LOVEFiLM launched in early 2004 after a series of mergers and acquisitions. Five years on the brand has become synonymous with mail order subscription film rentals in addition to providing the infrastructure for the likes of Tesco, WH Smith and Odeon to run their own branded rental services.
Simon Morris, LOVEFiLM's chief marketing officer, has been with the company since its inception having previously worked with SEGA UK and BSkyB in marketing director roles, Chris Evans' TV company Ginger Television Productions as MD and then co-founding the dot com content brand 365 Corp.
Here, Simon talks about the importance of strong brand identity, the benefits of an active user community and how LOVEFiLM as an 'entertainment platform' could prove a natural ally for the videogame industry.
Q: How has what you achieved in with your previous roles at SEGA, BSkyB and Ginger Television translated to what you're now doing with LOVEFiLM?
Simon Morris: The thing that has stuck with me from my time with SEGA and then with the subsequent companies through to LOVEFiLM has been three key principles: range, value and convenience. Those principles ran through SEGA at that time and are present at LOVEFiLM today along with distinctive branding that differentiates us from others in the market.
Q: Recently the multi-format title Assassin's Creed II adorned the LOVEFiLM disc envelopes as part of a high profile ad campaign, how relevant is the advertising of videogames to LOVEFiLM's customers in this way, some of who will have no idea what Assassin's Creed II is?
Simon Morris: Well, just to dial back a bit, we can specifically target various advertising methods at specific groups of LOVEFiLM's customer groups and so the Assassin's Creed II advertising run will have been sent to carefully selected customers. It's a technique that a lot of companies claim to have but often don't actually have the data to back up those claims.
Over the last six years we've built up LOVEFiLM to be the UK's largest online subscription community and the third-largest subscription business of any kind in the UK, after Sky and Virgin Media. We've done that through our focus on great customer service, great products and great brands and based on those three key principles of range, value and convenience, we've also developed a very clear understanding of what our brand is all about: it's an entertainment platform. During this time we've collected a huge amount of data to aid with our marketing.
Fairly early on we saw a big crossover with the games industry, and I'm sure you've seen the data about games generating more revenue that DVDs and Blu-ray for the first time last year. What we're able to do is examine the film and videogame tastes of our customers and so target the advertising of relevant products at those customers; the advertising of Assassin's Creed II was specifically targeted in this way.
Q: What can the LOVEFiLM service bring to the UK games industry?
Simon Morris: We have a very active user community that generates a huge amount of the content for each other in the form of reviews and blogs and that is just snowballing at the moment. It's what's helped us amass around 1.2 million subscribers in the UK and around 4 million site visits every month and we're in that position because we've gone beyond offering a film rental and purchase service to become an entertainment portal.
So the relevance of our service is to be found in the fact that we've created this huge engaged community of entertainment focused UK consumers. We can see the crossover from film to games not just in terms of franchises like Spiderman or Batman but in terms of the demographic profile and entertainment interests of our customers. Statistically, demographically- and profile-wise there's a good chance that a lot of our customers are going to be interested in games.
We created the games side of our business a couple of years ago as an added value proposition to have it there as part of our service and it's grown from strength to strength. We now have something close to 2700 titles on the games platform on LOVEFiLM and if you compare that to walking in to a games retailer their range is limited and so, for example, my son is experiencing various archive titles on the PlayStation 2 through the rental and sales service of LOVEFiLM that he wouldn't be able to get elsewhere.
Q: So you felt the videogame section of LOVEFiLM was a fairly natural extension of the service you were already offering then?
Simon Morris: Yes, definitely. It's been a really easy and natural extension of our business to get in to games. It's apparent for us to see that clearly there's something in it for our customers and clearly there's market opportunity in it too and so we're taking an increasingly closer look at the games market as it fits well with our strategy and with our brand and business.
We're looking at what we can do with it for our customers, but also what we can do for the games industry and what it can do for us. I think the concept of our advertising that has so far appealed to the games industry is our ability to target the most attractive audience that the games publishers can reach in an affordable and effective way.
Q: Do you think there's scope for the rental model for videogames to be changed with the help of game developers and publishers?
Simon Morris: There's definitely room for videogame publishers and rights holders to experiment with release schedules for both rental and sales models of games.
In the lifecycle of the products that we deal in there have always been windows: rental, retail, free trial windows and so on each with its own distribution methods and I think that the exciting thing with this brave new world is that these models are being challenged.
We're seeing distributors experimenting with putting product out on the same day for digital download and DVD retail or cinema release and with some considerable success so there's a great opportunity in the games publishing business for rights holders to experiment in this way too.
LOVEFiLM is in a unique position to be able to assist with that experimenting because we have hundreds of millions of pieces of data to be able to help effective targeting. We can work with games publishers to target consumer groups that rent and buy specific franchises, or that game on PS3 and 360, or who are in to RPGs or female gamers that play beat-em-ups...
We've been reaching out to the games publishers and increasingly the games publishers have been reaching out to us so we've got the likes of Capcom, Activision, EA, Ubisoft, Codemasters, SEGA, Microsoft all of them have advertised with us and look to work with us in order to reach customers.
Q: What plans does LOVEFiLM have for its games division in 2010?
Simon Morris: LOVEFiLM is a brand that people like, relate to and trust, and one that works to those three principles that I keep banging on about: value, range and convenience. In the next 6-12 months we're looking at ways of bringing more of that and more of the games industry to our consumers.
One of the things that we're really interested in is the games platforms themselves as they are entertainment platforms, we have content that we can put on these entertainment platforms and so we can clearly see a symbiotic relationship emerging between us and the platform holders.
I think that we are really uniquely placed, not just in terms of our distribution method, but also in terms of the social networking side of things with the number of users that are actively speaking to one another and creating content for one another. It'd be interesting to look at the heavy-usage gamer market as I'm not so sure about that.
We have the data, a good relationship with our customer base and we've got a great brand, if you add all of that up I think it shows that we can be a natural ally to the games industry and we're in a position to score a three way win: a win for us, a win for the games industry and win for consumers.
Simon Morris is chief marketing officer for LOVEFiLM. Interview by Stace Harman.