A very interesting article: https://www.techinasia.com/iflix-hooq-free-tier-video-streaming
TLDR; Both iFlix and HOOQ have decided to move away from charging subscriptions to viewers and instead offer their VoD services for free using a paid by advertising model.
Both companies have built out solid distribution networks, so it makes sense to pivot to a free-to-air advertising paid service. Anything is better than admitting defeat and pulling the plug on their hard work.
When iFlix began in May 2015, their entire business model was predicated on the idea that “one month iFlix subscription costs the same as a pirated DVD”
A snappy marketing catchphrase, except all it means, is you are entering a crowded market and competing solely on price. Price wars only benefit the consumer while leaving a trail of burned-out, bankrupt producers in its wake.
Using a Price War as a foundation is a fundamental error and a classic “Red Ocean” mistake…creating a bloodbath where few survivors exist.
In 2018, companies must fixate on swimming in a “Blue Ocean”.
It’s the ONLY way to succeed in a crowded marketplace. More on the Blue Ocean strategy later…
“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,” says iFlix group co-founder and CEO Mark Britt. “Looking back now, we realize how superficial that view was.”
I suspect the reason the subscription model isn’t working for them, maybe two-fold;
- Possibly they’re paying too much for their imported Hollywood content (often the modus operandi in Hollywood is to charge distributors residuals, i.e., the more the content is shown the greater the cost to the distributor).
- Alternatively, the market for watching second-hand Hollywood content isn’t quite as lucrative as they thought. Old movies and Korean dramas don’t exactly set the pulse racing. And in countries were people live on minimal wages, you’re better off offering them something truly unique and special to win them over.
Either way, this suggests the Channel X Global economic and content model is superior. To read our White Paper click here
Firstly, we only need approximately 80,000 subscribers per month (at $1 per head) to break even with our operating costs [approximately $1 million a year].
Secondly, Channel X Global (CXG) acknowledges that we can never compete with the high budgets of Hollywood productions.
So we’ve designed our model from the grass roots level of getting young people, fresh out of college in each country to produce the content with guidance from Western mentors who do have Hollywood style experience and professionalism.
We believe this is the only way to produce content that is appealing enough to audiences in each emerging market and the only economically viable way to do so.
We also acknowledge a fundamental truth about humanity. We are all tribal at heart and identify more with stories and events from our own cultures. As exciting as Western shows can be, my gut instinct tells me Emerging Markets have moved higher up Maslow’s Hierarchy of Needs and are now looking for content that reflects the zeitgeist within their own tribe.
I always thought it was strange that these VoD companies believed it made economic sense to spend 90% of investors’ money importing second-hand Hollywood content, rather than developing local series (specially when a lot of that Hollywood content is available for free on local channels or can be downloaded or by buying pirate DVDs.)
Of course it’s incredibly difficult to create original, unique local content for the dozens of non-English speaking, culturally diverse countries.
A multi-billion dollar problem, CXG solves with a revolutionary 5 Pillar Blueprint, outlined in our White Paper.
Hooq and iFlix made the classic Red Ocean Strategy mistake. Red Ocean Strategy simply means there are lots of sharks feasting over a small amount of fish in a crowded pond.
To massively increase chances of success, you want to create a Blue Ocean Strategy where there are plenty of fish and almost no competition. One way to do this, is to have a unique, clearly differentiated product.
With Blue Ocean strategy, you define the terms of the market by creating a brand-new market .
Once you understand the principles of Blue Ocean vs Red Ocean strategy, you instantly understand why the iFlix and HOOQ content model will struggle to survive (Possibly, even moving to a free/advertising model made not be enough to save them).
All of this is very good news for Channel X Global, maybe some of these VOD companies will realise CXG is the only solution to their long-standing Red Ocean problem.
Finally, the Tech Asia article mentions Go-Jek are entering the VoD market, which I find very intriguing.
Go Jek are legendary in the tech startup world for creating a unique and original ride sharing app for the Indonesian market.
One sentence gives away the fact they understand the VoD market in 2018 immediately.
“Local unicorn Go-Jek has announced its own subscription-based platform for video streaming, called Go-Play. It will feature content that will be “95 percent Indonesian-focused,” according to the company.”
Very smart Go-Jek.
They immediately understand the only way to differentiate themselves, is to swim in a Blue Ocean and are doing that by creating their own original Indonesian content.
We’ll be meeting with them soon to discuss a collaboration.
Quill Potter, CEO Channel X Global – The Billion Dollar TV Revolution Powered by the Blockchain.
P.S. A link to the Blue Ocean Strategy book on Amazon
READ OUR NEXT POST >> CHANNEL X GLOBAL FOLLOWS BLUE OCEAN STRATEGY PRINCIPLES PERFECTLY
∙ Authored by Quilliam Potter
∙ For TV Consultancy Work or General Enquiries about Channel X Global, email firstname.lastname@example.org