Media companies around the world have been clamoring to get in business with Wattpad Studios over the last few months. Mediaset in Italy, Lagardère Studios in France and CBC in Canada are among the latest to have sealed development partnerships with Wattpad Studios, joining the likes of Entertainment One (eOne), SYFY and Sony Pictures Television. A division of the social storytelling platform, Wattpad Studios is working with content companies to turn Wattpad stories into TV series and films, with successes that have included The Kissing Booth on Netflix, Light as a Feather on Hulu and the feature film After. Allen Lau, the CEO and co-founder of Wattpad, talks to World Screen about the company’s journey from being a modest mobile reading app to an incubator for up-and-coming talent and the power of using data and analytics to identify ideas that will resonate with audiences.
WS: Tell us about the Wattpad story. How did the company come about?
LAU: The company started in 2006, but I had the idea for it in 2002. At that time, I was the CTO and co-founder of my first company, Tira Wireless, which was a mobile gaming company. I’m very passionate about mobile—not too passionate about gaming! We just accidentally got into that business. In my spare time, I wanted to do something that I was truly passionate about. I read a lot, so that’s why I had the idea for a mobile reading app. The most popular phone at the time was the Nokia. It was very hard to read on—just three or four lines of text at a time. After I tried the prototype, I knew it was not going to work. Fast forward to 2006, and the most popular phone was the Motorola Razr, where instead of 4 lines of text I could read 10 or 15 at a time. That’s when I thought the timing might be right. Out of the blue, a very good friend of mine, Ivan [Yuen], instant messaged me to tell me he was working on a new product idea and he wanted some feedback. He was also working on a mobile reading app, and he was one step ahead of me. He had built a website where people could share their stories. We joined forces and then started the company. The rest is history.
WS: How did you build the global community of Wattpad users to what it is today?
LAU: It was 100 percent organic. In the first two or three years, we struggled a lot. The traffic was growing, but when you’re only at 100 users in the first few months, doubling that is easy! By 2008-09, the iPhone had come out, the App Store came out, and then Android phones. Equally importantly, in 2006, YouTube was one year old and Facebook had 12 million users—sharing on the internet was a very boring concept for a lot of people. In 2009-10, everyone was sharing; socially, it wasn’t a problem anymore. So with the combination of better mobile devices, everyone having a data plan and sharing on the internet becoming much more acceptable, the environment was right for the company to take off. Traffic started to take off in 2009-10, and we never looked back. We now have 75 million monthly users, of which 4 million to 5 million are monthly writers who upload half a million chapters every day in 50 different languages. A couple of years ago, the most popular [Wattpad] story in India was written by a Filipino living in New Zealand. That could never happen before we existed. Because of the internet, because of our platform, this type of cross-border traveling of stories has become a possibility. That’s one of the main reasons we have grown as fast as we have. And we were very good at internationalization and localization. We supported multiple languages early on because we knew that not everyone would be reading and writing in English.
WS: How many of your 75 million users are outside of the U.S.?
LAU: More than three quarters. Of the 75 million, roughly 13 million are from the U.S. Then Indonesia and the Philippines, and then Vietnam has 4 million, Turkey has 4 million, Mexico 3 million, France has nearly 2 million. It’s very fragmented but in a good way.
WS: Why have Indonesia and the Philippines become such significant markets for Wattpad?
LAU: In Indonesia and the Philippines and many other countries, the first experience of the internet is on a mobile phone. In Indonesia, there are 17,000 islands—and not every one has a bookstore! Now you have a device that you carry all the time that has bandwidth-friendly content—long-form textual content—that you cannot get otherwise because there is no bookstore near you. And in many countries, the publishing ecosystem is not as well established. Even to get published in the U.S. is not an easy job. With Wattpad, you can write something in Bahasa, on one of the tiniest islands in Indonesia, and press a button and 15 million people in Jakarta can read your content.
WS: What led to the creation of Wattpad Studios?
LAU: We had this idea in 2011-12. We had reached critical mass and we realized, perhaps we can take some of our best content, our best IP, and turn them into other formats. But we didn’t pursue it because the company was quite small at that time. We didn’t have the resources to execute. And then in 2014, out of the blue, TV5 from the Philippines approached us to work together. They were thinking of a concept called Wattpad Presents—a series where each episode is a different story from Wattpad. We connected, we both loved the idea. We had been thinking about it for quite some time. It didn’t take long for us to sign on the dotted line. It started as an experiment and before you know it, we had done six seasons with them, 200 episodes. It was one of the most popular young adult shows in the Philippines. We helped TV5 increase their ratings by 30 percent. That’s when we knew the concept would work. After we had done two or three seasons with them, we said, Let’s start Wattpad Studios and scale this business.
WS: Tell us about the partnerships you have.
LAU: Sony in the U.S., Bavaria [Fiction] in Germany, Mediacorp in Singapore, iflix for movies, entirely focused on Bahasa Indonesia. In 2019, we’ve announced a string of new entertainment partnerships, including Mediaset in Italy, Lagardère Studios in France, NL Film in the Netherlands, CBC in Canada and Huayi Brothers in Korea. These join our existing partnerships with SYFY and eOne. In the Philippines, we have a partnership with Anvil Publishing [for a YA and romance book imprint called Bliss Books].
WS: How are your analytics used in the adaptation process?
LAU: We can tell the screenwriters and producers, Keep chapters one, five and seven. In chapter seven, only keep the first two paragraphs because they generated the most comments. By analyzing the 100,000 comments on a story, we can tell you, cut out this character. We can provide data and insights that weren’t possible before. In the past, with so many movie adaptations of books, people would say, it sucks, the book is so much better! It was because the screenwriter had no idea what the audience would like and which chapters or paragraphs are the most important. It’s all based on guesswork. We take that out of the equation. We’re not replacing the job of the screenwriter; we’re not replacing the job of the editor. We’re turning humans into superheroes. We equip them with the right data and insights so they can make the best possible decisions.
WS: What are your primary revenue streams?
LAU: There are three buckets. One is advertising, that’s easy to understand; 75 million people spending over 22 billion minutes on our platform every month. Advertising is an obvious business model! Two, we have various paid models on the platform. We also put some content behind a paywall with our Wattpad Paid Stories program. People can buy virtual coins and pay per chapter. It’s only a few pennies per chapter. This model is very innovative and it’s working well for us. We also have a subscription tier. The subscription is mostly feature-based: ad-free, certain themes, specific features designed for the premium users. And then finally the studio: TV shows and movies.
WS: Of those revenue generators, where are you seeing the biggest gains?
LAU: We’ve been doing the ad business for a very long time; it’s the most mature business. The pay model is only a year old but is growing very fast. We’ve been doing the studio model for three years, but it takes time to make a movie! That part is also growing fast with all the partnerships we’ve talked about. In the next few years, the last two buckets will become a much bigger business and should overtake the advertising.
WS: Where else would you like to have partnerships in the next year or so?
LAU: There are 200 countries in the world and we want to be in all of them! In Europe and North America, we’re covered. In Asia, we have a few partnerships already, but there are so many different countries. Latin America is one of our most important regions. We have a lot of users, but we don’t have a partner there yet. I would like to see one or two partnerships in LatAm.