Hybrid models for emerging markets

There are growing signs that OTT video in emerging markets require a deep understanding of local consumer preferences where the traditional 'rules of the game' may not apply.
Mark Britt, iflix CEO
Mark Britt, iflix CEO


There are growing signs that OTT video in emerging markets require a deep understanding of local consumer preferences where the traditional 'rules of the game' may not apply. Asia’s leading streaming service, iflix has announced it is making a strategic move to switch from its traditional SVOD model and replacing it with a strategy that it says is better adapted to emerging markets. The new model for iflix will be a hybrid combination of a free tier, a curated films of the day, and a strong lineup of originals focused on premium short-form content via the newly established Studio 2:15.

“When we began iflix, we naively believed that the Western entertainment model could easily succeed in emerging markets, and that price, would be the primary customer pain point,” said CEO Mark Britt. “Three years later, we have a much deeper understanding of the localization requirements, and infrastructure, payments and authentication issues within our territories. The data and learning we’ve acquired challenge many of the traditional metaphors that exist within our industry.”

Britt added that iflix was at first an SVOD service but then radically changed its business model and is now essentially free (FVOD) and exploring other business models (AVOD). In many MENA countries, SVOD models have yet to demonstrate long term financial sustainability mainly due to poor payment options, affordability and high piracy rates. He also noted they can learn a lot from how countries like China have developed mobile payment platforms to drive mass consumption of on-demand content.

Local regional content is king and Hollywood/Western TV shows is queen, seems to be the new mantra. Despite the popularity of global hits like Game of Thrones, audiences still demand localised content that they can relate to. This is the case especially in emerging markets in the MENA region which tend to have strong cultures and regional celebrity following like we see in the cinema industries of Egypt and India.

Similarly Viu, the direct to consumer app from Vuclip Inc has tasted success with its policy of provided ad supported free content and taking a local approach to content for individual markets. Featured in Digital Studio's May edition cover story, Vuclip's VP of Content & Brand Marketing, Wesam Kattan says Viu is ready to ramp up original content production globally, after enjoying encouraging growth in Asian markets from viewers who embraced Viu’s freemium model. Viu provides free access through ad-supported content for all viewers while offering enhanced features and exclusive content to premium subscribers.

While Viu expands its Arabic library and rolls out original Arabic productions, they will be banking on the large library of exclusive content that appeals to South Asian and Filipino expats in the GCC to drive viewer growth. This approach to drive growth with free ad supported localised content could hold the key to competing for market share in emerging OTT growth markets in the Middle East.

Looking ahead, it will be interesting to see how OTT players balance the mix between a globalised and localised offering. Logic dictates that the more localised the content is, the narrower the potential audience base is likely to be – contradicting the very scale the global OTT business model of Netflix and Amazon demands. OTT players in the region must carefully model out different scenarios and place selective bets.

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