The Pay-TV Innovation Forum is a global research programme for senior pay-TV and content executives, developed by NAGRA and MTM, and designed to catalyse growth and innovation across the global TV industry, at a time of tremendous change and disruption.
As part of the programme, we are publishing a series of interviews with leading TV industry executives from around the world to explore their views, perspectives and experiences of innovation. In this interview, Kjetil Jakobsen, Global Director of Products and Partners at Asian OTT service provider iflix, shares his views on the opportunities for OTT services across Asia’s emerging markets.
What are the business models enabling growth for iflix in Asia?
We aim to give as many people as possible the opportunity to access iflix, by increasing the number of available payment methods and the number of billing relationships via our distribution partners. Big telco and broadband companies have large customer bases already and have the ability to provide distribution very quickly to large numbers of people. There are a number of ways we partner with them, from hard bundles - where a telco buys the right to a certain number of subscriptions and then gives them to their customers free of charge – to soft bundles, discounted subscriptions that can be either an add-on to a core telco product, or a standalone product. We also offer a direct-to-consumer paid model, of course, as well as an AVOD model where anybody can come to iflix and watch a portion of our catalogue for free.
How important is your relationships with telcos?
It's one of the keys to our success. Rather than telcos having to go and license very expensive content, we're offering them revenue that is generated from the advertisement model in exchange for marketing support and distribution. Since launch, we’ve worked with some of the biggest telcos in Indonesia, Philippines, Malaysia, Vietnam, Thailand, Myanmar, Nepal and Bangladesh.
How does your offer compare to global OTT providers such as Netflix?
One of the biggest differentiating factors between an emerging market mobile-first player like iflix and the likes of Hulu and Netflix is obviously the price point. We want as many people in our market as possible to be able to afford our service, so we have a very aggressive, low price point. For that to work as a subscription business you need scale. Similarly, with advertising, you also need scale to create a valuable business model. We also need to give users the ability to pay easily: while mobile wallets, online banking, and retail outlets have not traditionally been part of the digital payments stack in the West, they are critical for our business.
How important are data and analytics to iflix’s business?
I can't overstate the importance of data. We have billions of data points coming into our data centre - data served by telcos, data served from non-telcos, data served from our own infrastructure, billing success rates, average wallet size, all down to product level. In terms of content, we know how many people watch a specific piece of content, how many people drop off during the watching of a specific piece of content, the value of every minute served on this piece of content versus the cost it took to acquire that piece of content, which content works better to acquire users versus which content works better to retain them. We process this every day and it is the foundation of every meeting that we have in the company. It’s also crucial for our advertisers too – you can’t sell ads without providing reconcilable data.
Content piracy – and persuading consumers to pay for content – remain major challenges in many Asian markets. How is iflix responding?
Piracy is our biggest competitor still, by far. Content piracy is hard because we can't compete on price, so getting people to start paying for content means we need to compete on other things like compelling features, engagement features, exclusive content, consistency of quality of service, and consistency of accessibility. But with more players establishing themselves in these markets and big content producers taking Southeast Asia more seriously, we hope that legislation and enforcement of legislation will improve as well.
Looking ahead, how are the emerging markets in Asia evolving? And what opportunities does that create for services such as iflix?
Markets in Southeast Asia present somewhat unique and favourable conditions for a service like iflix. The population is overwhelmingly young, and the GDP is increasing across many markets. Within the next couple of years there could be a billion people entering what is considered the middle class, and with that, there is an increased propensity to spend on entertainment and communication after basic needs like housing, food and transportation are met. A mobile phone is the gateway that delivers all of those things, so it is no surprise that an affordable Android device has become a staple. In countries like Myanmar, the mobile phone was virtually non-existent 10 years ago, and now everybody has a smartphone that's connected to the internet at relatively low data rates. They have leapfrogged the entire computer and television experience that you and I are very familiar with. With these new consumers, our goal is to be the first service they hear about, at the price point they can afford, with the method of payment that they are familiar with. We’ve seen a doubling in our active users over the last 4 months, so we are doing something right, but there's still a lot of work to do.