16 June 2017

Africa: Iflix Plans to Turn African VoD Market On Its Head and Projects 2 Million Users in Two Years, Local Commissions Under Way

Malaysia-based VoD provider iflix has recently announced that it is rolling out to Africa and the Middle East. It is pitching a low-cost content plus data package with telcos and has large ambitions. Russell Southwood spoke to iflix's Head of Africa Andre de Wet about its plans.

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From 1 August this year, iflix will open in four countries: Ghana, Kenya, Nigeria and Zimbabwe. It chose these four countries as the start of its roll-out because they are English-speaking and the most advanced in terms of available local content.

After the initial four country roll-out, expansion into other Sub-Saharan countries will take place quite rapidly:"We've paid for rights across Sub-Saharan Africa minus South Africa." It's not going into the South African market:"It's purely a cost factor. Content is more expensive in South Africa."

It will steer away from French and Portuguese-speaking countries in the short-term but it is building a hub to do translations so that it can address them at a later stage. It is dubbing content for East Africa into Swahili. It has 5 offices in Africa and a content team of 15 people.

Andre de Wet was the former CEO of Price Check which he says that he grew by more than 700% over 3 years to be among the top 5 most visited e-commerce sites in South Africa and Africa.

The iflix content will be a mix of international and local"We've got great Western content. For example, we've got 800 hours from Warner Bros and 600 films from NBC Universal". On the local side it has 1000 hours of exclusive Nollywood plus a local element for each of the initial roll-out countries:"In different countries we have between 200-300 hours of exclusive local content. For example in Ghana we have 120 hours and in Zimbabwe 150 hours".

Its starting point has been to do deals with telcos across its different territories to bundle content and data in a single price: it will be either cheap or reduced cost data. He was reluctant to talk about which mobile telcos he's done the deals with before the August launch date:"We want to reach wider audiences and get as many people educated as possible to use SVoD. There's a study (for Africa) that shows only 8-10% understand what Netflix does. It's a long-term game. We're interested in the next billion and want to be ever more local as we go".

So what differentiates iflix from Netflix?"Localisation. In Asia, we've got 50-55% of users watching Western content and rest watching local. The most pirated DVD in Ghana is Korean and we have that kind of content. We also have interesting telenovelas from Turkey and Latin America".

"Netflix is going for people who can afford US$10 a month and understand Western content. Our users have less understanding of Western context and desktops. The price point is substantially below at around US$2-4 a month. You can just join a telco and you get iflix as part of your package". Payment will be integrated with carrier billing and mobile wallets. It will be available across all devices for users, on up to 5 devices per account. There can also be two continuous streams at any one time.

So can you make your revenue share with the telcos work?:"Yes, iflix is not a charity. It's not a revenue share but I can't get into the details".

Will the bandwidth be adequate to stream video to users?:"We will be able to deliver high quality on their networks. There will be three different streaming speeds: low, medium and HD. The low speed gives no pixellations. You're also able to use Wi-Fi hot-spots to download plus there's off-peak data with operators for downloading".

De Wet believes that there's a big market out there:"There will be a few million subscribers. It took iflix two years to get to 5 million in Asia. It might be sooner in Africa. There will be a couple of million over a year to eighteen months".

So who will be iflix's biggest competitor?:"Piracy. In Nigeria at Alaba market they sell 800,000 to 1 million (pirated) DVDs every day. With us you get quality production for the price of a DVD". Outside of piracy?:"There's a few interesting players like NuVu, Showmax and others but no-one specifically".

"We're very excited about it. We think our model will turn Africa on its head. There will be 500 million on smartphones in next 2-3 years and we want to make it affordable and localized for them. We want to be first in, in front of the industry." iflix sees itself as having changed the business model by partnering with telcos and in several key country markets actually attracting investment from them.

iflix was founded by Patrick Grove, CEO of Catcha Group, Mark Britt and Evolution Media Capital (EMC), a merchant bank focused on the media, sports, and entertainment industries. In April 2015, iflix announced the completion of a $30 million round of funding, led by leading international investment firm, Catcha Group and Philippine Long Distance Telephone Company (PLDT. The company launched its service in Malaysia and the Philippines one month later. One month after it's launch in Indonesia it had 1 million users. Its latest investment round in March this year was for US$91 million and included Liberty Global, Sky and Middle East telco (and former owners of Airtel) Zain, with whom it is partnering in six countries in the Middle East.

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