The Story of Iflix through Ongoing Financial Problems: Is This Indonesian Company Really the ‘Emerging Market Netflix?

The third piece of the new Iflix was a more relevant library of films and series for consumers in Southeast Asia. So the strategy shifted away from a focus on Western content—which was more expensive—and instead to local production, which was both cheaper and more marketable to mass market viewers.

Iflix began to film its own original content in April 2017, initially in Malaysia. At the end of December 2018, when Iflix was very much in the mire financially, the company announced a 12-month initiative to find local filmmaking talent. The programme—which Iflix said would cost $5 million—was run in partnership with Next 10 Ventures, a $50 million fund from former YouTube executive Benjamin Grubbs, aimed at serving “the creator economy.”

That much-touted initiative is on pause though. Grubbs told us that the project was postponed from an initial April launch, but no new date has been confirmed.

“Right now, [we] are evaluating a start in Q4 [2019] to align with commercial partnerships tied to the Iflix platform,” he said.

Growth and Expansion in Global Markets

Growth and Expansion in Global Markets

Given product times associated with creating films and series, it is still too early to assess the success of Iflix’s move to localise its library. Vivek Couto, co-founder and executive director at MPA, said, however, that he believes the company is building out a niche in markets like Indonesia, Malaysia and the Philippines.

“The future isn’t terrible for Iflix,” said Couto. “It just requires a lot of discipline and a big advertising business. The alternative to YouTube is a clear bucket, but to be frank, no one really competes head-on with YouTube in Southeast Asia yet. The space is the one below YouTube.”

“If you have enough local content to help boost consumption initially and monetise some inventory, you can always open up the pay model later which is to some degree what the biggest OTT platforms globally have done when competing the largest emerging markets in the world, China and India,” he added.

MPA predicts online video advertising in Malaysia, Indonesia, and Philippines alone will reach $1 billion in the next five years. Facebook and YouTube’s share of this is likely to drop as new platforms rise and dedicated streaming starts to find a larger audience within the region. That may well leave opportunity, but it isn’t clear whether advertising revenue alone can sustain a business.

“Iflix has to be able to grab a big chunk of the $250–350 million available to be a winner in this space and be an attractive proxy for investors in OTT… and they will likely need an additional recurring subscription increment on top of that,” Couto explained.

The Grove playbook

With the company struggling to keep its head above water, founder Grove is seeking the comfort of familiar shores. Australia, in particular. Taking Iflix public on the ASX, if the reports are indeed accurate, is a move straight out of the Grove playbook since Australia was the destination for all but one of his public listings.