Interview: Razmig Hovaghimian, Co-founder and CEO of Viki.com

Zac: Alright, so let's start with an overview of the site, how it got started and what exactly your goals are overall.

Razmig Hovaghimian: Sure, so we were a class project actually at Stanford and Harvard Universities, my co-founders and I. And we started as a language-learning tool of all things. We were trying to see how we could get people to learn a new language and then we put Youtube videos behind it, you probably know a bit of the background, and it was just a class project. Then we took daytime jobs, things got a bit serious, started growing: I think at some point we had a billion views, I was at NBC Universal, on the international distribution side, and it just clicked, it clicked that as soon as we get translations on, content starts traveling. You know, you bring down the borders around it and it starts going to the next 10, 20, 30 countries that it hasn't been in.

So we quit our jobs -- we had put all our life savings in it -- and in 2010 we released Series A, came out of beta in December 2010, and we're building, you know, a global destination for the best of world TV and movies, for the fans and by the fans. If you will, in a way, we're sort of trying to liberate content, bring down this border that surrounds it and just have it travel, have the fans find it, and fansubbing is the heart and soul of it. It's been to the core of it, we've been inspired by you guys, actually, and the movement in the 80s with the anime subbing and it only made sense that, you know, the fans want to go out of their way to make sure they get the nuances right and make sure that other fans who want to love it see the content anywhere.

So that's how it started: we started licensing. It was a pain for the first 18 months to even convince content owners to allow us to fansub around it, but I think we just crossed about 10,000 hours of content now from 38 countries including some primetime stuff from NBC, BBC and A&E with the fansubs on them, and growing. So that's the vision, if you will, sort of your Hulu or Netflix but for the rest of us. For the fans and by the fans, and anime is an exciting new genre for us to get deeper into, especially given the whole fansubbing history behind it.

So tell us a little bit about how this process started, because that sounds to me, and I'm sure to everyone who's ever worked with Japanese license holders, convincing them that “Yeah, we're gonna have fansubbers sub this content,” that can not have been a simple process, getting them to agree to that. How long did that take you? How much stress was involved in that?

(laughs) Lot of stress, lot of travel, lot of drinking.

(laughs) Yeah.

And a lot of trips to Japan. Actually, getting the anime fansubbing rights was pretty much the hardest and it came with some restrictions, from numbers to restrictions on what countries we can do it in – numbers meaning the languages, how many languages it can be in – but we had set the precedent, so I think what gave us, if you will, a little bit of credibility with them is that BBC and NBC Universal, particularly, had agreed to allow other content to be fansubbed, which was a first.

So I've been trying to get the anime side even from our launch days, we started with Korean, but we started proving the concept. We're starting to explain to them that it's moderated by the fans. It's controlled, subtitles can be locked, and these are heavily passionate people that are working on it. At that point we also had Creative Commons protection for the fansubs, to protect it for the community, for the work they're doing, and also for the content owners.

It helped that one of our investors also is a known figure in that space. He's Mr. Kadokawa, chairman of Kadokawa, the studio, and he was one of the initial folks that had put their content on Youtube. And two of the folks that have been helping us on Viki are former execs at Gonzo, so they had opened up the relationships. I was working in Japan for two years while I was at NBC Universal and, of course, Universal had a relationship with Geneon.

So I knew some folks, but through the help of our advisors, through the investments, through Mr. Kadokawa and that precedent we had set finally, finally it tipped and it tipped with Tezuka. So when we started getting Tezuka titles one thing led to another and we started getting more and I think we looked at 430 titles or so and we picked about 100 for the next couple months. So we're hoping that those are going to be an interesting 100 that have been trapped, if you will, in Japan and we're gonna help them grow. But it wasn't easy, it was sort of iterative conversations and there were baby steps towards getting them comfortable with the process. Does that make sense?

Yeah, it makes sense, but I'm curious how you think this site fits in with all the existing streaming anime that's already out there. You mentioned Hulu; is the intention to compete with Crunchyroll? Is the intention to, you know, eventually be doing things like simulcasting – you are running Ozma which is a current show.

Right.

Is that the intention, to have this content compete with other streaming sites, because there's a lot of competition out there?

There is a lot of competition. I think it's additive, because we're trying to get content that has never been open in the US. The model for us, frankly, what we're trying to do, is we see that a lot of anime that was created hasn't really traveled. We're getting worldwide rights, which is a little different, than a lot of these sites, because Hulu, as you know of course, is in the US and it's expanding – it has its Japan base and others – Crunchy is heavily US but they have a big, broad presence that's growing outside as well.

So for us, really, we want the best experience. We want the fans to enjoy the shows and we want the content owners to realize they're luring new fans that can see it in different languages. So we're not just looking for English fansubs. We're looking for folks to sub it in Southeast Asian languages and European languages. We want this to travel far and wide, again picked by the fans and for the fans there. So I think in doing that we're increasing the size of the pie and getting it introduced and expanded for everyone involved in the process.

We also distribute to Hulu, by the way, and we feel that's additive. A lot of the shows we have outside of anime, like our Chinese dramas or the Korean dramas, they're both on Hulu and Netflix. Ozma, actually, we distributed that to Crunchyroll, because we felt that partnership makes sense. They have built a fantastic site for fans. And it works really well with us, because that's what we're doing, by the fans and for the fans. So in our view it's additive and it's been working well.

So are you paying a minimum guarantee on this stuff per episode?

It's just a combination. So there are minimum guarantees, sometimes once you recoup that you pay revenue share on the overages, but for the vast majority of the content we have today it's mainly revenue share.

Okay. And will you eventually be competing for simulcasting licenses in the same fashion that everyone else competes for bids on the rights to have these as exclusives? Because right now the name of the game in the streaming industry is probably, and still will continue to be, having exclusives, stuff that people can only view on your site and obviously this is a profit-motivated venture. Is the intention to eventually go there?

You know a lot of the content we have, that has been fairly large, is because we have a built-in, time-to-market advantage with the subs and we go to markets that, typically, the other folks that are buying don't go to. They go to the top two, three countries. They buy it for the US, or for Canada, or other areas that they typically have built-in audiences. We're picking everything else, we're picking the other 85% and the US in the process. So even when we don't get exclusives, like on the Korean shows, we still get massive, massive viewership. We have shows that have more than fifty million streams even without having an exclusive.

However the point you're making about the simulcasting is critical. So we will look at other shows and Ozma is the start. So we are looking at live-action shows as well and we're not necessarily looking at them for an exclusive. Precisely because of that additive model. The markets we go to, even if someone else were to pick up France, for them to sub it, for them to get it ready, it's a time, effort, and cost and in our case it's the community that's enthusiastically growing it within that market, so we can launch literally within hours. We have some Korean shows where, when we started, we were getting maybe 30 languages within the first 24 hours and another 10, 20 languages in the following week. And those are an additional 49 markets, if you will, outside of the English speaking ones that we're tapping into.

Yeah, that's interesting. It seems like you took a look at where the traffic is coming from, globally, and those Southeast Asian countries is where a ton of traffic comes from, as I'm sure you know, and it sounds like you're sort of trying to figure out how to monetize that.

Yeah, yeah.

Because it's very different – like you can't sell ads on content streaming in Southeast Asia, or at least it's very difficult. But that has been a giant question mark for a lot of streaming companies: okay, boy, millions of people in the Philippines will watch this if we make it available to them, how do we monetize that?

Right and that's why we have a huge presence in Singapore. That's where we're based and actually that's where I'm calling you from. And we are trying to crack that piece. It's not easy, but the reality is there isn't really a good inventory of premium videos in this region. So we have campaigns, actually, in the region that have been north of $50 CPM, believe it or not: this is Malaysia, this is Indonesia, this Singapore. So if you get those in critical mass, this can be basically profitable. At the same time it allows us to buy more content and fuel this because, as you said, it's hugely popular. I think Naruto was, like, number one or two highest searched term on Google last year. So, there's a massive, massive following for this content out here and we gotta make it work.

To a certain extent it's content arbitrage: we're picking up the best content from around the world in countries that they haven't been traveling to and for that reason typically you can get it on revenue share. And if we can monetize it it's hugely beneficial for the content owner, because these are 20, 30, 40 countries that they were never making money in, and they're learning a lot from that intelligence behind it as well, because they can see that there are new fans in that market.

Okay, so let's talk a little bit about your business model. That is, I think, where most of the questions are coming from. I put it out on twitter that “hey, I'm gonna be talking to these guys, what do you guys think?” and the chief thing was, and you've probably heard this, was “oh, it's easy to make money when you're not paying anyone to translate your material.” That whole “by the fans, for the fans” thing is a nice platitude, but people now know when you say that, generally it means you're exploiting fan labor. How would you combat that criticism? How would you describe your relationship with these people and are they getting any sort of compensation for their work for you?

Yeah the fansubbing. So, what we aim to do is just be transparent and what we are trying to do here is just give more than we can take back. And it is backing them. So I can understand the criticism and I think, you know, it's fair that people have those questions. But we put the fans front and center and every time you see shows on Hulu, for example, it tells you who it's brought to you by, even the team name of Viki. When you see the credits you see the names of everyone that's been involved, you see the faces of those involved.

And there are many reasons why people come to Viki. A lot of them want to learn a new language. We build features for that, like seeing two subtitles at the same time. Some people are brought on to the mission. They build the channels even before the videos are on and we go license the shows that they recommend. So it is for them and, you know, at that level we're not bluffing. What we're saying is “let's work with you guys and let's open this up” and when we go with content owners for licensing we make that very, very clear that this is for the fans and we need fansubbing rights around it. So it started to morph into this and it's now at a contractual level. We would not license things that we cannot get the fans involved with it.

So as long as we're authentic, we stay true to this mission, and we work with the fans to get this as a better experience for them, I think we're getting the right balance. Obviously at the same time we have to make sure that it's content that travels and it's not content that's gonna lose money for the content owners, but, you know, it's an experiment. It's not an easy thing to get this whole fansubbing at a global scale for all these countries, especially countries that content hasn't been explored in. But I see where some folks can come from. Again, so long as we keep them at the heart and soul of this, and remain true to where we started, I think they'll see through it.

Well, yeah, I guess. I think no matter how much you say that it's still gonna be “okay, you've figured out a way to make money off of fansubbing without compensating any of the people who are doing the work,” and, you know, using that language is all well and good, but I think that is the chief thing that's gonna come back at you, like, “so you've got this by the fans for the fans thing, but obviously this is a capitalist enterprise, not a non-profit”. So is there any intention, at any point, to recompensate translators? In other places that's all paid work.

Well, you know, actually that's something that we would consider, something that we've explored in the past, but even asking the fans – and maybe I should let fans answer this question, rather than me answering it – people are doing it for the love of it. People are doing it because they're also exploring the content, finding the content. We are, honestly, we were, like, on fumes, by the time we raised our Series A. So we started as a .net. We started as Viikii, I don't know if you remember our early days. Not capitalistic in this nature, we're trying to build a model here that works for the fans and the content owners alike, and we feel that its additive, and if we can find that right balance, it works. We don't tell any of the content owners that, you know, this is not a business at the end of the day, because they wanna go to other markets, and we don't tell the fans that we are a non-profit either. We say that, with their help, we're trying to get this content to travel to all these countries. So long as we're transparent, and they understand the model, I think it's a model here where we can grow together. So you can make that sound like it's all platitudes, but that's the reality. All we can do is live it.

Right.

So long as we live it, and so long as we stay by it, I think that's all we can hope for. And people will feel how they feel about it. So I think our actions will be the best way to judge it.

Right, and if you're a professional translator, or a fansubber who wants to make the leap into professional translation or video production, it sounds like your site is more of a resume builder than a destination for work, maybe, if that's one way to look at it.

Yeah, it could be one way of looking at it. I know a lot of people come in spurts, they come and they work on a drama that they're really familiar with, or an actor that they really love. They make friends on Viki, so we hear back from a lot of the fans that they made lifelong friends, they've traveled to countries where there are fansubbers on their team.

I think you're familiar with the Viki model where everything is a channel.

Yeah.

So a channel can be TV series or they can be movies and they have their moderators and managers and the different levels of fansubbing. So they make friends within their group. And people seem to be enjoying it. So they can go and they can come back and it's open, it's a playground for them as well.

Right.

And we try to make this an enjoyable experience and I think we build a platform that also makes their life easier. So it's a place where they can get the adoration of other fans that can see their work. They can get messages from other fans and, you know, continue that relationship building even outside of the Viki model. At the same time they interact with all this great content that they love. It wasn't easy for us, Zac, I'll tell you that much. I mean, if it was just a capitalistic model, god, man, I wouldn't have gone through this trouble, this pain to get it going.

Yeah, and to that end, do you have an ambassador? Is there somebody managing these teams? Because, you know, managing fansubbers, I would imagine, is a lot like herding cats in that it's nearly impossible to do. And so, it sounds like maybe your solution to that was “okay you guys, just do whatever it is you wanna do, and we'll make it work”… do you have a quality check? How does all that work?

So the channels themselves have managers and the managers of the channels go and recruit moderators by language. So it can have Arabic, French, English, etc, etc. And once the subtitles are actually completed and the managers and moderators are happy with the quality, they can lock the subtitles.

I think you know that the fansubbing on Viki is collaborative, right? So they can get three or four hundred people working on a one hour show at the same time. You can translate one word, go get coffee, come back, the entire one hour could be done, because you can contribute just one word. You don't have to do a sentence or an entire series, and they police each other. So each word actually is voted on and the best one sticks. That's why it's collaborative in that nature where you can just do a very small piece and have the rest of them work on it. And the whole Creative Commons element protects them, that anyone, if they were to use these fansubs, it has to be attributed back to the Viki community.

It's growing. We have, I think, we shall maybe have the latest numbers on this: we cracked 200 million words translated and we're in a 150 languages to date.

Wow.

So the fansubbing community now is just in so many languages. And we see some random ones pop up on the map as well. So it's been an interesting phenomenon and it's spreading.

Yeah, yeah. I think what you're doing is kind of providing something that has just not been there for a very long time, which is a legitimate avenue for these people to do what it is they want to do without breaking the law, which is kind of important.

Yeah, and with content they love.

And it's scaling the community site as well. We do some light moderation. You can check on our blog, actually, and you can see our community managers that are interacting with them. But it's really just to set the parameters rather than come in and moderate the policies and the guidelines. But by and large it's the community. We listen very carefully to them over time for what features and products and enhancements they wanted and we implement them. So we learned a lot from the community and we keep taking that feedback and iterating and improving the product.

How many employees does the company have? I mean you've got all these moderators and stuff, I assume those are all volunteer positions as well.

All volunteers, correct. So, we have equivalent of about 37 people now, not all of us full time, and they help on the content acquisition side. So less than 40. I'd say the core team is about 26 people now and we're spread between Singapore, Japan, Korea, and the US.

Alright. And, so are you eventually planning on moving to a subscription model? You know, with these streaming sites it's often said that you need lots of money and lots of time and you can sort of cross your fingers and hope that you get it into profitability at some point. Like, Crunchyroll is still not really in the super profitable area and they've been at it for four or five years at this point. What's your plan?

There's always gonna be a free version, that I can tell you.

Right.

Premium we haven't thought out. Now, there is some content that is extremely difficult to get unless it's behind a paywall. It can be because of the holdback or because of the incumbents or the TV stations in those countries. Actually, Malaysia being an example: it's extremely hard for that country actually to get rights for the NBC Universal shows we have. We have everywhere in Southeast Asia except Malaysia, just to give you a sense.

So there could be certain countries or certain types of content that could be, you know, might be behind either a paywall subscription, but those are not even in the planning stages yet. If we get to that point where we're exploring that type of content it might something we look at, but the whole content arbitrage model – where we're picking up content at a reasonable price but being able to monetize it on ads globally at a higher price that breaks even – I think is the model to explore. And for right now it's working and I think it's scaling quite well at a global level. It's working well in Europe, it's working well in North America, it's working well now in Southeast Asia. And we're about to make an announcement actually on an ad sales partner, globally, that's helping us with these. So at that point I'm more than happy to run some examples by you, as well as what kind of CPMs we're seeing there.

Right.

That was another tough one to crack, but it's looking interesting.

What's your marketing plan? Are you planning on doing anything that your average anime companies d, which is to show up at conventions and maybe have a panel with a representative there, and you know, any intention of doing anything like that?

(laughs) Listen, I'm learning about the market, so anime is one of the genres we're in. I'd love to show up at conventions, even just to talk with the fans. I saw some of the photos. It looks fun. I've been to the Singapore one, I've been to Japan, it would be awesome to be in San Diego. But just to understand the genre a little better. You know, I was a fan as a little kid growing up in Egypt and you see stuff that's still airing there that's so old from the 70s and 80s. So I would love to immerse myself a little more and, yeah, absorb the genre. Especially given its root of fansubbing, I think it would be a fascinating one to get more into.

And speaking of that: your audience. What so far… because you've got anime, and generally when you have a site like a Hulu or something, anime is not the most popular content on the site, and obviously what you've got is very diverse. It looks like the dramas are really your bread and butter. Is that the case?

We started with dramas. Korean dramas are maybe under 40% today, but the way you see it from the US it might look very different, because if you look at our site from Southeast Asia it looks very prime time US, if you will. Lots of A&E, History Channel, you see SyFy shows on there, you see the BBC shows. So from the US it's pretty heavy, it looks like Asian concentrated. Anime we're just starting in. As you know we started with the ten titles, including Ozma. But anime actually is doing well and what I hear from Hulu is it's actually doing fantastic so I think it's gonna be one to watch and grow. And of course there've been a lot of others before us that seeded that market. So, TV in general, the dramas included, is roughly about 80% of the content now. We're about maybe 15% movies and 5% short form.

So one of the first shows you put up is Brother, Dear, Brother which is sort of a classic, obscure show that no one would ever try to make any money on.

Mm.

It's that kind of a show. And I had someone immediately ask “can they liberate The Rose of Versailles from Toei? Can somebody finally get Toei to let someone subtitle that and make it available to viewers?” Are you going after that kind of stuff? Those kind of shows where there isn't a commercial market for them really, but there's an audience for them?

You know, honestly Zac that's something I'd love to do. I mean one of the things we talked about initially when we said what kind of titles we should go after, and the way we identified Tezuka Pro and the titles that they have, and -- of course you know that Brother Dear Brother is one of those -- is just the stuff that's trapped, like I'd even love to even find the false negatives, stuff that's phenomenal but has never really traveled, and Rose of Versailles would be one of them.

Yeah, actually we're trying, we are in conversations… it seems to be a tough one. Another one I'd love to get is Candy Candy. It's been so hard to get that one, but I hear so many people are fans of it, and my wife is even a fan of it. She grew up reading it. So there are shows like that, that we gotta try and liberate, as you say. And yeah, Brother Dear Brother seems like an interesting one. It seems to be getting some traction and it seems like it was never even officially released in English, I did not know that.

Cool. Alright man, well you answered all my questions. I appreciate the opportunity to talk to you. It's exciting what you're doing.

Thank you. Thanks for the support and thanks for the tough questions from the fans.

(laughs) Yeah, no problem.