Andrew Evetts, founder of DVD rental business Oovie, had a problem: how could his small startup scale to a large number of locations? Unlike a streaming video startup, or a postal-based DVD rental business, Oovie had significant hardware investment in the company’s custom-built DVD vending machines.
Speaking after leaving Oovie in the hands of current owners Hoyts (the cinema chain which bought the company in 2009), Evetts says he and co-founder Ian O’Rourke solved their scaling problem by negotiating a series of partnerships with companies including Woolworths, Westfield and Hoyts.
Evetts and O’Rourke started the company in September 2005. Since then, Oovie has rolled out more than 400 machines to supermarkets and shopping centres across the country. The growth kicked off following a deal with Woolworths in mid-2009, which saw 100 of the unmissable green machines rolled out over six months.
“We were ultimately hamstrung [trying to scale] so needed to have a corporate backer,” says Evetts.
“We spent a lot of time talking to different companies.”
While it was relatively easy to get a meeting with the right executives, the challenge was getting them to commit to any agreement. Eventually the pair struck a deal which saw revenue shared between the company and the supermarket chain.
The tipping point, says Evett, was when an Oovie rental machine was installed in the Woolworths headquarters.
“We had to put a machine into their head office. It got quite popular and that’s when we got some real traction.”
Evetts says the Woolworths deal was more about access to customers than anything else. The co-founders knew that people didn’t like to have to make a special trip to a video store. They thought more people would borrow movies if they could do so when they were buying their groceries. They could return the DVD the next day when picking up the milk or eggs they’d forgotten.
It couldn’t have been done without engaging a consultant, says Evett, who had previously worked for Woolworths. They knew the right people, understood how the company worked and were able to help broker an agreement.
“Literally, they were the middle man. I wish we’d done that earlier.”
The same thing happened with the sale to Hoyts. At the time, the pair had been working with Anthony Deeble, now head of Val Morgan Retail Media, who had come in as an advisor. Deeble had the right connections. He’d previously sold his company Outpost Media to the owners of Hoyts.
Evetts says the model is closely aligned to that of RedBox, the big US DVD machine rental chain so Oovie was able to replicate the things that worked. He says they have 30,000-40,000 machines and rent their DVDs for a dollar a night. They also tried and tested an array of marketing approaches.
Offering free rentals on Wednesday nights had great results for Oovie, as it did for RedBox. An email would go out each week with a promo code to rent a DVD for free. It helped build an email database now in the hundreds of thousands, and also fostered goodwill with users. While the promotion is now offered monthly, it continues to be a key marketing tool for Oovie.
“Mid-week is always much slower. We saw a big increase in the number of mid-week rentals.”