How did MUBI become the Netflix of independent films?

In February 2007, about a month after Netflix launched its online movie business, Efe Cakarel quietly launched a video-on-demand service for international and independent films, now known as MUBI. At a time when Netflix is trying to offer a wide audience lots of choices, the Turkish entrepreneur is taking a very different path, focusing on a selection of old classics and independent art house films. Since then, Netflix has morphed into a giant in streaming services, and many of its smaller competitors have died. But MUBI was spared.

Cakerel likens MUBI to the “clerk’s Pick” section of your favorite video store. You walk into the store, and no matter how many movies there are, you just pick the 30 at Clerk’s Pick, and there’s always something you like. MUBI is like that, like a casting consultant you can trust.

Last month, the London-based company announced it had acquired exclusive online streaming rights to Paul Thomas Anderson’s new film, “Junun.” The film, which Chronicles radiohead guitarist Jonny Greenwood’s musical journey through India, will premiere at the New York Film Festival on Thursday. In a few hours, MUBI will stream exclusively online. (For MUBI, you can pay $4.99 a month or $39.99 a year.)

Acquiring the exclusive rights to Anderson’s film was a big achievement for MUBI, and it was almost effortless. According to CEO Cakarel, Anderson has long been a MUBI customer and contacted the company earlier this year when Hosted was in the early stages of production. “We didn’t even know [he was a member] because you couldn’t read his name from the email address he used and he didn’t use his real name.” Cakarel explains. Later, MUBI learned that Anderson was working on a new film, and the two agreed to make an online premiere on MUBI. “He wanted to get his films out to a global audience with taste,” Cakarel added. “So everything fell into place.”

For years MUBI has been offering a selection of niche art-house films (usually not on Netflix or Hulu, the other video-streaming giant) to nurture the tastes of its users. (MUBI started as “The Auteurs,” then changed to MUBI in 2010 — a voiced variant of “movie” and The name of a Nigerian city.) On Monday, selections on MUBI’s U.S. site included Bernardo Bertolucci’s ’70s classic’ The Conformist, ‘and Park Chan-wook’s’ Sympathy for Mr. Vengeance. ‘ Occasionally, MUBI shows relatively “mainstream” films like Sin City (currently available on MUBI’s French website), but it’s still dominated by niche titles. MUBI adds a new film every day and removes an old one. That means you only have 30 movies to watch at any one time.

MUBI’s manual selection model stands in stark contrast to major streaming services like Netflix, Hulu and Amazon. The latter has a large number of video sources and provides users with personalized recommendations based on algorithms. MUBI’s model greatly reduces viewer choice, but Cakarel thinks it’s better for them. “Think about your own Netflix experience, how frustrating it is — how long it takes to find the movie you want to watch!” “Not that way, absolutely not.”

Cakarel also believes MUBI’s strategy makes business sense. In a year, MUBI will only have to acquire the rights to stream 365 films online and limit them to 30 days or less. Netflix and Amazon, by contrast, need to acquire thousands of titles. As a result, MUBI has significantly reduced its spending on copyright. When MUBI was founded in 2007, it took a more conservative approach, with films coming in and going out in cycles. But switched three years ago to its current one-movie-a-day schedule to ‘keep things fresh,’ in Cakarel’s words.

Some music-streaming services, such as Apple, have recently moved to a hand-picked model. It’s even common on social networks like Snapchat and Twitter. But with the exception of Vyer Films, a $20 / month service, few video-on-demand platforms have taken this model to the extreme as MUBI has.

“The manual selection model works in the vertical domain.” “The point about subscription streaming services is that unless they are niche and vertical like MUBI, they need a lot of compelling content,” says Fernando Elizalde, an analyst at Gartner research and consulting. It would be very expensive to manually select so much content.”

But that’s not to say MUBI operates without any data. It uses data from different countries to select the most popular films on the regional version of MUBI. (Turks prefer Middle Eastern dramas, while Scandinavians prefer cartoons.) But a team of 50 people makes the final selection for each country.

So far, MUBI’s strategy seems to be working. In January, just months after raising $5.1 million in a fourth round of funding, MUBI announced a new $15 million round. It has also recently acquired licensing rights from Paramount and SONY Pictures, and has begun to buy film rights. In July it bought its first film, a six-hour Portuguese drama, “Arabian Nights”. The film premiered to critical acclaim at the Cannes Film Festival. Cakarel said MUBI would continue to buy rights to more films at festivals in the future.

Cakarel also said MUBI would consider creating original content like Netflix and Amazon, despite their limited resources and expertise. Currently, MUBI has around seven million registered users, but is not yet profitable, and only 100,000 of them are paying users (a number they say is growing at a rate of 2% a week).

While MUBI is dwarfed by the millions of paying subscribers of Netflix, Hulu and other big streaming services, Cakarel doesn’t view them as direct competitors. “I know our selections aren’t for everyone,” he said. Netflix is trying to be all things to all people, trying to capture 70% of the market. My goal is just 10%. But MUBI can really satisfy this small group of people.”