It isn’t clear how much the IPO might raise, but two industry sources told us that Iflix plans to be a public business before the end of the year. One of them said the company has just “months” of runway left due to a monthly burn rate of $7 million. The second person, however, suggested the figure has dropped to $4 million thanks to cost-cutting, which included exits from all regions outside Southeast Asia. Regardless of the exact monthly losses, it is clear that the company remains loss-making and, one of the people said, time is of the essence. That’s because Iflix’s recent $50 million investment is not quite as it appears—a large chunk of the investment figure Iflix announced wasn’t paid in cash.
Instead, the company gave equity to a number of content producers who were owed money for licensing deals, and to others in lieu of paying cash for new deals, said one of the two aforementioned people. As much as $15 million from the round is believed to have been for licensing, which significantly reduces the cash infusion. So the upshot is that Fidelity bought equity as the anchor investor, but other participants took Iflix stock in exchange for content deals.
Boxed in, crowded out
A lack of cash directly from the deal is offset somewhat by a bridge round secured earlier this year but not disclosed publicly. The company raised nearly $20 million from existing backers in February as “it was about to run out of cash,” said a former employee.
Iflix did not respond to a detailed set of questions sent by us for this article.
It wasn’t always this complicated. Iflix was founded in 2014 as a venture that Catcha Group—Grove’s holding company and a founding Iflix investor—could sell for profit further down the line. One scenario envisaged was a sale to Netflix to give it reach into emerging markets. Other options included flipping it to one of the myriad entertainment firms that Netflix threatens—the enemy of my enemy is (indeed) my friend—an early employee told us.
What Makes Iflix the Best Video Streaming Service For Emerging Markets?
Iflix began in a blaze with $30 million in funding to kick things off, but five years on, it still hasn’t broken out. The streaming market in Southeast Asia is hard to assess qualitatively, but data shared by Media Partners Asia (MPA), a research and consulting firm that tracks telecom and media, suggests that YouTube owns around 50% of the region based on revenue from advertising or subscriptions. That’s followed by Netflix, which MPA predicts will reach 15% in the region by the end of 2019, with total revenue for the market pegged at $1.2 billion.
The rest of the competition is a hash of platforms and categories, including viral video app TikTok and Facebook-owned Instagram, both of which command a significant audience. Of the others, MPA estimates that Viu, HOOQ and Iflix—the most visible regional Netflix alternatives—account for a combined 10%, with Viu alone taking half of that figure. Iflix itself claims 17 million monthly active users, but it doesn’t distinguish between those who pay for a subscription—which includes Netflix-like monthly options and smaller ‘sachet’ alternatives—and those who consume the ad-supported version of the service.