OTT services have had a significant impact in the US, and they are growing rapidly in several European countries as well. But in fact, OTT is particularly well suited to emerging markets, perhaps even more so than developed ones. Price sensitivity is very high in emerging markets, and free content offered by pirated services is often how users access content. The rapid adoption of smartphones is now creating a growing pool of devices that allow younger viewers to view content on their personal devices and the contract-free, on-demand nature of Internet streaming appeals to this audience. Plus, OTT providers can offer services at lower prices, giving viewers the option of an acceptably priced, legal and reasonably high-quality service.
Initially launched in Malaysia, iflix has expanded to several other emerging markets, and gained several high-profile investors, including Sky . (See Is Sky Eyeing a Global OTT Empire? and Can Asian OTT Providers Challenge Netflix, Amazon?)
Telco Transformation caught up with Nader Sobhan, head of iflix in the Middle-East & North Africa (MENA), where he recently launched the service, to get his thoughts on iflix and Internet streaming in emerging markets.
Telco Transformation: Why choose this region – Middle East & North Africa (MENA) – to launch in?
Nader Sobhan: Well, I would say to answer that question you have to look at the evolution of iflix as an organization. It started in Malaysia, founded by the Catcha Group. Catcha provides a number of Internet-based services for the south-east Asian region.
The founders were very impressed by the Netflix model -- the idea that consumers could choose what to watch, when they wanted to watch it. But they realized very quickly that the Netflix model would not work in south-east Asia. Firstly, you would require very localized context for content. People must be able to relate. In a sense, you need three tiers of content -- very local content, some international, Hollywood-type content and then regional content. Regional content would be what people in the region like -- so for example, in north Africa we offer Bollywood and Turkish content [because that plays well in that region.]
But while solving for these problems in south-east Asia -- things like pretty crappy Internet, prepaid plans with limited data, high cost of bandwidth -- we realized these aren't so much south-east Asian problems, but emerging market problems.
That's why we run higher compression on our video streams, and we were pioneers in download-and-watch. This was all driven by market needs -- what the customers needed. Similarly, we look at the booming middle class in emerging markets [and saw a real opportunity there]. And we are focused on the smartphone, because that is the primary device for them.
TT: How are you pricing your offer?
NS: So we approach our whole pricing strategy differently, almost in reverse. We don't look at how much we can charge, we look at how low can we go, to get more of the market. Because we are not so much focused on our SVoD competitors as we are on piracy. That's the real competition in emerging markets. And high cost is a barrier for SVoD.
We are charging about $3-4 [per month] in the MENA region, depending on the market. Our goal here is to try and wean consumers away from piracy. And we do that by using three main measures: by offering constant access and connectivity to the service; creating a service [and content offering] aimed at the local market; and a price point that is more effective.
Also, we are using a partnership strategy. In our region, access to telco partners is key. We are part of a joint-venture with the Zain Group [for iflix Arabia] which is a big differentiator for us. We are seeing the fruits of that already -- we're very proud of that relationship.
TT: What other markets are you present in?
NS: We started in Malaysia, and we are in a number of other south-east Asian markets: Thailand, Philipines, Brunei, Mynamar, Sri Lanka and various others. Of course, we are also present in MENA and we have a service for sub-Saharan Africa as well.
[iflix is available in 18 territories across Asia and the MENA region, including Malaysia, the Philippines, Thailand, Indonesia, Sri Lanka, Brunei, the Maldives, Pakistan, Vietnam, Myanmar, Kuwait, Bahrain, Jordan, Iraq, Saudi Arabia, Egypt, Lebanon and Sudan. The company will be expanding to additional markets over the coming months.]
The MENA launch has been very exciting -- six months ago it was just me, and now we have more than 60 people. We are approaching all countries, it's just a matter of time. We have regional heads for Asia, MENA and Africa... it's been a bit of race to launch first, and I'm glad I launched before everyone else. (Laughs)
We don't want to just switch on service and blanket entire regions. That's not our approach. We want to have people on the ground, engage with the people in our markets, with the industry. You know, regulators, content producers... really be a part of the country. So we are scaling aggressively but our growth may seem patchier. We want to set up our organization, partner with telcos, get everything in place.
TT: What is your content strategy? Are you producing any exclusive content -- movies, TV shows?
NS: We have a large global content library. We have deals with all the major Hollywood studios, for movies and TV shows. We have experimented with the balance between movies and TV shows. Movies are a great draw -- people love to watch them. But binge viewing of TV shows is huge. People love that. Specially now, during Ramadan -- people watch a lot of TV shows.
We've just launched our first iflix original -- it's part of our Ramadan season [promotion] featuring Gulf, Egyptian, Lebanese, Syrian and Bedouin TV series -- all starring prominent actors from across the Arab world. We've created a new Egyptian sitcom, Waklinha Wala, with 30 of the top stars in the Arab world. It's co-produced by Shadows (production company owned by famous Egyptian actor Ahmed Helmy), Front Row, and the Kuwait National Cinema Council. It's the kind of show you would normally get on pay-TV. It's the first time an SVoD service has created something like this, with A-list stars. And it's available as a box set from day one. You can binge watch from start to finish. This has never been done before [in the region.]
TT: What are your plans for the immediate future?
NS: We have a lot of stuff on the cards. I truly believe there is no good time for innovation -- it has to be in the DNA. In a sense, I think we're disappointed with the way the user interface is organized with most international SVoD services. If you see, the content is always organized around genres like "comedy," "drama" etc. We've created a different way of finding content, in our "selections" category, which is designed around what mood you are in. We also have a "celebrities" option, so you can watch what [your favorite celebrity] is watching, and what they are recommending.
We have an innate humility -- we don't know what will work, so we must try many things. Evolve, using a data centric approach. We have strong data systems, we want to dig deep, understand trends and approach the market with open minds to see what works. We're a special kind of crazy -- expect a lot of experimentation and social activity as we move forward.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation