iflix, a Malaysia-based subscription video on demand (SVoD) service for emerging markets, has closed a $133 million funding round led by Hearst Communications – a US-based media, information and services conglomerate – as well as new investors such as Singapore-based EDBI and clients of DBS Private Bank.
The new round brings total funding raised by iflix this calendar year to more than $220 million. According to data compiled by CrunchBase, iflix has now raised aggregate equity funding of $298 million across four rounds. iflix co-founder and Group CEO Mark Britt declined to disclose their valuation but told this portal that the company had raised over $300 million to date, including this latest round and a previous $90+ million investment announced in March.
In an official statement, Britt said, “Hearst is a leading investor and has many of the world’s most innovative and iconic video brands, including ESPN, A+E Networks, Vice, AwesomenessTV, Complex and more. This collaboration significantly deepens our bench of experts with our longstanding partners Evolution Media, Sky and Liberty Global to help drive iflix’s continuing growth.”
Proceeds from the latest round will be used to fund iflix’s local content strategy and expand its technology and development teams. Founding shareholders Evolution Media and Catcha Group have participated in all preceding capital raisings.
In an email exchange with this portal DEALSTREETASIA, Britt explained that different investors often contributed in other ways beyond financing. He explained: “We look to all our investors to help iflix grow rapidly, and assistance from different investors comes in different forms beyond simply financing. EDBI can help us leverage Singapore’s advanced digital infrastructure and their wide network so we can extend our localised content to capture greater market opportunities and customer base in the region.“
Since going live in May 2015, iflix has focused on growing its footprint in emerging markets and claims substantial growth over the last 12 months across all segments, expanding from four markets to 19 across Asia, the Middle East and Africa.
Additionally, it has built integrated distribution partnerships with telecommunications operators to bundle the iflix service with customers’ mobile and data subscriptions. The company claims this has driven growth in subscriber numbers and engagement by 3x and 2x respectively, with some of the highest average active mobile viewing durations of any service in the world at 2.5-2.75 hours per session.
The company posted 230 per cent growth in year on year revenue, and increased its commitment to localisation, producing 26,000 hours of subtitles in nine languages, with locally-curated content in every market. iflix’s full content library showcases content from over 230 studio partners from 30 countries.
The growth in the use of iflix’s services is underpinned by the growing middle-class population of emerging markets, where smartphone proliferation and affordable access to high-speed mobile networks has driven the growth of mobile-first media consumption.
Britt told this portal: “Linear television viewing is declining and there is incredible growth in the OTT space. In emerging markets globally, we have a millennial audience driving the mobile revolution, and who want to be in control of their entertainment experience. Smartphones are creating a global Internet ecosystem that we never seen before.”
“In Indonesia, only 1% of people have a credit card – and the demand for deep telco integration and carrier billing is clear. This is iflix’s context – our vision, our dream is to lead the entertainment revolution across emerging markets. It’s the next 3 billion people that are coming online over the next 15 years.”
He adds, “Growth has been exceptional in Asia, with over 5 million members streaming over 30 million minutes a day on average – that’s over 57 years of content being streamed every single day. We do not release country specific data but can confirm Indonesia is presently the largest market for iflix.”
Acrss the emerging markets that iflix operates in, the middle class is forecast to grow from 662 million in 2009 to 2 billion by 2020 across the Asia Pacific, Middle East, North Africa and Sub-Saharan Africa, with Asia being the largest contributor to this growth.
The region’s young, technologically literate populations are further expected to drive growth in digital entertainment media, leading to a growing focus on localising content and building distribution channels to capture and retain users.
In effect, this replicates Netflix’s “conglomerated niche” strategy that will see it develop content for an array of audience interests, with iFlix’s online model allowing it to serve those audience interests simultaneously and at scale.
However, at the same time, this original content strategy has posed problems for the likes of Netflix, due to the economics of producing compelling original content. Whether iFlix can successfully replicate this model and generate returns on investment is questionable, though its focus on emerging markets mean that its costs will be far lower.