, is the company’s most successful channel, he said, noting Ross is “like Mister Rogers for millennials and Gen Z.”

As part of Cinedigm’s exploration of AI, recommendation engines and other tech, the company is looking into creating a “deep fake” Bob Ross.

“We’ll see where it goes,” he said.

In addition to ad-supported models, international expansion is also a big opportunity for streamers as most countries outside the United States are behind. Cinedigm likes to partner with local operators to enter foreign markets, he said.

While the company has 46,000 indie titles in its library, on most titles, Cinedigm has just North American rights, so the company is trying to increase the percentage of worldwide rights in its library.

McGurk believes the future is bright for independent content creators. Previously, “You had a system that was controlled by six or seven major studios,” he noted. Now, there are “hundreds of opportunities to get access to eyeballs.”

In the next three to five years, he sees consolidation.

“You’ll probably lose two or three of the bigger streamers,” he said, adding there will be “more channels and fewer companies.”

Cinedigm: OTT/Streaming Revenue Up 31%; COVID-19 Drops FY 2020 Revenue 27%,

Home entertainment/over-the-top video distributor Cinedigm July 6 reported that it narrowed its fiscal-year 2020 (ended March 31) net loss 10% to $14.7 million, from $15.9 million in FY 2019. Revenue dropped 27% to $39.2 million, from $53.5 million, largely due to the shutdown of the theatrical business. Cinedigm attributed the revenue decline to its digital projection business.

Meanwhile, streaming revenue increased 59% year-over-year, primarily driven by 466% growth in ad-supported linear television and ad-supported video on demand (AVOD) ad revenue growth. Total streaming-related revenue increased 31% year-over-year, with total sales of $24.4 million. Streaming-related billings now represent more than half of Cinedigm’s entertainment business.

“Clearly, we have made remarkable progress as an OTT/Streaming company over the last year, including achieving profitability in our core business in this fourth quarter by increasing [pre-tax earnings] by $3.5 million or 125% over last year,” CEO Chris McGurk said in a statement.

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McGurk said the distributor now markets a 16-channel OTT portfolio to include about 670 million global devices from more than 40 distribution partners worldwide.

“We grew ad-supported viewers on connected TV’s from zero to 13.2 million in 15 months, almost tripling viewers in just the last 7 months prior to May 31,” he said.

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“We are rapidly scaling up our streaming business to capitalize on the ongoing and permanent [pay-TV] cord-cutting shift towards OTT entertainment,” McGurk said. “Heavy streaming adoption rates, particularly for free, ad-supported linear channels, continue to dramatically accelerate.”

Erick Opeka, president of Cinedigm Digital Networks, said the company’s revised model is driven by signing and launching new channels, increasing distribution footprint, growing viewership, and achieving monetization with scale partners.

“Our focus on these four key areas can be reflected in our results and our deals with the best companies in the industry,” Opeka said. “Given this, Cinedigm has enormous prospects for growth in the coming fiscal year.”

Cinedigm also strengthened its balance sheet with the addition of a 26% ownership interest in China’s Starrise and $15.5 million debt reduction.

“Reducing this debt decreased our interest expense by $3 million annually,” said COO Gary Loffredo.

Cinedigm Acquiring AVOD Platform ‘Future Today’ for $60 Million

Cinedigm March 15 announced it has entered into a definitive agreement to acquire Future Today, one of the largest ad-supported VOD networks, for $45 million in cash and $15 million in Cinedigm common stock.

The acquisition increases Cinedigm’s over-the-top video footprint to over 7.6 million monthly active users and 67 million total app installs.

The Los Angeles-based home entertainment distributor said Future Today, which owns and operates more than 700 content channels with more than 60 million app installs, and manages more than 200,000 film, television and digital content assets,generated about $23.9 million in revenue in 2018.

Future Today brands include Fawesome.tv, focused on general entertainment movies & television shows, and HappyKids.tv, providing age-specific edutainment in the connected TV market.

Alok Ranjan and Vikrant Mathur, co-founders of Future Today, will continue to lead the subsidiary as co-presidents, entering into long-term employment agreements with Cinedigm upon the deal closing.

“Building our stake in the rapidly surging AVOD business is a top priority for Cinedigm, and the acquisition instantaneously transforms our company into the world’s largest provider of premium [ad-supported] content,” Chris McGurk, chairman/CEO of Cinedigm said in a statement.

Future Today’s cloud-based technology and ad-based monetization platform manages OTT services for more than 350 content owners, producers, distributors and major media companies helping them launch and monetize connected TV channels across all devices.

“Alok and Vikrant have built Future Today into one of the most respected and fastest growing companies monetizing video content today,” said Erick Opeka, president of Cinedigm Digital Networks. “Their entrepreneurial spirit and deep knowledge of the video ad space, combined with Cinedigm’s content and relationships, will be a formidable and compelling combination in the rapidly growing AVOD segment.”

The transaction is expected to close in the second calendar quarter of 2019 and is subject to customary closing conditions.

DEG Meeting to Focus on Doing Business In, and With, China

DEG: The Digital Entertainment Group is hosting a special membership meeting Sept. 25 at the Luxe Sunset Boulevard Hotel in Los Angeles about doing business in and with China.

The meeting starts at 2 p.m. and will be followed at 5 p.m. by a networking session.

“Creative Collaboration with China” is hosted by Cinedigm, the film company majority-owned by Hong Kong private equity group Bison Capital.

Amy Jo Smith, president of DEG: The Digital Entertainment Group

Cinedigm in January announced an alliance with leading China-based Starrise Media Holdings Ltd. to release movies in China theatrically and digitally. The deal also paved the way for Cinedigm to distribute Chinese films in North America.

“Part of DEG’s mission is to provide members with leading-edge knowledge and resources about emerging trends and technologies to prepare for growth,” said Amy Jo Smith, CEO and president of DEG. “In this vein, this program will delve into how media and entertainment companies in the U.S. and China can work more closely to refine storytelling and script development to improve content performance across existing and emerging distribution platforms, and how the evolving distribution landscape may affect future revenue potential for content in both markets.

In the keynote address, Cinedigm Entertainment Group president Bill Sondheim will provide introductory remarks. “We are making a concerted effort to build meaningful bridges between the U.S. and China film industries and I see great enthusiasm in China and Hollywood because both sides see economic benefits,” Sondheim told Media Play News.

Sondheim’s remarks will be followed by a “chat” with Cinedigm chairman and CEO Chris McGurk and Bill Mechanic, the former 20th Century Fox studio chief (and, before that, the home video head for the Walt Disney Co.) who now heads Pandemonium Films. Bennett Pozil, EVP of East West Bank, will moderate. Variety once said, “Pozil has become the go-to financier for those at the intersection of Hollywood and China’s film markets.”

The keynote will be followed by a panel discussion on distribution strategies, consumption patterns and content creation trends in China and the United States.

Panelists include Marc Gareton, EVP, International Asia-Pacific and International Productions for Warner Bros. Home Entertainment; Doris Pfardrescher, president and CEO of Well Go USA; and Daniel Solnicki, EVP, Business Operations, as NBCUniversal. Stewart Till will moderate.

In addition to the speakers, about 15 delegates traveling from China will attend, including representatives from the highest levels of government and companies like Tencent.

“We are very honored to have been able to develop this program as a knowledge exchange with Film and TV Import and Export Association (FTIEA) members from China and to host a delegation from FTIEA that has traveled to Los Angeles to participate in the program with U.S. producers, distribution experts and business development executives,” Smith said.

The meeting is free for DEG members. To RSVP, or to inquire about non-member attendance, email Shannon@degonline.org.