Kuala Lumpur-based platform iflix continues to make waves in the SVOD space, attracting investments from the likes of Sky, Evolution Media and Liberty Global. The service went live in Southeast Asia in 2015 and has since positioned itself as the leading SVOD operator for emerging markets. In April of this year, it expanded to the Middle East and Northern Africa and a few months later said it would be arriving in Sub-Saharan Africa later in the year. From its regional base in South Africa, iflix is looking to sign on customers with its slate of Western and local content. Marc Barnett, the group COO of iflix and head of Africa, tells World Screen about the platform’s strategy for the region.
WS: Was expansion into Africa always part of the iflix business plan?
BARNETT: Initially our business kicked off as a Southeast Asian SVOD service. It became clear to us that we were gaining traction in Southeast Asia and we started thinking about how we could expand the business. The blueprint, effectively, was to go broader in Asia, go into the Middle East and into Africa. It was the opportunity to pull together a lot of markets that have similarities from an emerging-markets perspective. That’s been our focus since day one. We are in Southeast Asia, but we’re not in Singapore. Certain markets don’t fit with how we want to operate. But in the vast majority of markets in Africa, the Middle East and Asia, we’ve found similarities.
WS: What have you learned from the Southeast Asian rollout that you can use for your African expansion? In what ways are the regions similar?
BARNETT: There’s a set of conditions that tend to exist universally across emerging markets—inconsistent infrastructure and levels of internet quality, expensive and limited mobile data, low credit-card penetration and a lack of familiarity with online payment options. Combine those things, and while there are a lot of differences in the markets, there’s enough of a similarity for us where the learnings we take from what we’ve done in Asia can roll out across Africa. We think we’ve addressed a lot of those challenges with our distribution partners, who are the leading telcos and hardware manufacturers in the vast majority of our markets. And then localization for us is a massive focus. We build local teams, we set up local businesses on the ground with strong insights into their markets, we buy local content, we subtitle that content, we provide local instances of our app and our site. We often talk about how we’re operating a global business and [multiple] local businesses. We want to get the best of both worlds. We want to make sure that we have a local focus with local people who understand the local market and run an end-to-end local business. But we also want to get the benefit of global learnings and global expertise.
In one sense it is the same strategy everywhere. Localize the service and bring the right content to the right people at the right time for the right price. But every one of our markets has a completely different setup in terms of how you market in that country, what level of localization is required, how you meet the censorship laws, what content is available. Some markets produce far more content than others. So for us, each market is run as a standalone business. If you operate as a global business with headquarters run out of a tax haven, you can avoid operating locally, so to speak. We take great pride in the fact that we set up local offices in some markets that are quite difficult to do that in, but we’ve persisted because we believe it’s the right thing to do and the right way to operate a business.
WS: What conditions did you see in the region that made you feel like now was the right time for expansion?
BARNETT: Africa’s smartphone numbers are forecast to grow from around 220 million in 2015 to 720 million in 2022. Africa has leapfrogged a lot of traditional infrastructure. The developed world has gone through landlines and branch banking and then into cellphones and mobile money, and there’s a whole bunch of steps in between. For a lot of the consumers in parts of Africa, the first phone they’ll ever have is a smartphone. It’s not like we’re trying to transition people from TV to pay TV to watching on laptops and then tablets and then phones. [Mobile viewing] is second nature to most of our consumers. They jumped straight ahead. There’s a huge youth population that is hungry for entertainment, and they consume content today the way that our service is designed. So if you look at the size of the population and the explosion of technology and options, and our ability to deliver [entertainment] at a price point that at least makes it competitive and compelling against piracy, now is the right time to dive into Africa.
WS: How are your local telco partnerships working?
BARNETT: What’s working well is that there is a lot of synergy between us and the telcos. What we’re trying to do and what the telcos are trying to do are quite aligned. In a lot of these markets, the battle between telcos is fierce, and they’re always looking for an opportunity to provide an additional service to their customers to grab market share. From our perspective, there’s a lot of win-win. We’re trying to capture a large portion of the market, and we want to be able to provide payment options. Carrier billing is a great tool to connect with consumers and allow them to pay [for an iflix subscription]. Online credit card use is not prevalent in some of our markets. So [partnering with a telco is] a good first step to connect to a big consumer base and offer payment options. In a lot of cases, we’ve been able to strike deals with telcos that offer either zero-cost data or reduced-cost data or additional data packages for bundling iflix into their mobile service.
WS: Tell us about the content lineup for the region.
BARNETT: Local content is the biggest focus for us. When we started iflix, it was quite heavily Western. That was where we thought you gain credibility. And that worked quite well for us initially. As we dove in deeper and spent time with consumers in our early markets, we realized that we’re aiming to be a mass-market service, not a niche premium service. If you’re a niche premium service you can offer that fantastic Hollywood content and capture that top end of the market who know that content—they’ve seen it in other places. In that world, you’re trying to win market share against other global competitors. iflix is designed for the mass market; it was built thinking about emerging markets and providing people with entertainment that they wouldn’t otherwise have access to. What they want is access to local content. In some of our markets, local distributors have content that goes to cinemas and then as soon as it finishes [the theatrical run] it can never be found anywhere else. We’ve done deals to put that content onto iflix. That’s one of many examples where we’re trying to find as many avenues as possible to get ahold of the content that people want to watch and put it in the palms of their hands.
The Nollywood content we’ve acquired is performing quite well. We’ve acquired local content in Ghana, Tanzania and Kenya. We’ve commissioned our own originals in each of those markets that we’ll launch once we go live with our telco partners.
Step one was to test the tech and the infrastructure and make sure the local versions of the site work well. That’s happened. Two is to launch from a retail perspective. And step three is to launch with our telcos and start to push the bundles that are offered at a telco level. After that, we’ll start talking about the original series we’ve commissioned. That feeds back into our belief that we want to invest in the local ecosystem. Producers can sell their content to an SVOD supplier and gain an additional revenue stream. That will only help the ecosystem grow, which is good for consumers. It grows the entire pie.
WS: What have you most enjoyed about being part of a start-up?
BARNETT: Before iflix, I worked in Australia at an independent advertising agency called Bohemia. Before that, I spent about ten years at Microsoft and Ninemsn. Mark Britt [CEO of iflix] and I have worked together for 10 of the last 12 years. Here I can make a difference and shift the needle every single day. You can make decisions on a daily basis that can change the course of the business and have a significant impact on results. There’s an excitement that comes with that. As a start-up, you get the highest highs and the lowest lows. And it’s not even by week or by day; it’s sometimes by the hour. You have all these plans and think everything is going wonderfully, and then you discover something that is a disaster, and you have your lowest low, and the next hour you discover something that is the best thing you’ve heard in the last month and you have your highest high. I enjoy that roller coaster.