iflix Takes on Netflix in Southeast Asia

Sky’s Investment in the Asian Start-Up Bolsters Its Position

Malaysian streaming service iflix, a competitor to Netflix in several key growth markets, has received investments from UK-based Sky as well as Philippine Long Distance Telephone and Indonesia’s Surya Citra Media. Sky’s injection of $45 million provides iflix with greater international exposure. The cash infusion is expected to support the company’s expansion into other markets at a time when Netflix is expanding around the world, including iflix’s home territory of Southeast Asia.

Launched last year, iflix currently offers its services in Malaysia, the Philippines and Thailand. At the end of 2015 it had more than 1 million subscribers. It is now eyeing expansion into other parts of Asia, as well as Africa, Latin America and other emerging markets where the numbers of smartphone users and households with fixed-line broadband are seeing considerable growth. According to iflix co-founder and CEO Mark Britt, the company is accelerating its expansion plans for the business sooner than expected, owing to rapid growth in existing markets and strong demand from new markets.

Subscribers can access tens of thousands of hours of content from a library of Hollywood films, Asian regional and local TV shows and movies for about $2 a month. This compares with Netflix’s price of around $10 a month. Like Netflix, iflix offers services on multiple connected mobile devices such as tablets and smartphones.

Netflix, launched in 2007, has become virtually synonymous with video-streaming services in the past five years, having matured from a mail-based DVD rental service. Early on, Netflix had plans to expand its services internationally and has clearly succeeded, recently announcing that its servives were available in almost every country on the planet, with the notable exception of China. However, Netflix content differs from country to country, owing to agreements with content owners and local regulatory requirements. In January 2016, Telekomunikasi Indonesia, the country’s state-owned telecommunications company, blocked Netflix for failing to meet Indonesian regulatory requirements. The agency claimed some material was inappropriate for local viewing. This was a windfall for iflix, as it left the door open for dedicated, localized programming.

In addition, iflix can localize not just content, but also viewing habits, making the most of its audience’s “mobile first” approach. It also has the advantage of lower pricing and ease of payments through integrated mobile billing through an agreement with Malaysian operator Digi.

iflix isn’t the only provider looking to sign up new subscribers in the region. Singapore-based Hooq, a company backed by Singtel, Sony Pictures Television and Warner Bros., is continuing its rapid expansion across Southeast Asia. Although demand in the region for streaming video is expected to parallel the growing number of smartphones, competition to win customers will be fierce over the next 12 months.

For Sky, the relationship expands its geographical network for content distribution. It is investing heavily in commissioning original programming in its quest to compete with Netflix and others. Its investments in Web players like iflix and Fubo TV underline the importance that this traditional broadcaster places on offering video to audiences over the Web.