Iflix deal signals Tencent’s big push into original content

In a bid to expand the presence of its streaming platform in Southeast Asia, Tencent has struck a deal to buy Iflix, a regional player that has established a sizeable user base but failed to generate equivalent financial results.

Iflix got a soft landing through the Tencent buyout. / Photo credit: Iflix

While the Chinese entertainment giant confirmed that the purchase is aimed at growing its WeTV unit, it declined to give further details when Tech in Asia reached out for comment. WeTV has already amassed close to 20 million downloads across Southeast Asia in the past 12 months, according to data from analytics platform App Annie.

Iflix is currently available in 13 countries across Asia, including Pakistan, Malaysia, the Philippines, Thailand, Indonesia, and Vietnam.

As of April 2020, Iflix had had over 25 million monthly active users on its platform, though it’s unclear how many of them are paying subscribers. The deal will combine Tencent’s regional reach with Iflix’s library of local original content – a type of asset that the Chinese firm is strongly pursuing, Tech in Asia research suggests.

The move is part of Tencent’s overall push into original content in China and the rest of Asia, cutting across video, games, and music.

Staying original and making money

Tencent’s total video subscriptions rose 26% year on year to 112 million during the first quarter of 2020. Its subscription revenue, which includes both its video and music offerings, grew to 62.4 billion yuan (US$8.8 billion) during the same period from the nearly 49 billion (US$6.9 billion) it recorded in 2019.

Tencent attributed the growth to original content that caters to its mainly Chinese audience. It singled out its original productions, such as the third season of The Land of Warriors and Eternal Love of Dream, as major growth drivers.

The company appears to be emphasizing quality productions over quantity these days.

Tencent released 216 programs in 2019 versus 252 in 2018. Despite the drop in quantity, viewing time in 2019 went up to 35.19 min compared to 33.64 min in 2018.

And similar to its games production, the company has taken a data-driven approach in video content production and promotion.

Tencent has a “golden rule” for online video-streaming promos, a tip it shared in its videos annual report. In the first 20 minutes, the show or the endorsement should aim to reach 60% of core customers and have at least one “bao dian” (i.e., a twist or memorable moment) either in the episode or the ad.

Tencent also understands that Southeast Asia could dig its Chinese original productions. In Thailand, The Untamed, an original production by Tencent Pictures, racked up more than 100 million views.

With its Iflix acquisition, Tencent could export more Chinese originals to Southeast Asia, potentially maximizing revenue for each production.

Video streaming in Southeast Asia