Name: How Iroko went from pioneer to powerhouse | Part 1 (2010-2016)
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How Iroko went from pioneer to powerhouse | Part 1 (2010-2016)

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SubscribeSign inShare this postHow Iroko went from pioneer to powerhouse | Part 1 (2010-2016)afridigest.substack.comCopy linkTwitterFacebookEmailJun 12, 2020Share this postHow Iroko went from pioneer to powerhouse | Part 1 (2010-2016)afridigest.substack.comCopy linkTwitterFacebookEmailand by commenting and sharing this post with your networks.Sometime in the early 2000s, London-raised Nigerian Jason Njoku met German student Bastian Gotter at the University of Manchester. Upon graduation, Njoku would try his hand at entrepreneurship, launching various nightlife, publishing, and digital media ventures in sequence. Gotter, at the time a derivatives oil trader at British&nbsp;energy major BP, helped support these ventures to varying degrees until the 2007-2008 financial crisis.The resulting economic downturn ultimately forced Njoku to move back in with his mother; however, ever enterprising, he noticed a change in her TV viewing habits—from British soap operas to grainy Nollywood dramas—that he felt hid a business opportunity. Njoku successfully persuaded Gotter to jointly explore the idea's potential and, with Gotter’s renewed support, Njoku was soon on the ground in Lagos, Nigeria, negotiating face-to-face with various Nollywood stakeholders.(Njoku is on the right.) By mid-2013, the proprietary IrokoTV platform contributed the majority of IROKO’s revenue while Youtube contributed less than 15%. At the time, IrokoTV employed a freemium model with its audience enjoying free access to advertising-supported lower-tier content and paid access to premium content (IrokoTV PLUS). By the end of 2013, despite paying subscribers representing less than 3% of IROKO’s monthly audience, IROKO’s paid subscription business became its main revenue driver.By Q2 2014, paying subscribers had grown to 5% of its global audience and in April 2014, the company announced that it would move to a subscription-only model wherein the free, advertising-supported IrokoTV option would be discontinued in 140 of its 170 revenue-generating markets:“I am literally betting the entire company and millions of dollars of revenue on a dramatic shift to a paid only model…We start with 140 countries but expect to migrate everything over in the near future.”In addition to identifying its core business model for IrokoTV, in 2014 IROKO also defined its core audience:“When I think of the future of IrokoTV, I can only really see Africa and specifically Nigeria as our big markets…Africa is no longer the future. Africa is now.”At the start of 2014, Africa represented only 2% of paying IrokoTV subscribers. By early 2015 however, African subscribers grew over 450% year-on-year to represent 11% of the IrokoTV subscriber base (with Nigeria being its fastest-growing market globally).Having determined its core business model and customer base, IROKO moved towards further integration of its activity chain. In Q3 2014, it launched ROK Studios, an in-house production &amp; financing studio that allowed for greater control over the cost and quality of its content.&nbsp; (In September 2016, ROK Studios partnered with SKY, the largest PayTV operator in Europe, to launch ROK TV, a 24/7 Nollywood channel fully programmed, produced, and developed by ROK Studios.) “We started off licensing movies for $100. Fast forward 3 years, we now license movies for four to ten, fifty-thousand dollars at times. So we spend a significant amount of our budget on content — $3-$4 million a year on content.So at core, we’re a content company…[and] because we own the platform…we have thousands of [data points]…For example, I know the top 20 most-queried actors and actresses in Nollywood and that enables me to say ‘in these movies that we’re producing, we want those people in there, not because we think they’re popular but because we can see from the data that those guys are popular.’Our goal for ROK Studios is stupidly simple: we want to improve the quality of Nollywood movies being made… in time, we will be able to produce 200 movies a year ourselves.”IROKO also moved to better align its product offerings with the needs of its core audience. In March 2015, in response to unique user behavior related to the cost, quality, and availability of broadband data across its African markets, IROKO launched a new feature for its IrokoTV platform: it allowed subscribers to download data-optimized, DRM-protected content for offline viewing. “In Nigeria (and Africa), peak viewing is between 10am — 5pm: office hours. During this time, the ISP networks people are using are enterprise level data. This is the opposite [of] every other [Western] market. Yet we believe viewing patterns globally are similar. The difference is/was data availability.”By July 2015, IROKO fully embraced the on-the-ground realities across its African markets. It focused its product and engineering teams around mobile and the Android platform, and it required users of the IrokoTV app to download content before viewing, a departure from the immediate gratification of traditional streaming that consumers with access to affordable, high-quality networks in Western markets were used to. (IROKO later enabled progressive downloads, the ability to play content before fully completed downloads, for users outside of Africa.) “We took one of the most ambitious steps in trying to solve the largest challenge for unlocking growth for our African viewers: accessing content. The dawn of the download began…Unlocking growth in Africa is our only reality. It’s where the market has always been, hence we begin to distort the product to this reality.”In addition to aligning product features to the realities of sub-Saharan African markets, IROKO also took an experimental approach to understanding consumer preferences, with heterogeneous pricing for African vs. Western markets and mobile-only vs. mobile plus desktop users:“Consumer Internet in Africa is new…New customers need new prices, so our Africa mobile-only customers will receive one. We are building for folks without electricity…[so we] have to stay experimental…We still don’t have the definitive answers to Africa pricing yet. We’re still figuring it out.”As IROKO has evolved through the years, several characteristics are evident: cost management through activity chain integration, market-growing pricing strategies, identification and addressal of unmet consumer needs, and heightened focus on everyday African consumers at the base of the pyramid. Activity Chain IntegrationWisely, it has since integrated its operations both forwards and backwards. To exert more control over the customer relationship and experience, it launched the IrokoTV web platform in 2011 and its first mobile app in 2013, and it continues to move away from third-party technical partners to an in-house technology infrastructure that allows it the nimbleness to react to market conditions in what Njoku calls ‘Internet time.’Moreover, to better control its costs &amp; supply of content, in 2014 it launched ROK Studios, a data-driven, in-house content production unit that allows it to bypass costly content licenses, and in 2016 it launched IrokoX, a platform that provides content creation, distribution, and monetization support to independent third-party producers in exchange for 20% of revenues.Market Growing Price StrategyAs a venture-backed company focused on rapid top-line growth, IROKO incorporated a growth &amp; experimentation mindset into its pricing strategy. For example, the company noticed the popularity of individually packaged CPG (consumer packaged goods) items which, while cheaper on an absolute basis, were more expensive on a per-unit basis than larger sizes. Leveraging this insight, the company introduced unlimited weekly Android access to IrokoTV for 100 Nigerian naira which resulted in 100% growth in Nigerian subscribers within the first 30 days. (In comparison, the equivalent weekly cost of the company’s annual package was less than 60 Nigerian naira.)We don’t use margins structures when we think about pricing, we think about what the customer can legitimately afford…[and we work] to reduce the entry level price for IROKOtv in Africa. We’re growing the market.Unique Solutions for Unique Consumer NeedsAfter IROKO developed its proprietary web and mobile IrokoTV platform, it noticed unique behavior from its African audience and ultimately sought out and discovered the underlying cause: high costs of data and poor bandwidth capacity. Indeed, the company has repeatedly said that the major challenge it faces in Africa is the ‘data burden’ which limits the ability of its target audience to consume IrokoTV’s content.In response, the company took and continues to take steps to mitigate this issue. It moved away from streaming towards downloads, tasked its product and engineering teams to find technical solutions around data compression, and it launched a kiosk &amp; agent network that allows subscribers to receive DRM-protected, IrokoTV content without using their broadband data:There are peculiarities which you have to embrace, otherwise you can’t win in the local market here. We’re going to go that extra mile because we are here and we know what it’s about…We believe in the Nollywood community. What we are now doing is building future features which bring the communities closer together. But those features need folks to be educated — they need their hands to be held. Hence the introduction of the kiosks…We have 65 deployed with a further 35 being deployed in Q1 [2017]…The core purpose of the kiosks are pretty simple: Customer Education; Product Evangelism; Product Customer Support; Transactions (collecting cash/facilitating mobile wallet, etc.); [and] Data Free Downloads (DRM protected).Targeting Customers At the Base of the PyramidBroadly speaking, IROKO’s evolution from launch through 2016 has seen it de-emphasize Western markets to focus on African consumers given its belief that its future opportunity is larger there:“The only reason we are large outside of [Africa] is because of terrible internet penetration on the continent. But that will change…We need to build the future.African Diaspora = 30m. ~4m watch Nollywood. Sub-saharan Africa = 850m. ~150–200m watch Nollywood.”In adjusting its product, pricing, and distribution strategies for the African market, IROKO has facilitated the adoption of its service by average Africans rather than just the middle class:“Our community, our folks who watch Nollywood, primarily live in the base of the pyramid…[They] aren’t necessarily tech savvy. But they are our people.”IrokoTVROK StudiosIrokoXIroko GlobalIroko+iROKINGROKIroko NetworksIrokoTVWith the benefit of today’s 2020 vantage point, its evident that IROKO successfully executed this base of the pyramid strategy, growing its share of subscribers from Africa from 2% at the start of 2014 to over 80% currently, in the process outmaneuvering competitor after competitor and deftly weathering various external and internal crises. distortingThanks for reading This post was adapted from a version first written in 2017. Let me know what you think by leaving a comment Like this postShare this postHow Iroko went from pioneer to powerhouse | Part 1 (2010-2016)afridigest.substack.comCopy linkTwitterFacebookEmail7 CommentsFor your security, we need to re-authenticate you.Click the link we sent to , or .Expand full commentExpand full commentNo posts© 2022 Emeka Ajene ∙ ∙ &nbsp;is the home for great writingThis site requires JavaScript to run correctly. Please or unblock scripts

SubscribeSign inShare this postHow Iroko went from pioneer to powerhouse | Part 1 (2010-2016)afridigest.substack.comCopy linkTwitterFacebookEmailJun 12, 2020Share this postHow Iroko went from pioneer to powerhouse | Part 1 (2010-2016)afridigest.substack.comCopy linkTwitterFacebookEmailand by commenting and sharing this post with your networks.Sometime in the early 2000s, London-raised Nigerian Jason Njoku met German student Bastian Gotter at the University of Manchester. Upon graduation, Njoku would try his hand at entrepreneurship, launching various nightlife, publishing, and digital media...

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