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- [00:16]
A
Welcome to the Media Odyssey podcast live at Stream TV Europe.
- [00:21]
B
That is Marion Renchett and that is Ivan Chaparro.
- [00:25]
A
Thank you all so much for coming to Stream TV Europe. The first one. Anybody here listen to our podcast, raise your hand, give a cheer. We are recording this, so the energy here has been amazing. Day two is just starting. Thank you all for rising early after a great party last night. Are you having a good time, Maryam?
- [00:46]
B
I'm having a good time.
- [00:47]
A
You crushed it yesterday. We have an amazing guest here. We're going to break down the mystery around microdramas. Bogdan Nesvit is the founder of Holy Water Tech and My Drama. And we're going to walk you through our mutual skepticisms around microdrama. And we're going to get inside the business model. Bogdan has graciously, I guess, volunteered to represent this massive movement in the content ecosystem right now. Bogdan, could you just tell us how? I think everybody in media, or most of the mainstream media folks, believe that the microdrama phenomenon just popped out of nowhere in the last 18 months. But you founded this company a while ago and it didn't start in video. It started in a different art form. So walk us through the origin story of Holy Water and My Drama. Oh, yeah, sorry, you need your clicker.
- [01:44]
C
Thanks a lot, Evan, for inviting. Thank you for coming, guys. So Holy Water Tech has existed for six years. I founded the company with my current co founder. We started from Interactive Stories platform. We started building those interactive books where you can make choices and those choices lead users to different endings and different chapters. Then we started asking ourselves a question. How can we scale those interactive stories? And for me, the obvious answer was to launch a books platform for amateur writers around the world, basically to source great books, assess them with data, and turn the best books into interactive stories. That was our second product that we launched. Then we started thinking about how we can develop it from further. So we launched audio books based on the books. And then in 2024 we launched our first video streaming platform, Microdrama platform called My Drama. And that is our biggest product right now. And now we are also focused on developing AI video streaming. I'll be talking about this in the future. This is how our content journey and user journey looks like. So the first thing that you see is our books platform. It's called My Passion. We have more than 1 million monthly users and we test our books on My Passion. So we create hundreds of books per year. We test them on real data, so we get real data from users. Then the best books we turn into AI generated video series. So the second step is 100% AI generated video series. We have a different platform for that. So we do test AI generated video series to see what kind of characters perform, what kind of hooks and cliffhangers perform. And then the best AI generated video series we go and turn into live action mobile. First vertical movies for my drama. This is actually the real case, started from a book and we turned it into video series and then the next step that we are aspiring to. So basically our vertical video series, they are getting tens of millions unique users and mostly in the United States. And there is a huge fan base around our best movies. And then the logical step would be why not go full screen and actually turn this into a movie. And this is something that we are working on. On.
- [03:52]
B
That's quite funny actually that you're going full circle on this. Everyone is very keen and is looking at you because you went vertical and you want to go again to the big screen. Long form. Fascinating. But let's go back a bit on my drama because how did you build this from scratch? So my passion. You worked on books, then went to the video. How did my drama really come to be and how did you build it to be? How many people are we talking about using that platform right now?
- [04:25]
C
We have close to 7 million monthly active users on my drama. It's mostly users in the United States. So basically the question for us was when we had books platform, the question was how do we expand our reach reach of our content. And the plans that we had was either to launch comic books platform, basically to turn books into comic books or to go video streaming. Video streaming was more risky for us because we didn't have any expertise in films creation. But it was also a more ambitious bet and it was something that I'm super passionate about. I'm passionate about movies. So we decided to go ahead. We basically started turning our best books into video series. We found great studios, we worked with those studios to create data driven scripts based on our books and they started working really well. So we started scaling it further and now we are working with a lot of studios, including Fox Entertainment and other
- [05:18]
A
studios in the US and how many different movies? So you take these movies, you break them into micro episodes, right? About three minutes long on average.
- [05:28]
C
It's about one minute long actually.
- [05:30]
A
One minute. Okay. And so how many different movies titles do you have on the platform right now?
- [05:35]
C
Right now it's close to 300 already on the platform. We are going to be close to 500 by the end of the year and probably 1,000 by the end of next year.
- [05:44]
A
And the average number of episodes, you know, micro episodes within each film is
- [05:49]
C
what, up to 90 episodes. It's like a whole movie of one and a half hours to two hours. It's just, it's broken down into those small bits to tailor to current consumption habits of small engaging episodes which start with the hook and end with a cliffhanger.
- [06:05]
B
How many? So you said the US was your main market. Did you do that on purpose or did you launch globally and then the US picked it up?
- [06:14]
C
The US has been always our main market since our Interactive Stories era. It's the biggest market. So we consciously launched in the United States.
- [06:23]
B
And so how are people paying you? What's the model? That's one of the things. I like the idea of vertical video a lot. You call it Pocket tv. Even I maybe do not understand the business model of a lot of those apps. This is where I'm getting doubtful about the model.
- [06:45]
C
Yeah, so the model has actually evolved a lot since the beginning. It all started from what is called microtransactions. Imagine that you basically watch a 90 episode series and you pay for each series with coins. You have some number of coins that we give you as the app. Once you run out of coins, you have to top up. You top up by buying in app purchases. At that time when we had like 10 series, that was the only monetization we could afford ourselves because otherwise we wouldn't be able to return the investment. So it was the first step that we did. Now we fully transitioned to subscription. So basically our viewers subscribe in order to watch all the library without any limits. And now we are currently transitioning. I really believe in ads monetization and brand integration. So now we are kind of transitioning into this monetization as well to tailor to broader audience which is not ready to pay for subscription.
- [07:39]
A
And you have kind of multifaceted subscription model. So the subscriptions range from like a week to a month to a year. And you are kind of almost at the end of your transition away from micropayments. Right. What percentage are subscribers of your users now?
- [07:54]
C
It's 90 plus percent right now regarding different types of subscriptions. So basically we are data driven company. We have like petabytes of user data and we use it to customize user experience. And we run about 1000 AB tests per year. Even more than that. So we are testing different prices, different subscription lengths and we basically tailor our prices and lengths to different audience. Segments.
- [08:20]
B
How about your competitors? Because are they moving away from micropayments to subscription too? Is that something that everyone is seeing?
- [08:29]
C
I think you cannot go against evolution. If you go against evolution, you just become dinosaur. The evolution right now is moving towards subscription. And I can see that more and more competitors are starting to basically go into subscription as well. It's just a natural flow of the world right now. And I'm sure that most of them will either transition or they will just stop existing. Because the transactional model, I don't think that it will be relevant anytime soon.
- [08:57]
B
But do you think you're going to make as much money? Because a lot of what we've heard these last few years was very focused on, oh, this is the new thing, you know, you're going to make a lot of money because essentially people are being pushed to consume and consume. And so moving to subscription, do you think you can make up for the money that you guys were making on micropayments? Do you think it's sustainable?
- [09:19]
C
This is a provided challenge. So I was asking myself this question as well. But the data shows right now a different story. I believe that we are going to make more money from subscription because subscription has much higher retention revenue. So basically the retention of our audience is about two times higher with subscription versus in app purchases. This means that we are retaining people who are continuing to watch and to pay. And at the same time, the data shows us right now that users with subscription, they consume three times more content than users with in app purchases. So it's all about retention revenue. And we are also running tests with ads monetization. For ads monetization, the metrics are even higher, retention is even higher and the daily consumption is like one and a half hours. With that, with ads monetization, people consume one and a half hours per day of content.
- [10:09]
A
The acquisition model, how do you acquire customers? What is the. Because I did an article about Real Short, which is one of the biggest, if not the biggest, of the players in the microdrama space. And what I showed was that for every dollar they brought in in revenue, they had to spend in marketing. So that they were basically losing money on every subscriber or acquisition. What are you finding? How are you acquiring customers? What's been most effective and what is the cac? I mean, is it something that you can manage to get down over time?
- [10:44]
C
I'll start from afar if you don't mind. So can you please raise a hand? Who knows who this is, what this is. This is basically the strategy poster drawn By Walter Disney. This is the whole strategy of Disney that He drew in 1950s, something like that. And it basically shows that in the center of every content company is ip. IP is the main value of the company. And then he shows how this IP is being repurposed and recycled in different forms. For example, you create a movie, then you have music track out of this movie, then you create a comic book and stuff like that. And also he shows different types of distributions like tv, theater and other places. So right now the world has evolved a lot. The world has evolved. And what we are doing, we are basically adapting Disney strategy to the current consumption habits, to the current distribution habits, to the current content creation ways. So basically our main distribution right now is social media. This is where most of the especially young audience spends their time. And what we do, we do it in two ways. We have organic social distribution and we have paid marketing social distribution. So we organically, we publish pieces and parts of our content via Facebook, Instagram. We generate about 2 billion monthly impressions to reach out to our audience and then we drive audience to our platform. The second way we do distribution is paid marketing. So basically we are running super targeted ads for particular user segments across Facebook, Snapchat, TikTok. And we generate a lot of impressions by running ads. At any given month we are running around 30,000 unique video creatives, video ads that we create tailored to particular user segment. Based on our Data Right now 70% of our users come from paid user acquisition and 30% comes from organic marketing. What you said about real short that they spend dollar and they return dollar and they return dollar. I'm not sure about the economics because I don't know it. I can tell you that for us the economics is, is much more different. They are returning money. We are actually profitable right now, even though we are spending a lot on marketing and we are growing more than two times year on year. So there is economics definitely there. But I don't think that if someone relies 100% on paid marketing, they will be able to survive within one to two years. Because paid marketing tends to, the price tends to go up every year, especially once the competition grows. So the companies have to start thinking about other alternative acquisition channels as well,
- [13:24]
B
talking about organic, because people here in different ways are doing the same thing as in pushing content on social and trying to bring people back to their own and operated. So it is only 30% of the users. But so how have you managed to do that to bring those people in for the organic customers, for the organic portion of it?
- [13:47]
C
So the main thing is to basically we build this complex strategy. We have hundreds of pages on Facebook, right. For example, we have a lot of accounts. There are companies, a couple of companies that do really efficiently social distributions. We have a lot of YouTube channels. And what we do, essentially we test different clips based on data. We test different clips, they all end on a cliffhanger, meaning that our viewers want to continue watching and understand what's going on there. And the only way to find out is to go to our platform and to watch it on our platform.
- [14:25]
A
So you're giving away a decent amount of content for free on a. It's like selling drugs here. Take a taste and come in.
- [14:32]
C
And it's more like a product preview you basically watch for.
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A
It's not like selling. Yeah, just like a drug dealer. Try it a little bit.
- [14:42]
C
I believe that drug dealers use this strategy of product review. I think car dealers use this strategy as well and a lot of other companies. So basically, users watch about 20 minutes. They decide whether their time investment is worth the emotion that they will potentially get from this content. And then they go to the platform and watch it.
- [15:01]
A
And when you said you have all these different YouTube channels and Facebook pages, are they based on different titles or is it holy water, my drama? How are you running several different Facebook pages differently?
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C
We are testing different strategies right now. The one that you mentioned is super interesting that we are running tests for. Basically each page is dedicated to each particular movie and we are trying to build a fan base around this movie.
- [15:27]
A
I think one of the theories I have about this current moment and what's going to happen moving forward is that the AB testing, being a great AB tester, being a test and learner is paramount. It's central to success. Is that your experience.
- [15:43]
C
I think one of the main advantages that we will be able to build as media content and any entertainment companies is data set that we have basically user data that we already have and how we leverage this data. I don't think that in AI era product will be a big competitive advantage. You can build almost any product with Claude. Right now we're already building products without writing any code. We didn't do it last year. We're already doing this right now. So the advantage will be data that you have for your users and how utilize that data. So A B tests are basically paramount for us. It's like slicing our existing data that we have and seeing what kind of slice works the best and working with the slice with customized and personalized approach.
- [16:31]
B
So let's talk money A bit. How big is this business? Because we've been seeing a lot of numbers, but at the same time, most of those companies, Your company is 6 years old and none of them are public as far as I know. So we're seeing estimates. What are your own estimates from what you've seen? What is something realistic in terms of what this business can bring? And number two, we tend to box you guys in that micro drama hype. But from what I'm hearing, you're changing your model in a dramatic way. So do you want to still be in that box in a year in
- [17:09]
C
terms of the numbers right now, what we know and what kind of things, we're estimating right now the market is around 11, $12 billion. Right now, the total market in the world, including China, in China is the biggest market because it started about six years ago, actually. And outside of China, it's much smaller. By 2030, I think the market is projected to be around 25 billion, something like that. And it's going to be 10 billion outside of China, mostly in the United States. So the market is huge. The market is growing and the potential is also huge. So we are betting that this market is going to be huge. But also the volume of this market will actually depend on whether companies like ours will be able to push this format further. Push this format further beyond microdrama, because microdrama. What is microdrama in terms of content? Like content? If I speak about content, microdrama is five tropes. It's five different tropes recycled in different settings. Recycled in different settings. This is what they invented in China. And right now it's still a niche phenomenon. It's not mainstream media. It's still a niche phenomenon. In order to turn this into mainstream, we'll have to experiment with new things. We'll have to experiment with new genres like fantasy, thriller, detective, sports, and everything else. This is what we are doing right now. It takes investment because it doesn't work from the first time as well as those five tropes that are already proven by data. But I'm sure that we'll find a way. And the market is going to be huge.
- [18:47]
A
Yeah. So basically, anything that has an innate cliffhanger in it will probably work in this. So detective stories, true crime thrillers, things like that. Sports. So let's talk about the content itself. But also you mentioned AI. How involved is AI in how much do you spend per movie, if you can share that, and then how much of that is affected by the use of AI?
- [19:16]
C
Sure. So about two years ago, I started asking myself and my team a question. How can we translate our 1000 books library to 50 languages? And the only answer was with AI. So we started translating our books with AI and they started performing really well. We scaled our books platform two times thanks to that. Now the next question was, how can we create a book 10 times faster than we used to create them? So we created an internal AI tool that helps the writers to create books faster. Now we create even hundreds more books than we used to create. Then the next question was, can we generate a movie with AI so that movie actually works? And we started generating movies and those movies actually started to work really well, not just in terms of giving us data for live action movies, but also as a standalone platform. Our AI generated series right now is the fastest growing product that we have. And we also built an internal tool for basically movies generation. So we have real directors who generate movies with AI internally using our tools. This is just for the comparison, like in terms of how long would it take to produce a movie? If you decide to produce a movie right now for Netflix, it's going to be 100 weeks. For my drama, this is our live action platform. It's going to be four months. Four months right now in the world, it's super long timeline. In four months, everything can change in the world. A lot of wars can be started, the consumption habits can change and stuff like that. And with AI, we can generate the movie in two weeks and get real data in two weeks and basically scale in terms of money. You asked about that. So for live action movies, we would spend from 120,000 to 250,000, depending on the quality, depending on what kind of talent we are using, depending on the location and other factors. For AI generated movies, it's like a couple of thousand dollars.
- [21:13]
A
But first of all, the name of your AI production engine is my muse.
- [21:19]
C
Right, My muse, yes.
- [21:21]
A
And so you talked about AI being involved in the production, getting it down to two weeks and a couple thousand dollars in production value. But you're still using human script writers and human directors in every piece, right?
- [21:35]
C
Yes, all the scripts are written by humans. And this is something that we haven't been able to optimize with AI. I don't think that we'll be able to do that anytime soon. When I'm thinking about scripts and content ideas, I'm thinking about this quote by Nvidia's founder. Nvidia is one of the largest companies right now, AI companies in the world. He said an interesting thing when he was asked what kind of skills should humans create to be able to compete with AI? And he said that he doesn't think that you can compete with AI in efficiency and other things. But what he said as well is that suffering and emotions are things that make humans unique. Basically, suffering and emotions. Suffering and emotions make humans a character. And a character is something that AI doesn't have. So I believe that in order to create a genius, great script that is going to reach tens of hundreds of millions of people, you have to have some emotion, you have to live through it. And this is what humans do the best right now. So all the scripts are written by humans. I've tried with my co founder to write scripts with AI myself and we just started my drama, it didn't work. The metrics were insane. So we have professional script writers who are using scripts, using their emotions and view of the world.
- [22:54]
B
You're creating different platforms every time. My passion, my drama, my muse. Are you thinking about having some sort of a super app at some point? Why are you breaking down things like that? Is it because you think that specific segments, et cetera, need to be served within a certain app?
- [23:14]
C
There are a couple of questions in the business that I keep coming back to. That's one of them. I've been doing this like I've been coming back to this question for at least four years. And for now we decided that separating the platforms would be the best solution because we are separating the audiences as well. It's easier to manage data audiences within each product. Also, you can sell subscription for each product within each app. So for now that's our strategy, but we'll see in the future. We are having thoughts to unify this into one super app. Mobile, first entertainment platform with comic books, anime, movies, books, interactive stories, audiobooks and everything else.
- [23:57]
B
So you started a few years ago and AI is now more present than ever. And do you have data and do you see differences in terms of engagement and relatability depending on how much AI was involved in your process or not?
- [24:12]
C
I'll share an interesting slide. This is the real usage data from our platforms. So what you see here is episodes retention. So basically each like if 100% of people started the show, then 100 people started the show, then by the end of, I think one and a half hours, I don't see it from here, but it's going to be 91%, 91 people remained. So for my drama, live action movie, it's inside the columns. This is what the data that we have for My muse. AI generated movies. You can see that the. The data is pretty much similar in terms of user retention within episodes. The main difference between AI generated movies and live action movies. What we see right now is not conversion into payment, it's not retention. It's about how far we can scale this movie. So it seems right now that the audience that is ready to consume AI generated content is much more limited than audience that is ready to consume live action content. So we are able to scale our live action movies much more efficiently than AI movies. In order to sustain the same volumes for AI platform, we have to produce much more content than for live action.
- [25:25]
A
And do you want to show a clip of the AI production now?
- [25:39]
B
You poor thing. Let me see what happened to you.
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C
Let's begin.
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A
No.
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B
Please, no.
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C
So, hello, My holy sacrifice.
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A
It can't be. So what you're saying is the consumer basically susses out AI versus live action and. And is choosing live action, choosing to watch the live action movies more than they are the AI generated stuff.
- [26:31]
C
It's more, yes. By making a choice, consumers basically either limit our scale or promote our scale on the social platforms. And what we see is more people are choosing live action right now. Yes.
- [26:45]
A
On social platforms and moving into these other genres. You said it's expensive, it takes investment. Is that the rationale behind the partnership with Fox?
- [26:53]
C
It's one of the rationales, yes. Because we want to push this forward and turn micro drama into mainstream entertainment like Pocket tv, mobile tv, whatever you call it. And Fox and Fox Entertainment wants to learn from our data and they also want to be where the audience is and the audience is on social media. So we basically combined those two motivations and created a synergy together. And right now, together with Fox, we are producing different genre. We are using talent as well in our shows and let's see where it goes. But the data that we are already getting from Fox produced shows is, is really great and there are some hits that we produced together already.
- [27:31]
A
But there's another aspect of the Fox partnership around ad sales as well, correct? Around ad sales.
- [27:37]
C
Advertising, yeah. One of the things that we really believe into is ads monetization because it will help to expand the space and to turn it into actually mainstream. And Fox has really great expertise in ad sales. So that's one of the things that we are exploring. Yes.
- [27:54]
A
So it's not necessary for you to necessarily build a huge enterprise around advertising in house. You're going to partner with them and let them carry a lot of that weight.
- [28:02]
C
True, true. And we are going to focus on what we do the best. What we do the best is using data and doing social distribution and generating content with AI as well.
- [28:15]
A
So yesterday I talked about how the fact that a lot of these conferences turn into group therapy and you, a couple years ago, really you got burned out and you came to a crisis point and you really changed your life and kind of the philosophy of the culture at the company around mindfulness. That was our first conversation over dinner. Can you talk a little bit about that? How did you come to that and what does that look like for.
- [28:46]
C
Yeah, I've been meditating for more than 10 years. Meditation right now is the most important part of my life and my day. I meditate for about two to three hours per day every day. I never skip. And it wasn't about the crisis that you told me about. First of all, it started as a. I have adhd. Like I have super intense adhd. It's hard for me to. To focus and consciously direct my focus somewhere. So I started meditation as basically the tool to help me to focus. And it worked a lot. It helped me a lot. And I believe that we become what we focus on. We become what we focus on. We can become anything if we can consciously direct our focus somewhere. And what we see right now is that most of the people, they don't train focus. Most of the people, they don't even own their focus. Our focus gets hijacked by social media companies, by companies like I'm building companies that want to turn us into consumer and stuff like that. And we go and work out in the gym, right? We go do cardio. I think most of the people here do cardio and take care of their body. But most of us, we don't take care of our focus and our mind, which is much more important, I think, than the. So meditation first of all became the tool to improve my focus. It improved it significantly. Then I started seeing other benefits. Then I started seeing a lot of narratives that used to be going on through my head that I never noticed before. I realized that most of US are actually NPCs, like you know, those non player characters in games who are run by a couple of narratives, like a couple of narratives created for them. And I realized that it was me, I was running on the camera narrative that I had to achieve something because as a kid I got praise as an achiever. So that was constantly running through my head and I didn't even notice it. I thought I was a conscious human being. And then I started seeing it from Afar, like this narrative running through my head, these narratives. And what meditation gave me is basically this space between this narrative running in my head and my conscious ability to choose whether I will choose this narrative and will react. So that was the second thing that. The second progression with meditation that I got and the third one that I'm going through right now is basically meditation also helped me to find answers that I couldn't find. Two questions that I couldn't find answers throughout my life, like who we are, why we are here in this 3D matrix. And meditation was the tool that helped me to find these answers. And, yeah, I've never been happier in my life. And if I were to. I don't give advice. I don't believe in advice, because we are going through our own journey, each of us. But if I were to say something which would be the most impactful for this world that I see it right now, I would say is if everyone meditated for 30 minutes to 60 minutes a day, I think we would have less worse. We would be much more happy. We would. We will be able to direct our focus whenever we want. And by directing our focus to any place that we want, we can become anything that we want. So that's the journey with meditation in a couple of words.
- [32:03]
A
Amazing. And obviously, it seems to be working for you. You're an impressive person, and I think it sounds like you have a real design for the future of this app. It's not micro dramas, it's a programming. And so thank you so much for joining us on the podcast.
- [32:20]
B
Thank you.
- [32:21]
A
That is Marion Renchette.
- [32:22]
B
And that is Ivan Chaparra.
- [32:24]
A
Thank you for watching the Media Odyssey podcast. We'll see you next time.
- [32:28]
C
Thank you.