As Netflix continue to grow its market share globally (and losses), pundits are beginning to question the sustainability of unlimited content streaming at a flat fee. In 2017, Netflix has committed close to US$17 billion for content in the coming 3 years. The truth is, if they hadn’t continue to do so, their existing subscribers would have dropped off eventually.
Closer to home, the once branded as the Netflix of Asia, iflix have been keeping mum since it raised a supposed US$133 million about 8 months ago.
Piecing together everything
It actually seems that iflix could be suffering from a possible cash crunch.
This may not be totally unfounded as it recently closed its digital team in Singapore, on the reason that all its operations were in Malaysia. In addition, it also seems that many high level lieutenants either have left or are planning their leave. The buck does not stop there. Other issues such as late payroll, and forced resignation of many personnel have been rumoured.
Consumer preferences are changing
Perhaps one key problem was that iflix is competing directly against Netflix and failed to focus on a profitable niche. Netflix with it’s huge coffers could easily outproduce original content, and have been releasing star-studded content since the past year or so. This has somewhat altered the expectations of consumers.
After all, why pay to access old DVD movies and TV series you can easily access by downloading from the grey market (this is the typical mindset of many Southeast Asians). Netflix on the other hand, offers content that is often new and not available in the grey market. So, kudos to Netflix for changing the “why-should-i-pay” mentality of many consumers.
Silver lining
iflix’s rumoured demise may be heartbreaking, however it has so far helped pave the entry of many unexpected new players. For example, realizing the shift in consumer preferences (from digital/satellite tv to internet tv), major players such as Astro launched its internet video streaming service, and seeing huge user growth across the board. They even booked enviable revenues on their ecommerce stores which are tied to their online tv.
Even as we write, Amazon’s Twitch have already launched its Bangkok operations for a few months. The growth in user generated content still sees no signs of stopping, and the numbers are staggering when it comes to content for the gaming genre.
Conclusion
At the end of the day – whoever owns the content wins, as distribution will become just another channel. But if you already own distribution, you need to reinforce with content. Take a look at India – media companies are better positioned when they move into streaming, because they already own the content and bandwidth is cheap.
Smart players (like Netflix) are investing heavily into local content – as it has stronger following and with huge budget, it is increasingly hard for local players to play catch up. Hopefully iflix can turn around its business and fast. The future is no doubt in internet tv, and this shall remain as the space to watch.
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Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at hello@mworks.asia and let us know how we can help.