iflix eyes a lead on Viu with MENA expansion plan

South East Asian OTT video provider iflix has announced its expansion to 8 new countries in the Middle East and North Africa (MENA) region – a strategy which is likely being driven by recent investor Sky, to grab a foothold in emerging markets before rival services such as Viu and Netflix can make their mark.

iflix was founded in Malaysia in 2014 and only started trading in May 2015, but landed a $45 million investment from Sky in March the following year, for a significant but undisclosed shareholding. In the process, Sky bought out $2.5 million of shares from existing unnamed shareholders, adding to iflix’s first round of investment of $30 million in April 2015, led by Catcha Group and Philippine Long Distance Telephone Company (PLDT).

iflix has boldly assigned itself the title of the world’s leading SVoD service for emerging markets, this week adding Saudi Arabia, Jordan, Iraq, Kuwait, Bahrain, Lebanon, Egypt and Sudan to bring its footprint up to 18 countries across Asia and MENA.

The growth of iflix to gain a base of 5 million subscribers in under three years is certainly impressive, but we would argue that this self-proclaimed badge of honor might be somewhat premature, given that Viu, owned by Hong Kong’s PCCW, has managed to sign up 6 million monthly active users after just 18 months. However, Viu hasn’t broken out how many of its 6 million subscribers are shared between the paid subscription tier and free, ad-supported tier, whereas iflix has no free tier, but we suspect iflix has included those currently on the one month free trial in its 5 million figure.

Our new South East Asian OTT forecast currently has iflix and Viu neck and neck with 5 million paying subscribers apiece, but by 2021, we expect Viu to gain a lead on iflix, largely due to its presence in the booming Indian market. On the other hand, a MENA launch strategy will lead to new opportunities in largely untouched markets, but at a trickle in comparison to India and China.

An India launch from iflix wouldn’t be an unexpected move, but it may be hedging its bets as India is a fiercely competitive market – albeit one with huge opportunities as it is nowhere near saturation. For more information on this report, due out very soon, please contact [email protected]

The core markets for iflix are the Philippines, Indonesia, Thailand, and its home country of Malaysia, where it competes against the likes of Hooq, Netflix, Viu and Tribe, as well as a multitude of local live and SVoD offerings – in a series of complex, fragmented markets.

In a similar strategy to Viu, iflix has tied up deals with most of the local telcos – a business model which is essential to growth in these emerging markets where mobile-first video is the de facto format for streaming content.

Piracy is a huge concern for OTT video providers in South East Asia, which is why iflix has undercut its significant rivals, to combine affordability with convenience. Its monthly prices range between $2.24 and $2.93, compared to Hooq’s $3.00 to $3.70 costs and Netflix’s steeply priced monthly fees of between $7.00 and $10.40.

According to iflix’s head of marketing in Thailand, Artima Suraphongchai, “our biggest challenge is illegal services, not other service providers. More players coming into the market is good for iflix and the industry.” It will be interesting to see if Netflix is affected by piracy and eventually drops its subscription costs accordingly.

The Malaysian company has tapped content distribution agreements with a diversity of studios including Hollywood and studio partners in Japan, South Korea, India and Europe. The service offers a content catalog of 30,000 hours of series and movies, plus offline viewing of up to 10 titles – another feature which is a major selling point in South East Asian and MENA regions.

Also this week, iflix selected the Ascendon billing platform from US payment services firm CSG International, a cloud-based software-as-a-service (SaaS) platform. CSGI says Ascendon will be handing the myriad of payment options for 3 million iflix subscribers – creating an eWallet to consolidate PayPal, credit card, Google in-app purchasing, gift cards, vouchers, and direct phone bill payments.

iflix expects its eWallet services to be up and running by late Spring this year. Faultline Online Reporter has reached out to CSGI to uncover which countries the deal applies to, and why Ascendon is not handling the full 5 million active subscribers claimed by iflix. Perhaps this means there are 3 million paying customers and 2 million on trial.

Mark Britt, iflix co-founder and CEO, said, “to have grown from a small, but ambitious 20-person operation without a live service, to launching a global business, in now our second region with eight new markets and 80 staff in MENA alone in less than two years, is a testament to our commitment. MENA is one of the fastest-growing and most exciting online markets in the world, with data-savvy consumers who share a passion for entertainment.”

Emmanuel Frenehard, iflix CTO, added, “we have created a world-class internet TV product with a customer focused approach and aim of providing individual users with the best experience possible. This commitment includes giving customers convenient payment options to best suit their preferences. As we continue to enter new markets around the world, Ascendon allows us to quickly make new, local market payment options available to consumers, as part of our mission to deliver the world’s best content at a price that everyone can afford.”