Iflix raises $133m as it dominates Netflix in parts of Asia

Catcha Group CEO Patrick Grove talks about Iflix at Tech in Asia Singapore 2016. Photo credit: Tech in Asia.

Malaysia-based Iflix, emerging markets’ answer to Netflix, today announced it closed a new funding round worth US$133 million to boost its production of local content as it aims for the “next billion users.”

The round was led by US publisher and TV station owner Hearst, which early this year revealed plans to be an active buyer of companies in an effort to rely less on its traditional media businesses. Other new and existing investors who also shelled out some cash include:

• Singapore’s EDBI
• some unnamed clients of DBS Private Bank
• Evolution Media
• Sky
• Catcha Group
• Liberty Group
• Jungle Ventures, and
• Philippines Long Distance Telephone Company

Founded in 2015, Iflix is available in 19 emerging markets, mainly in Southeast Asia – 15 of which it entered in just the past year. During said period, it claims to have seen a 230 percent year-on-year growth in revenue, plus three- and two-fold increase in subscriber numbers and engagement, respectively. It offers a library of thousands of programs from 230 studio partners in 30 countries.

“We were looking for a partner who could bring additional expertise and knowledge to our business,” said Iflix co-founder and group CEO Mark Britt, referring to Hearst.

Apart from expanding their technology and development teams, Britt told Tech in Asia, “The new funds will allow us to double down on our local content strategy, including local cinema releases, productions, and originals. Our most popular and impactful shows are predominantly local ones.”

Additionally, Hearst owns several video brands like ESPN, A&E Network, and AwesomenessTV – some are already available exclusively on Iflix.

Hearst, which also owns newspapers and magazines, would be looking for more acquisitions this year to reshape its business mix, its president and CEO Steven Swartz told his staff in his 2016 year-end letter quoted by Bloomberg. That year Hearst spent more than US$2 billion on acquisitions, the largest of which was a company providing safety data and maintenance to corporate jet owners.

Whereas traditional media ad revenue continues to decline, Swartz noted the internet has created “virtually unlimited places to put advertising.” Not to mention other revenue streams like subscription-based services.

Who’s leading?

Iflix is a perfect new avenue for Hearst. Iflix stands to gain from the rise in subscription-video revenue, which could reach US$120 million in Southeast Asia alone this year, Vivek Couto, executive director of Singapore research house Media Partners Asia, was quoted as saying by Forbes. In fact, Couto reckons Iflix’s share of the pie might be 35 percent or US$42 million.

Iflix is in the running to conquer the region’s video streaming space, where other players like US-based Netflix, Singapore-headquartered Hooq, and Hong Kong’s Viu are also trying to capture market share.

While Netflix and Iflix are often pitted against each other, Iflix co-founder and chairman Patrick Grove, also the entrepreneur behind Iflix backer Catcha Group, have insisted that the two are not direct competitors. He said Netflix chases the affluent crowd, who are willing to pay around US$10 a month, while Iflix is targeting emerging markets where its desired audience “earn a salary of less than US$10,000 a year” so it charges only US$2 to US$3 a month.

Those consumers also watch from their smartphones, which run on prepaid credit and sluggish internet speeds. That meant introducing easier payment methods (people can pay for their subscriptions through their cellphone bills) and streaming technology that’s better suited for the region.

Betting on more originals