iflix Chairman Talks Reaching 5M Video Streaming Subscribers in Emerging Markets
Patrick Grove also discusses why he doesn't see Netflix as a true competitor, having Sky and Liberty Global as investors and the company's approach to censorship.
Streaming video service iflix, which has positioned itself as a Netflix alternative in emerging markets, launched in Asia about two years ago and is expanding into the Middle East and North Africa.
The privately-held company has said that its users have streamed more than 6 billion minutes since it launched in Malaysia and the Philippines in 2015. It now has about 700 employees across 24 offices. Its service costs about $2-$3 per month.
In March, the company unveiled a $90 million round of funding from John Malone's Liberty Global, Middle Eastern mobile carrier Zain and existing investors Sky, Catcha Group and Evolution Media Capital. Last year, iflix had already raised $45 million from Sky, in which Rupert Murdoch's 21st Century Fox owns a 39 percent stake and is looking to buy full ownership.
iflix chairman Patrick Grove spoke to The Hollywood Reporter's international business editor Georg Szalai about the service's growth and subscriber figures, how it differs from Netflix, its approach to censorship and why big-name entertainment industry figures like Murdoch and Malone have taken note of iflix.
How many markets are you in now, and how many do you expect to go into?
We are already in 10 countries right now in Southeast Asia. We are going to fully launch in 10 countries in the Middle East [this] week. In about two months, we’re going to launch in about 20 countries in Africa. So by the end of the year, we will have have gone from being in five countries to 40.
Why do you see the big opportunity in emerging markets?
It’s our vision to revolutionize internet TV in emerging markets. They have a different set of structural opportunities and challenges. For instance, in emerging markets it’s very, very mobile-focused, more so than in Germany or other European markets. No. 2, internet connectivity is less stable in those markets, so we are very focused on the ability to screen beautiful video images at very low bit rates. You can also download and watch the video offline, which is now one-third of our views. So we are basically focused on solving challenges that only exist in emerging markets.
How are consumers in emerging markets different?
What’s fascinating is that we’re seeing that consumers in emerging markets love to binge-watch. Our average viewer would spend maybe two hours and 20 minutes on the service and most of the time this is on a mobile device. What we’re finding, that is no different from the West, is that people are getting addicted to great stories and binge-watching great content. What we are also finding our primetime is from 10 p.m from 1 a.m. — so usually about the time when you should be sleeping, but you keep watching.
What content is popular on iflix?
Local and regional shows work really, really well. Korean content works really well across markets. Japanese anime works really well. Great local stories work well. In many markets, such as in Indonesia, we work really closely with the studios. We are getting movies and TV shows right after they have been shown on TV or in cinemas. Unlike Netflix or the U.S., where you have to wait two years, we are getting content sometimes a day after it’s been on TV, and that’s resonating really well.
How key is Hollywood content to iflix?
In Indonesia, which is now our biggest market, in the last month, when I looked at the top 10 shows, four of them were Indonesian, four were Korean and two of them were Thai. So there were no Western shows in the top 10, even though we translate or subtitle every Western show. It was also fascinating to see Thai shows show up in the top 10 for the first time ever. It’s still important to bring great Hollywood content to consumers in emerging markets. But even as the middle class grows in those countries, they still want their local stories and the talent they love.
How are you different from Netflix, and how do you think about the competition with it?
How do you get all the local content?
We have local content experts in every country. We work with 180 studios across the world. We go hyper-local with teams on the ground in every market hunting down the best local and regional content everywhere it can be found. Many times when we get the content, it’s not even digitized. Somebody will give it to us on a DAT tape, and it still has the ad breaks. So we have to digitize the tapes, so that we can put them on the internet.
What’s your approach to censoring content? Netflix has run into some problems in some markets…
We are very respectful of local customs, religions and morals and have censorship and subtitling teams in every market. And we have good relationships with governments. We are always a phone call away if they should deem anything morally or culturally sensitive. And because we are willing to do that, we find that we have never had any problems in any country, unlike Netflix, which has refused to censor. It was banned in Indonesia by the No. 1 internet service provider. We are not banned, because we are very tolerant of local customs, which I think everyone should be.
How often do you have to take down or edit a show or so?
We have never had to take down a show. And we have never had to censor anything so dramatically that you’d lose a significant part of the original show.
Netflix has more than 100 million subscribers worldwide now. Any insight you can give us on how many paying subscribers you have?
We are probably a couple of months away from [reaching] 5 million subscribers. That would mean that in our first 24 months, we’d have grown faster than Netflix and Spotify did in their first 24 months. I’m really proud of the team for working tremendously hard to achieve that.
What are the keys to your subscriber growth?
First, we are hyper-local in terms of our content and our marketing. No. 2 is that we realize that most people [in our markets] don’t have credit cards, so we work with the telcos for people to get access to iflix. For instance, in most emerging markets, people will pay their phone bill before they pay their rent. Our go-to-market approach has been a very strong, integrated one.
What do you get from your two big-name investors Sky and Liberty Global, and vice versa?
Yes, I think we are the only company in the world with Murdoch and Malone on the shareholder register. We believe that we are revolutionizing pay TV and internet TV, and I think those two pay TV giants find it fascinating that we have been able to grow so fast. And No. 2, we are targeting markets that many Western pay TV companies have given up on, but we haven’t and have almost found a new, modern-day way to re-look at the business in these markets.
Any original content initiatives and plans?
I think there is great opportunity for local original content. In a lot of our countries, the content markets are not as developed as the U.S. or Europe, so there are always openings to develop great stories and great shows. We are launching local content in all our markets. We have already greenlit five shows in five countries. We are focusing on comedy shows with a very local flavor, which no one has ever done before in a lot of our markets. We’ll learn from lessons along the way, but we are committed to being a great hyper-local service.
Anything else you want to share?
I’d say watch this space. There are more exciting things coming up. It has only been two years. This is only the beginning for us, and there’s a long way to go.