African web-TV provider bulks up with new funds

Lagos: iROKOtv, the mobile entertainment group dubbed the Netflix of Africa, has secured $19 million (Dh69.7 million) from investors including France’s Canal Plus to produce original content and expand across the continent.

News of the funding provides further evidence of investor interest in the region’s mobile technology start-ups, given the wide use of smartphones to access online services, rather than personal computers. By 2025, half of sub-Saharan Africa’s 1 billion strong population will have internet access, with 360 million connecting via smartphones, according to McKinsey, the professional services firm.

iROKOtv said its new investment will go towards financing and producing local content, and backing its product and engineering teams in both Lagos, the Nigerian capital, and New York. It will aim to produce at least 300 hours of original content in 2016 and to double that by 2018.

Having first launched in 2011 as a free-to-watch streaming website for Nigeria’s ‘Nollywood’ movies — the world’s second-largest film industry by output — the Lagos-based group has since shifted to a “mobile only” subscription app strategy. Subscribers download an app and pay a monthly fee to watch unlimited movies.

“For us, there is no version of reality where the marriage between Africa’s most powerful communication tool [mobile] and the most prolific and loved entertainment provider [Nollywood] won’t be a joyous union,” argued Jason Njoku, CEO and co-founder of iROKOtv. “With millions more Africans poised to come online via mobile in the coming years, our mission is to lead viewers to content they’ll love.”

Although smartphone data usage is still expensive in many African countries, costs are coming down rapidly, in line with the price of smartphones. In Nigeria, Africa’s biggest economy, some Chinese-brand devices retail for the equivalent of less than $40.

Even so, iROKOtv has developed its app to stream films on low bandwidth so as not to deter customers who cannot afford large monthly data packages. While many of its 65,000 subscribers are in the African diaspora, not on the continent, iROKOtv faces new competition from Netflix, which this month announced plans to enter 130 new countries, including many African nations.

For iROKOtv the challenge will be to fight for new customers against Netflix. The California-based streaming video provider has 74 million subscribers.

iROKOtv, which previously raised $25 million from international investors including US-based hedge fund Tiger Global Management, declined to comment on the valuation implied by its new fundraising. But a spokeswoman said the new deal means that iROKOtv will be “cashflow positive within the next couple of years.”

— Financial Times