EXCLUSIVE: When Bogdan Nesvit and Anatolii Kasianov, the founders of Ukrainian microdrama behemoth Holywater Tech, visited the offices of Brent Montgomery’s Wheelhouse, they were immediately struck by a poster hanging on the wall.

Montgomery’s office was bedecked with Walt Disney’s famous 1957 flow chart, which set out in epic detail how the Mouse House would leverage its IP across TV, movies, merchandise, comics and parks. 

“I realized that this is essentially what we were already doing,” Nesvit says. “And this thing was genius at that time. Now, it can be refurbished for the 21st century in terms of how people consume content, how content can be distributed, and how data can be used to discover new ideas.”

Montgomery’s Wheelhouse, which used to be co-run by Jimmy Kimmel, invested in Holywater as part of a $22 million capital injection — described by Holywater as the biggest microdrama industry funding outside of China.

For Nesvit and Kasianov, this funding round and a landmark pact with Fox Entertainment, which is bringing vertical video to Hollywood, along with the first-ever set of SAG-AFTRA microdrama terms, put to bed arguments made by naysayers about the vertical video industry. Many view microdrama as cheap, schlocky imitations, which weaken the content industry.

Moving beyond schlock

“People used to say YouTube was just a platform for cat videos, or Netflix would never succeed,” Nesvit says. “Even microdrama two years ago was dismissed as a fad, and now big Hollywood studios want to join. So, naysayers should look back in the past because that will tell you a lot about the future.”

He cites microdrama hits that show the genre has moved beyond schlock. These include queer love story Chained by Her Love, which came from an interactive story game and tells of when a job interview at a fashion house turns sinister, and Young Elite, which emerged after a shout out for local Ukrainian writers to submit books to the Holywater platform. It follows a poor orphan at an elite school in an antagonistic relationship. Both examples hark back to the Disney flow chart as they involve IP being leveraged in interesting ways.

Schlock or no schlock, Kasianov feels that microdrama is always evolving and is now competing with social media giants for the eyeballs of those who want to watch platforms like Netflix, while simultaneously watching something else on their phones — the “dual screeners” — mainly those under the age of 30.

Nesvit and Kasianov, who bristle with young, start-up energy, launched Holywater in 2020 as a Ukrainian book supply firm helping amateur writers publish their work. What they really wanted to forge was an IP incubator by which creators could pitch in work that would become tomorrow’s hit content.

Microdramas came from this incubatory vision and with offerings including microdrama app My Drama, e-book platform My Passion and interactive streaming operator My Muse, the company took off. It is the biggest in vertical video outside of Asia in an industry predicted to generate annual revenue of between $20 billion to $30b billion by 2030.

Things haven’t always been smooth sailing. Kasianov says the company’s biggest challenge has been the Ukraine War, which is not only devastating personally but also led to a “profitability crisis” in 2022 that saw 35 staffers laid off and all R&D shut down.

After this, the ship was slowly righted, and then exponentially so, culminating in the $22 million funding round (Horizon Capital committed $16 million as lead investor) and a Fox deal, which is seeing the production of at least 200 films along with pacts with huge creatives like Dhar Mann.

Nesvit says the Fox deal has “exceeded my expectation in terms of speed.” Projects have already emerged, including Secret Society: Till Blood Do Us Part, which follows a scholarship student from foster care who is kidnapped and forced into a secret society that controls her school with dangerous rituals.

“The assumption here was that by combining our strength in data and distribution with Fox’s resources, talent and IP we can produce something even better,” he says.

Nesvit believes Holywater can evolve microdrama from a “dual screener” to a true Netflix competitor, producing a similar volume with something like one-hundredth of the staff base.

Unsurprisingly, the team believe AI holds the key to this future. Nesvit believes that soon “there will be a universal basic income, and people will have a lot of spare time.”

“These people will be able to produce movies that right now cost $1 million to make, using AI-assisted tools for so much cheaper,” he adds. “We want to build our company to give the creators those tools. The barriers that exist right now, they will be raised by technology, and everyone will be able to be a creator.”