Meet the Swedish-Russian cinephile building an anti-Netflix streaming platform

Business of Business: Could you give me a rundown of your venture? 

S.K.: Cinezen is a Swedish startup, which we conceived at the end of 2017. It's a new kind of film streaming platform. The idea was based on my personal frustration as a film distributor in the way how the other mainstream or niche platforms work. 

I was born in the Soviet Union, which I left 1991. I launched my film distribution company in Russia and distributed over six hundred films across the entire former Soviet Union, including Russia, Ukraine and Kazakhstan. 

When I started in the film distribution, we relied on a huge network of individual video stores to bring movies to audiences on DVD and VHS. Each store had its own editorial policy. If you went to two different video stores on neighboring streets (let alone in different parts of town or in different cities), you would find that their film selection varied because they catered to different audiences. Customers were exposed to hundreds if not thousands of film titles from browsing the shelves of a video store. 

I was always dissatisfied with the way the existing streaming platforms treat content and communicate with the audience. They are governed by recommendation algorithms, which try to anticipate your preferences based on what you’ve already watched. This is a very flawed and problematic approach because the algorithm can’t broaden your horizons and surprise you with an unexpected discovery.

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“I was always dissatisfied with the way the existing streaming platforms treat content and communicate with the audience...This is a very flawed and problematic approach because the algorithm can’t broaden your horizons and surprise you with an unexpected discovery.”

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The platforms show the same initial storefront to their entire audience, though sometimes it changes based on the recommendation algorithms. If you go onto iTunes or another streaming platform in the United States or in Russia or in Sweden, they will always have the same storefront for the whole territory. 

My first “eureka moment” was when I would license a very good film to iTunes to find that it wasn’t visible in any of their collections like new arrivals, world cinema, drama… despite being a really good award-winning film with a successful theatrical run. This was because an algorithm or an internal editorial group decided that it was not worth amplifying on the platform. 

So our initial idea was to give different people and organizations opportunities to create their own stores or their own channels within one platform. I thought, what if I had my own store window on iTunes, where I could display the films which I really like and recommend them to my many followers on social media. I have like 15,000 people following me on Facebook and another 15,000 on Twitter. 

I know many other people with a large social media following that are knowledgeable about film. They have diverse tastes and they would recommend different kinds of films. Some films might be featured in several selections, but basically every selection will be unique. And that's how we started to develop our project. Our initial idea was very much based on blockchain and cryptocurrency and I think it will play a very important role in the future. And this idea was realized in our first version which was presented at the American Film Market in 2018.

When somebody buys a film on the platform, the rights holder would be paid immediately. That's the beauty of blockchain. A big problem in film distribution, which I experienced firsthand as a distributor and producer is that everything is very non-transparent. Basically, the sales agents sell their films to the local distributors and local distributors try to sell them to the audience.

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“I can’t audit every platform that I work with. It's impossible. So I thought blockchain is a great solution for this.”

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And everybody has to report to somebody. The platforms report to the distributors, the distributors report to the sales agents and the sales agents report to the producers. And ideally, all the reports are correct and transparent. And if enough money is made, people start to pay royalties along this chain. But who can verify this report? They are unverifiable. I’ve made such reports and have also received reports from platforms in the form of an Excel file or PDF and I’ve had to take them at face value.

I can’t audit every platform that I work with. It's impossible. So I thought blockchain is a great solution for this. Because if you use this technology, when the user pays, the payment is verified through a smart contract, and then the smart contract splits the revenue in real time. We demonstrated this at the American Film Market.

I put the film which I held the rights to on the platform and we made a purchase in real time. And I demonstrated that my share of revenues already came to my crypto wallet –  sounds great, right? And there's greater transparency. You don't need reporting because everybody can just check your report directly on the blockchain. You don't need any rules. You don't actually need any payment administration because everything is happening automatically.

I’m sorry, I’ll interrupt you a bit…do you think it would work better with stablecoins?

That's exactly what I wanted to say. Now we have systems like Algorand or other blockchain infrastructures and networks, where you can work with stablecoins and use proof-of-stake consensus algorithms, which makes the transaction very fast and very cheap. So the only thing we need is more regulation, specifically regulation around stable coins and more corporate adoption. I firmly believe that stable coins are the future, at least for our purposes…stable coins could be a really great way to facilitate automatic revenue sharing and would be very transparent. 

The thing is that unlike many other platforms we not only share revenues with right holders but also with the third-party independent curators. We want them to curate the content for the channels and to use their social media to attract viewers to the platform so the only way to incentivize them is to make them partners in the process and to share revenue with them. The more people we share revenues with, the more complicated the administration is. And here blockchain can play a very important role in the future and stable coins are a very convenient tool for that. 

So that certainly sounds like a very groundbreaking and innovative idea….could you speak about your experience realizing it and your launch in the Russian market?

We had this started working in 2018. And with our first prototype or alpha version, which we presented at Cannes, and then basically every major film market and film festival. The whole idea of a blockchain-based tool was so popular back then. We got lots of mentions in the media and I was invited to have presentations at all the industry conferences. 

And then we started to look for investors. By the end of 2019 we signed a really good investment agreement and we planned to launch in 2020. And then you know what happened in 2020…the pandemic, which disrupted our investment plans. This sounds counterintuitive because the pandemic was a great time to launch. But it's a bad time to get a new investment… markets were crumbling and cash flow was disrupted. 

So we took another year to sort out these issues and we started to work on it again, in the beginning of 2021. We decided that maybe it was actually a good thing for us to take a pause, to rethink the system and redesign it. We started to work with one of Sweden's best UI designers Axel Von Friezen and he became a partner in the company.

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“I started in the late 90s where Russia was such a fresh and new market. Coming from Sweden but with Soviet roots and bringing really great films (the best in the world), I made people curious.”

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 By November, we developed a really good product. And based on the money available to us then, we saw that we had the ability to launch it in just one market. The initial idea was to build an international platform like Mubi or Netflix but before we could do that, we needed one market where we could test our concept. We thought Russia may be a good market for many reasons. I've had experience with this market. I worked as a distributor there for like over 20 years. I had a really, really good network in the film industry. 

I know many social media influencers personally, they know me because I was kind of a celebrity in this market because of my TV program. And also because for many years my company was the leading arthouse film distribution company in the country. I somehow managed to become a celebrity distributor, which is a rare thing, because distributors are usually behind the scenes. But because I started in the late 90s where Russia was such a fresh and new market. Coming from Sweden but with Soviet roots and bringing really great films (the best in the world), I made people curious. 

So I thought okay, we can start in Russia because we know the market and the culture. I had lots of personal contacts, a great network and many underserved dishes [films that weren’t distributed]. That's also very important because I believe this approach is very good to cover different niches. For example, LGBTQ cinema. 

Another niche was Jewish cinema. And again, we've worked with a program of artistic director of the Moscow Jewish Film Festival. And there's lots of interesting Jewish cinema in Russia, which has a very rich Jewish culture, but no specialized VOD platform. And it's understandable because the niche may be too small to sustain a specialized niche platform, but as a channel as a kind of a subdivision of a larger platform it would be fine. And then there was a channel for classic films. We also had a channel for horror films, which is a great niche anywhere in the world. And again, we worked with editors for the most popular horror film sites. 

We worked with Russia’s most famous feminist publication, which actually got banned today. I sent them my condolences… I said I want to congratulate you for managing to keep your publication online for six weeks after the start of the war. Very strict censorship was imposed. So when we started, I think, it was eight channels, which then became twelve. We had like another maybe five, six in the making.

When we started, people started to contact me. And that was a good thing. I didn't have to chase down potential content curators because we had a really good start. The media interviewed me. There were some publications about us in the popular media. So people started to contact me. Okay, we have this blog, we have this website. We have so many people visiting us, we want to join and to select films for you. And this was great.

So my understanding is that this was a voluntary decision to pull out of Russia.

Yeah, we were not forced to do it. But we had some serious reasons. First of all, we thought that ethically to keep doing business in Russia in this situation wouldn't be right. Especially when the exodus of companies started, you could understand that this war was a horror problem from day one. But it gradually became more and more horrible by the day. Now, after Bucha [massacre], it's just unspeakable. So first of all, it was a decision that we couldn’t continue doing business as usual.

I played a very important role in promoting the platform because a lot of people followed me on social media. I curated the curators and managed them and I discussed the films. I knew I wouldn't be able to even write about the films…who would care? And then of course, the entire model was based on freedom of speech, or at least to some degree.

For this model to work we needed free social media. We needed people who could write about the films or discuss them on YouTube, and recommend them to their audience. And you know, in Russia, all social media except Telegram was banned. Twitter is blocked, Facebook, Instagram, blocked. But also many of the influencers left the country and had other problems to solve, other than just recommending films. And of course, credit cards stop working in Russia. 

Or rather they work in Russia but because we are a Swedish company, we use the international payment processor Stripe, which stopped working with Russian cards. And if we started using a local payment processor, it would have been impossible for us to transfer the money out of the country.

So we didn't want to continue and we couldn't continue for many reasons: technical, financial, and because our curators were trying to escape this regime and build their life elsewhere. We also couldn't add any new films because it would be madness to license new films for Russia. It was just totally ruined. But we decided to give our audience two more weeks to watch the films on our platform. And then after two weeks, it would be taken off the air because it also costs money to continue running it. 

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“I got so many warm, positive responses from people. People told me how much they loved our platform. how it felt like a breath of fresh air for them.”

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After keeping it running for another two weeks, I sent all of our users a personal letter thanking them for being with us and apologizing for leaving them. I said that big wars usually lead to big changes in society, so let's hope that these changes will be for good. And I got so many warm, positive responses from people. People told me how much they loved our platform. how it felt like a breath of fresh air for them. They had so much access to the great films which we brought, which they couldn't find anywhere else and they loved how we worked and the way the films were selected. 

So I thought okay, we have to leave the market, but now we know that the concept works and people really need it. 

So clearly Russia is not a good environment to be doing business in, especially a cultural one. So what are the next steps? Which markets are you planning to conquer now?

Yeah, that's a good question. Because initially when we started in Russia, we thought about the strategy to grow. So we thought, okay, Russia would remain our market where we can maybe grow most in the near future. And then we'll add more territories because we're based in Sweden and Scandinavia. Or maybe we’ll look at some European markets. Maybe some distant but good markets like Australia, and then we’ll grow more muscles and we’ll try to enter the US market. 

And now we have to start from scratch. But we’re in a much better position because we all already have a product experience. We know how to do it. We know how to build a curator network. So we thought okay, starting with markets like Scandinavia doesn't make sense because they’re small and it's fragmented. I like Scandinavia as I lived here most of my life, but the biggest Scandinavian country, Sweden, has like 10.5 million people. And then they have Norway, Denmark, Finland, with around five million people each. We have 25 million people divided between four languages. And then we have, of course, Iceland with another 300,000 people with a language that nobody else understands. So we saw that and thought let's be bold! 

Let's start with the United States because this is like the most important market in the world and the biggest market in the world. And the market with so many niches, where even a small niche can be big enough to sustain a channel on our platform. And of course, there are big differences. For example, in Russia, the problem was that many great films wouldn't have any distribution. In the United States, most of them would have a distribution, but not all of them.

We checked the content on our platform and like 20% of our films had no American exposure. So that's a good start. So we can have some exclusive material and then lots of Asian and European films. Even some very good films don't have any distribution in the United States. If they did not premiere in Cannes, Berlin, or Venice, or if they weren’t prizewinners that made a big splash in Toronto or Sundance there is still lots of great content that's unavailable in the United States.

And then there are so many ethnic subcultures. Indian Americans or Polish Americans may feel underserved because few films in their native language are available on the American platforms. And even if they're available, they don’t know which are the best ones. If you don't live in your mother-tongue environment, you don’t have access to the same information. 

So we believe that there is a potential and because we started the market, there are lots of really great film, arts and culture influencers, with hundreds of thousands or even millions of people following them. And it can work both in North America where we want to launch the platform, but that can also facilitate international expansion. Because if something makes it in America, it can make it anywhere in the world. 

Do you think that this has the potential to scale to the same level as some of the streaming giants or is this going to be a niche service? 

This can scale to one of the leading niche or multi-niche services. Every niche is usually small, but people tend to have different interests. Very few people have just one track in mind. We analyze our statistics and we can see on our back end what people watch. For example, I could see new users of the Jewish film channel and the next purchase will be in the horror film channel and then he or she will jump to an LGBTQ channel.  So yeah, we believe that globally, we can reach millions of subscribers. 

Before the pandemic I went to major film festivals. I follow the industry. But still there’s so many great films selected by our curators, which I haven't seen or haven't even heard of. But this hive mind of curators could create a really truly great selection of films. So yes, it can be scaled up. I don't think it can be scaled up to hundreds of millions of users. But to the magnitude of millions of users? Yes, absolutely. That's why we were doing this.

What is your timeline or proposed timeline for the U.S. launch? And what are some milestones that you have planned for the next you know one to x number of years?

Well, we’re doing the modeling… I can tell you, when the war started, it shook us so much and there was so much stress that the 3-4 weeks we could hardly work. And I think many people around the world, especially people with relations to Russia and Ukraine, are in the same situation. I came from the Soviet Union…for me, Russia and Ukraine are like parts of the country where I grew up. One of my best friends from the army is in Ukraine and he's in the territorial defense.

So we started to collect ourselves and started to work on this concept again just a couple of weeks ago. I'm talking to the investors because of course they’re interested in what we're planning to do next. They understand that we cannot continue in Russia and cannot use the same strategy as before. I would like to launch the platform in the U.S in November. It's a good time. It's also a good time for the American film market, it's a good time to make an announcement…and it gives us enough time to prepare for the launch. 

We need to build up the relationships, we need to appoint local representation because obviously we can't do everything from Sweden. We need somebody on the ground and a good network. So we're looking at that we need to, as we did in Russia, to establish relations with the potential curators and influencers. We need to see what channels, what niches they want, and figure out the rights on the content they want. 

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“In 2022 and 2023, we plan to focus on the American market. So if we can reach  30,000-50,000 subscribers by the end of 2023, we’ll be very happy.”

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Our initial idea was that because Cinezen was based on blockchain and transparency, we could have all the films in the world in our collection. And then all these curators would pick up what they like and build their channels. Then I realized that the industry wasn't ready for that and this cannot happen, that they’ll license maybe a few hundred films and most of them are not very good. So we did it the other way around. We started to talk to the curators and ask them what films do you want us to license for you? And they gave us their suggestions. We licensed the films for which we could come to an agreement with the rights holders, but also understanding the choices and the tastes of the curators. 

So you need to do the same to go through the same process in the United States to build this kind of network of channels to see what content they want to license, either from the international sales agents or from the local U.S distributors. One big advantage of the American Film Market is we don't need to localize the content because every film available on the market already has English subtitles or is in English. That makes things easier and maybe even cheaper. Just translating a film to four Scandinavian languages could cost you a couple thousand dollars. 

We also need to further develop our product. We know it's good, but it needs improvements. We need to be on devices which Americans prefer like Roku and Amazon Fire. 

In 2022 and 2023, we plan to focus on the American market. So if we can reach  30,000-50,000 subscribers by the end of 2023, we’ll be very happy. And then we can start expanding first to other English language markets like the UK, Australia, New Zealand and then to European and Latin American markets.

We will be keeping an eye out for your launch here in the U.S. and we'll be looking forward to it. It’s very difficult to resist asking you, as a film lover and someone who knows so much about movies…in your personal Sam Klebanov collection on Cinezen, what would be the top one or two titles that you would recommend?

Well that's like one of the hardest questions I’ve ever received…. I would say I would definitely recommend a Takeshi Katana film like Hanabi. I mentioned the film which was very dear to me, Show Me Love by Lukas Moodysson. There's also one Soviet film, which was a cult film in my student years… it never received enough exposure in the West.

If everything goes fine, I will personally invest in restoring and making an HD copy of Kin-dza-dza!, by Georgiy Danelia. And of course I would have an Ingmar Bergman collection and an Akira Kurosawa collection. And again if you look at the mainstream platforms like Netflix, they don’t have many classic films. So I would put on a bunch of classic films and not the most well known ones to offer people some discoveries.