Sky in Europe has moved rapidly to grab a large shareholding in iFlix, a rapidly growing South East Asian OTT video provider, which has tied up deals with Hollywood and most of the local telcos and attracted 1 million customers in its first 6 months of trading. In an entirely separate deal Sky and its parent 21st Century Fox have also invested in a US OTT sports network.
iFlix only started trading last May, but has landed a $45 million investment from Sky, for a significant but undisclosed shareholding, in the process buying out $2.5 million of shares from existing unnamed shareholders, as well as pumping money into what is a regional Netflix. It was only Last April that iFlix took on its first round of investment of $30 million, led by Catcha Group and Philippine Long Distance Telephone Company.
Key to its rapid emergence as a power player in movies are the deals iFlix already has to distribute content from US studios and broadcasters MGM, Disney, Warner Brothers, Paramount, NBC Universal, Fox, CBS, the BBC and Media Prima. This includes a number of exclusives such as shows like Mr Robot, Fargo, Aquarius, Minority Report, the Muppets and Black Sails. But in order to land these deals it has also had to cut some pretty cute deals among the telco community, where it has bundling deals with telcos in and around the Association of South East Asian Nations (ASEAN). It comes over like a combination of Netflix and Hulu. It has also announced plans to expand into other Southeast Asian markets such as Vietnam and Indonesia.
It is not quite clear why Sky would want an investment relationship with a SE Asian operation, given that it is currently based entirely in Europe at present, but it could be as simple as 21st Century Fox wanting to access cash resources within Sky for the deal. iFlix certainly doesn’t appear to have key content or technologies that Sky cannot access for a launch in Europe. There is one advanced claim that it can make, in that it can recognize any home which has a broadband connection from a telco partner, and it can authenticate a bundled subscription deal automatically in real time.
So far iFlix has operations in Malaysia, Thailand and the Philippines, and in November it added 200,000 customers in Thailand after just 12 weeks using a bundled 3 month or one-year free trial.
There is a dramatic land grab for OTT video subscribers in the region with both Hooq, owned by Singapore Telecom and Sony, and Viu, run by Hong Kong’s PCCW, both spreading their wings into these territories during the past 3 or 4 months. They have both claimed significant wins in landing K-Drama (Korean TV Dramas) for distribution outside of South Korea. Current service pricing is around the $2 a month level in this part of the world and iFlix claims that it too has access to the all-important Korea drama, without which wandering Koreans rarely subscribe to any service.
Netflix has just launched in the region and last quarter added support for Korean, and simplified and traditional Chinese languages, ready to do battle there and this deal seems to be Sky s rabbling to get in place before Netflix builds a head of steam.
The other side to the iFlix equation is that it has existing distribution deals with local telcos including early investor Philippine Long Distance Telephone Company, as well as Smart Communications, also in the Philippines and Telekom Malaysia and Digi Telecommunication in Malaysia, to bundle content into existing broadband or smartphone subscriptions for free, for up to a year. That kind of “deep pockets” strategy would make iFlix potentially very cash hungry at first, hence its need for the Sky money.
ASEAN initially consisted of Indonesia, Malaysia, the Philippines, Singapore, and Thailand, and has recently expanded to include Brunei, Cambodia, Laos, Myanmar and Vietnam, and it covers a population of roughly 625 million people – roughly half the size of China.
Just in July iFlix landed its first 100,000 subscribers and was identified as Southeast Asia’s fastest growing Internet TV service. Since then MGM has come on board as an investor. And iFlix last year cut a deal with Vimond Media Solutions, to establish a jointly operated development center in Kuala Lumpur.
Sky says it will work with iFlix to identify areas of potential co-operation, but unless Sky plans to buy it outright and begin a war with Netflix as it prepares to enter the region, or it brings a similar service to Europe, we can see few areas for collaboration. Sky already has its own movie exclusives in Europe and an OTT outlet under the brand of Now TV, so we don’t expect it to launch iFlix here.
In an unrelated deal both Sky and 21st Century Fox have invested in a US soccer OTT Multichannel Video Programming Distributor (MVPD) called fuboTV, leading a group of investors putting in $15 million.
This is its second round of funding, and will be used to grow the company’s sports-first streaming video offering, add new features and market the service. As a result of the equity agreements, both Sky and 21st Century Fox will take board positions.
fuboTV provides subscribers with a premium, over-the-top bundle of sports TV channels, featuring hundreds of live soccer matches, club videos, series, documentaries and other English, Spanish and Portuguese content. The service launched one year ago in the US, and has more than 40,000 subscribers each paying $10 a month, of which are 30% Latin American.
The fuboTV service has distribution deals with TV channels that hold US rights to major worldwide sporting events, including soccer matches from more than half of the leading international soccer leagues and tournaments, a primary driver of its first-year subscriber growth. These include Univision Networks, beIN Sports, GolTV and Benfica TV. Neither 21st Century Fox nor Sky are currently licensing content to fuboTV, but both companies intend to work closely with fuboTV as it continues to grow.
Sky and 21st Century Fox each invested $6 million in the round, with further investments from existing investors DCM Ventures, Luminari Capital, LionTree Partners and others. FuboTV was funded with an initial $4 million round in August 2015, plus seed investments prior to that from private individuals including Anthony Vinciquerra, former CEO of Fox Networks, and Blake Krikorian, co-founder of Sling Media.
This clearly shows that Sky and its parent have an aggressive attitude to acquiring OTT content rights throughout the world, perhaps slowly shifting its attack from DTH and terrestrial content delivery, to OTT IP networks.