Malaysia-based online video streaming service iFlix raised more than $90m in a round backed by media companies Liberty Global and Sky last week, indicating that geographic opposition to global market leader Netflix is emerging in several markets.
Evolution Media Capital (EMC), the investment firm co-founded by talent agency Creative Artists Agency and private equity TPG, also invested in the round along with domestic internet company Catcha Group, telecommunications firm Zain and an unnamed investment management firm.
The company has begun talks with possible investors over an increase to the round, which values it at more than $500m post-money, co-founder Patrick Y-Kin Grove told Forbes.
The capital, which boosted iFlix’s overall funding to $175m, follows a $45m investment by Sky in March 2016 at a $450m valuation, and $30m from Catcha, EMC and telecom group Philippine Long Distance Telephone (PLDT) 11 months earlier. Grove said its backers also include entertainment producer MGM, broadcaster Emtek and venture capital firm Jungle Ventures.
Founded in 2015 by Catcha and EMC, iFlix runs an online service that allows subscribers to stream films and television shows on demand. It has licensed content from partners including Walt Disney, Warner Bros, Fox, MGM, Paramount Pictures and Starz as well as local producers, and has built up a base of about 5 million users.
The company initiated its service in Malaysia and the Philippines and currently operates in 10 Asian countries, having expanded across Southeast Asia before launching in Pakistan, Vietnam and Burma this year. The new capital will support a move into the Middle East and Africa.
The push will be backed by a joint venture with Kuwait-based Zain, which will offer iFlix to its 47 million customers across the Middle East and North Africa on top of its own service. That approach mirrors existing deals iFlix has struck with PLDT and several other telecom networks across the Philippines, Malaysia, the Maldives and Indonesia.
Although Netflix is present in the region, iFlix is using local connections to forge ahead, not only utilising the help of local strategic partners but also striking promotional deals with national celebrities, negotiating censorship rules with individual governments and offering its service at a fraction of the price of Netflix in a bid to cut into markets that are awash with piracy.
“We are like McDonald’s and they are like a Michelin two-star restaurant,” Grove told Bloomberg, describing the companies’ relative positions in the market. “We both sell food, but we are not competitors.”
The progress of iFlix can perhaps be compared to that of ride hailing company Uber’s regional rivals (though Netflix has a stronger global market position than Uber), but as it grows its challenge will be to see off not only its larger rival but also homegrown players built to offer a localised service.
Hooq, which has raised some $95m from its founding partners, telecom group SingTel, media conglomerate Warner Bros and electronics firm Sony’s AXN Investment unit, is already competing with iFlix in the Philippines, Thailand and Indonesia, and also operating in India.
The purported expansion will put iFlix up against the likes of Icflix in the Middle East and potentially iRokoTV in Africa, and at that point it will have to see if the model that has served it well over the past 18 months still works when it is stretching its resources over a wide swathe of countries. It may well look to harness not only its telecom partners but also the knowledge of Sky and Liberty Global, both of which have ample experience in paid television services.