As iflix arrives Nigeria, iROKOtv must match iflix telco-driven distribution model

This video streaming service market is getting more competitive and Africa seems to be an interesting destination.

Iflix, a video streaming service with customers mostly in Southeast Asia, raised US$90m in a round led by Liberty Global and  Zain. It plans to take on Netflix and Naspers, which owns ShowMax, in Africa and the Middle East, Techcentral reports.

Iflix is promising a lower-cost alternative video-on-demand service and will be launched in Nigeria by June. This is likely to put it on a collision course with the Naspers-owned ShowMax, with also focuses on emerging markets.

Iflix offers customers in nine countries a mix of Hollywood fare like the film Iron Man and TV series Homeland along with local programming for a monthly subscription fee. The company has signed up more than 5 million customers — more than analysts estimate Netflix, the world’s largest paid video service, has in Southeast Asia.

The partnership with Zain mirrors how Iflix has grown in Southeast Asia. The company has relied on telecoms providers to sell Iflix on top of their phone packages. That way, Iflix doesn’t have to spend much money recruiting customers, and mobile providers can use Iflix to keep customers from defecting to rival carriers.

For Nigeria VOD pioneer, iROKOtv, iflix arrival will be a competitive challenge. If iflix succeeds is convincing one of the big telcos like MTN, Airtel, Glo or Etisalat to carry its contents, it could be a huge blow to iROKOtv. The reality is that the biggest challenge in the industry is broadband costs and if the telco-led model is replicated in Nigeria, by iflix, they will have more success.

Of course, there is an issue of contents which iROKOtv remains the undisputed leader in Nigeria. It has the largest collection of Nigerian Nollywood movies. But do not bank on that. One can have hundreds of Nollywood movies with a budget of $1 million. So iflix can build that business if it sees it as a growth area.

Generally, the competition in emerging markets is ratcheting up. Amazon.com extended its video service to the rest of the world late last year, while Netflix added a feature so people living in countries with inconsistent broadband Internet can download shows to watch later.

As the cost of broadband continues to crash, we expect this market to continue to grow, at least in the number of participants. That will bring cost down and help forge partnerships that will make it economical to watch movies online.

Every local company in this sector should note that the  VOD competitive space is international in scope. This is a global business and Nigeria is right at the center right now.