Inc. Southeast Asia | 19 July 2017
What gets this co-founder out of bed in the morning? Piracy, leading the entertainment revolution, and ‘little Raspberry Pis’ tracking Internet telemetry across 10 emerging markets
If current times tell us anything, states iflix co-founder and CEO Mark Britt at the RISE Conferenceheld in Hong Kong last July 11 to 13, it’s that “the United States does not have a monopoly on great ideas.”
Speaking at one of the most widely attended tech start-up conferences in Asia, with over 14,000 participants from across 90 countries, Britt expounds on thriving in this “new phase of the Internet” where the opportunity “to build world-class companies on world-class technology, executed locally, everywhere” is growing.
“My hope,” says Britt, “is that over the next two years, someone [speaking] on this stage in RISE [will be] calling Uber the ‘GoJek of America’.”
It’s an audacious, yet not at all far-fetched, statement from the person who created the start-up that’s been often called “The Netflix of Asia.” However, Britt avers that while “there is no need to think about it to a greater extent than that—Netflix went to Asia, met a local market, started to customize, and it had a beautiful baby that looks just like Netflix, and that’s iflix from emerging markets,” he points out that there’s a problem with that narrative.
“There’s a desire to think about the world through a U.S. paradigm,” he says, but the problem is that when you’re operating in the streets of Southeast Asia, and doing very local things, “the context is very different.” He points to Go-Jek, which has generally been dubbed “the Uber of Indonesia” and says that while Uber may have been the original inspiration, the two are nothing alike.
“There’s now a GoJek, an ojek, for your every need. They’ve innovated faster in a much more local way, and they are creating scenarios completely unique to the Indonesian market. Why? It’s their context—what they wake up and think about every day—it’s uniquely Indonesian,” he says.
Don’t be context-clueless
Context, according to Britt, is what will drive a start-up’s growth. And for iflix, it’s pretty simple. “Our vision and dream, what we wake up for and what gets us out of bed every morning is to lead what we believe is an entertainment revolution. But we only do it across emerging markets—the next 3 billion people coming online to the Internet over the next 15 years,” he shares.
Refining iflix’s context further, Britt points to a local store in Kuala Lumpur where every single DVD being sold is pirated, with curated sections that include Bruce Willis action movies, and a customer loyalty program that entails a guy calling subscribers every time a DVD comes in that they might like. “It’s algorithmic recommendation,” jests Britt before pointing to more sobering matters like the whopping $6.5 billion spend going into pirated DVDs today.
“What happens over the next 15 years as people get connected over the Internet is that, with 1.3 billion people, and the cost of a pirated DVD a month represents an about $8 billion revenue opportunity that is completely new. And that is what iflix is—it’s a product to compete with, and to replace piracy. Uniquely in the world, every single show can be downloaded and watched offline, no ads, super simple, and all for the price of a pirated DVD. And if piracy is your context, it becomes the paradigm for the entire business,” says Britt.
Currently, part of iflix’s business model is to track piracy data in each market, per episode, which enables the company to see what people are watching. “Piracy, and the percentage of the top pirated shows we have in every single market, becomes the quantitative measure on how we actually manage quality,” he says, adding that iflix now works with 190 studios globally.
Interestingly, even as they work with all major Western studios to include global blockbuster hits in their ever-growing database of movies and TV series, Britt says that what has really driven the success of iflix is that “things are very, very local.” In Ghana, he shares, among the top watched shows is a Korean one titled called “Legend of the Blue Sea.”
“Even with no historical connection between Ghana and Korea, no trade relations, no historical exports, etc., we now live in a global culture where the Internet has empowered people to connect with the things they love, more than ever before,” he says. Japanese anime, for example, has become a digital trend “in a way it’s never been before.”
In the Middle East, iflix dishes out Ramadan specials people can binge watch on, while in Indonesia, iflix became the first service in the world to simulcast live football games every single day. “Again, the context is very different. English isn’t a first language here, so how do I discover shows? And here, iflix looks less like Netflix and now much more like Spotify where celebrities curate playlists and recommend them to you,” he says.
Global content is exploding
The good news, according to Britt, is that for everyone who loves TV, “there’s twice as many high-quality television shows made this year as there were just three years ago.” But even as high-quality content is increasing, global television ratings point to a slight decline in TV consumption.
“It’s because there’s two very different stories going on,” says Britt. On one hand, everyone above the age of 65 is watching more television; but for everyone under the age of 25, “TV has fallen off an absolute cliff. My children will never ever know what a ‘channel’ is. Pay television is basically flat over the next five to 10 years.”
With audiences in emerging markets comprising mostly millennials, content is being consumed mostly through mobile. “The smartphone is creating a global Internet ecosystem we’ve never seen before, and in that ecosystem the rules are completely different,” he says.
In a region where 98 percent of the population are on prepaid mobile, and less than one percent have credit cards, it’s quite tricky to collect money from subscribers. “We had to run trials of sending someone out on a bike or scooter to collect $2.50 from subscribers, which is a tough way to build a business,” says Britt. In the end, iflix’s solution was deep integration with telco companies, not only in the billing but in making content and telecommunications services “a deeply integrated single bundle.”
It’s a model that has likewise given iflix a picture of how the Internet works at a region to region level. Right now, iflix has about 1,500 devices—“little Raspberry Pis from Sudan to Iran to Nigeria to Vietnam,” quips Britt—that track the Internet telemetry in every single country. In the 10 markets iflix is in, 4.2 million customers are consuming about 50 years worth of content a day, for an average of 2.5 hours, almost entirely on mobile phones. Binge-watching hour starts at 10 p.m. and runs through ‘til two in the morning. “We have a whole bunch of very tired customers watching content on mobile devices, mainly in their bedroom,” says Britt.
For a company that’s just turned two, the numbers certainly spell good things for the Netflix (that’s not really at all like Netflix) of Asia.