Writer: Eromo Egbejule
Photography: Jonathan Torgovnik
iROKOtv founder Jason Njoku put Nollywood, Nigeria’s prolific, fast-paced filmmaking hub, on the internet. How does he plan to dominate the African market?
Like most Nigerian mothers at home and in the Diaspora, Mrs Njoku was and still is a lover of Nollywood, the local movie industry in her country of birth that churns out more than a 1000 titles on shoestring budgets every year. She gets the DVDs and VCDs from relatives back home who patronise roadside vendors, and watches them at home in the council housing states of southeast London.
Compared to the British soap operas she was previously addicted to, the stories were of lesser production quality, but more enthralling. When her then 29-year old son Jason, with his degree in chemistry from the University of Manchester, moved in with her after several failed e-business attempts and other ventures, it was only a matter of time before he joined her on the couch. During this time on that couch he grasped just how popular the Nigerian export was, and his mother’s addiction propelled him to put Nollywood on the Internet.
A major employer of labour in Nigeria, the film industry contributed about 2% to Nigeria’s US$405-billion GDP in 2016. Key to Njoku’s approach was realising that the distribution network for Nigerian movies was poor and, worse still, they had very little online presence. This led him to start a new company – his eleventh – with former schoolmate, Bastian Gotter to tap that online potential. They named the new venture iROKO, after the large hardwood tree indigenous to West Africa. “It’s most definitely inspired by the iroko tree, which has strong roots and grows without limits. This is what we want for the company,” Njoku says.
Njoku went to Lagos in 2010 to negotiate the necessary deals and set things in motion. If the preliminaries were easy, getting their plans to fruition was more difficult. Negotiating distribution deals with mostly semi-literate local movie producers in Alaba, Idumota, Onitsha and Aba (the most popular film markets in Nigeria) was as cumbersome as it was exhausting.
The new company made history in 2012 when it received $8 million from New York-based Tiger Global Management, in what was at the time perhaps the single largest fundraising in the African tech sector, followed by an additional $2 million from Swedish hedge fund Kinnevik. Njoku had finally burst onto the internet and the story of his rise was the perfect script for Nollywood.
With offices in Lagos, London and New York and about 400 employees, they have set about increasing global access and distribution for the movie industry. They’ve received awards including recognition from Forbes magazine in 2012 heralding iRoko one of the Top 10 Innovative Companies in Africa – the only Nigerian company on the list.
The roots and the risks
Initially founded in October 2010 as NollywoodLove(now IrokoX), the business started its life as a YouTube channel streaming a bouquet of full-length home videos. It caught on like wildfire. Within a year it had accumulated more than a million views from over 170 countries and has been the one-stop shop for most of the Nigerian movies scattered around YouTube ever since. But by creating a streaming platform of its own, iROKOtv has managed to control and monetise its product far more than was possible on a single YouTube channel.
“We have 10,000 video assets on YouTube and still see it as a very strong platform, but not one to build a $500-million media and technology company on,” says Njoku. “For that, you need to build your own platform. For that, you need to own your house, own your relationships with viewers, and directly own the means to take payment from them.”
“On YouTube,” he says, “everything is lost.”
In its early days, the cost of business was lower; YouTube was free and Njoku didn’t have to sweat to develop content. Before NollywoodLove, local Nigerian outfit iNollywood had also tried to launch local content on the internet but failed woefully. The company was owned by another popular Nigerian serial entrepreneur, Sim Shagaya. Shagaya, the first CEO and now board chairman of thriving e-commerce company Konga, was primarily interested in acquiring rights for TV shows that were no longer aired on cable TV. At the time (2005), YouTube was in its infancy and the projected cost of streaming technology, powering the servers and other infrastructure around the clock would not have been viable.
Unlike iNollywood, iRokotv’s strategy is to focus on movies. In the past, it generated revenue in two ways: from subscriptions for premium content, and through advertising, the regular option for many YouTube channel owners across the globe.
One morning in April 2014, Njoku announced that he was ditching the advertising revenue in favour of the subscription model. It was a risky move, one that attracted comparisons with one of the world’s leading streaming services, Netflix, which operates using a similar model. It was also proof of the company’s desire to now target mobile users and generate income from them. While advertising revenue was averaging $0.15 per user per month, it was a far cry from the $6 that an average subscription brings in. So it seemed logical. But while Netflix expanded on being a DVD-rental service, iRokotv was ad-driven from the outset, and a switch could potentially be very risky for the Nigerian startup.
“I am literally betting the entire company and millions of dollars of revenue on a dramatic shift to a paid only model. This is the only future I see,” Njoku wrote at the time.
Despite having 60% of its subscribers from North America and Europe, Njoku strongly believes that the future of iRokotv is in Africa.
“When I think of iRokoTV, I can only really see Africa and Nigeria as our big markets.”
At the start of 2015, Subscribers in Africa represented only 11 per cent of the iRokoTV subscriber base. In July 2017, Nigeria became iRokoTv’s biggest market in terms of active subscriptions, representing 31% of the subscriber base. This rise in Nigeria-based subscribers can be attributed to iRoko’s move to completely remodel its product based on its Nigerian audience’s needs. In mid-2015, iRokoTV was redesigned to allow subscribers download data-optimized, DRM-protected content for offline viewing. Many subscribers couldn’t afford the data it cost to stream a movie, and download made it easier for them.
“Internet connectivity is improving in Africa as we speak, but it is still very much in its infancy,” Njoku says. “I hope to see a significant upsurge in affordable data in the next five years. In the meantime, while we wait for streaming to become easier and cheaper on the continent, we have to look at other means of bringing content to our fans, and one of the ways will be to help make downloads a more viable option for our Africa-based audience.”
While diaspora subscribers pay $50 a year, in Nigeria the price is 3,000 naira (less than $10) — more affordable to locals.
For many users in Nigeria, the allure of data subscriptions is in access to social networks, such as Facebook, and the ability to source news (especially football news) and visual content. Any hub of movies, TV series, music videos and documentaries will attract heavy traffic and generate thousands of dollars in revenue per day. And this is precisely what iROKOtv is transitioning into: a hub for Video on Demand (VOD) content on the continent and in the diaspora.
In December 2016, iRokotv decided to tackle the problem of high data prices in Nigeria with its Beyond Data initiative. Branded kiosks were placed in strategic locations around Lagos to aid customer experience and provide subscribers with Data-free downloads. Files can now be shared from agent to customer, and from customer to customer using Wifi Direct technology. A kiosk-finder feature was integrated into the iRoko tv app to ease locating of the kiosks.
“The #1 challenge for our community in Lagos (Nigeria and Africa) has been the data burden. It’s a mighty ol’ tax which, after the thousands of conversations we have had with customers over the last few years, is something we needed to overcome. Our very future depended on it.” Njoku wrote on his blog.
Dubbed the ‘Netflix of Africa’, iROKOtv sponsors TV series like FESTAC Town, Husbands of Lagos, Cougars, and Single Ladies, and several movies, through ROK Studios, the company’s production arm. Unsurprisingly, Njoku’s wife Mary Remmy-Njoku, head of the studio and a budding Nollywood actress and producer, stars in many of them.
iRokotv also launched two TV Channels on DTH (Direct-to-Home) channel StarTimes. The channels are both structured to appeal to different audiences – iRoko 1 for premium and contemporary content, and iRoko 2 for traditional Nollywood content.
“The world of DTH broadcasting is a whole new arena for us and it’s taken a huge amount of work to get there, so we’re massively excited about it and we’ll be looking to increase our reach across the PayTV market in Africa in the coming months,” Njoku says.
Regardless of this diversification, an expansion into the hardware market (as Amazon did with Kindle devices) is not on the agenda – the focus is still on content distribution. His team is forever gathering new content, watching everything that comes onto the market, but purchasing licenses for “about 12% of the movies they see, because we purchase only the best movies”. Is all this sustainable? If it isn’t, how long will it take before the iroko tree falls? The company is yet to break even, and the belief in some quarters is the company is simply building up enough hype to muster an initial public offer.
Njoku is stylishly evasive as he explains, with a bit of optimism: “What we are attempting to build with iROKOtv has no blueprint, so it is time and money-intensive. With this in mind, we hope to be profitable by 2020, if we keep following the aggressive growth trajectory we have set ourselves.” If there have been any offers for a merger or acquisition, he is quite cryptic about them. “Ah, I am unable to disclose that sort of information,” he says. “We’re a hot company and we’ve done well in our first few years, but we’ve got a very long way to go in terms of making the sort of dent in the African entertainment industry that we want.” 7 years after it was founded, iRokotv is not yet in profit. They’re denting wallets, too, even if Njoku tries to downplay it. “We’re seeing an upward growth in our figures, and we’re pleased with how our numbers are doing.”
Early this year, Njoku’s co-founder, Bastian Gotter left the company to follow his passion of investing in and growing start-ups in Africa. On Gotter’s exit, Njoku said, “Iroko would not be the company it is today, without Bastian’s seed investment and faith in me to ‘figure out Nollywood’. In 2010, Bastian put his money where my mouth was, and together we embarked on the huge adventure of building an African entertainment brand that has changed the face of media consumption on the continent forever. This is no small feat. He was a valuable member of the team, but it was the right time for him to move onto the next stage of his career – he has a wealth of insight into the African tech ecosystem, and a super-impressive track record for investing. He was part of the team that chose his successor, Lauren Miller, Iroko’s new CFO.”
The iroko is the king of the forest
With revenue looking good, it is little wonder that challengers to iROKOtv are emerging. In March 2012, one Ugochi Oyenekwe, iROKOtv’s first-ever employee, who also happens to be Jason’s cousin, partnered with a number of movie producers to set up Real Nolly, a similar enterprise. An act of betrayal at the time, but Jason waves it off, saying “I was annoyed at the time, but I don’t let such things distract me from my own business”.
The cockiness is not unjustified; iROKOtv seems to have called dibs on Nollywood and is clearly the market leader, despite the little successes of other competitors that have emerged during the course of its existence. This is down to a few factors other than its obvious ability to attract funding.
First and foremost, its budget for acquiring content dwarfs that of its competitors, including Real Nolly. Before iROKOtv and other streaming firms ventured into the industry, a movie would sell on average 50 000 copies for $0.50-$1 each, with only a few reaching 200 000 sales. For the producer and his marketer, the proceeds would be just enough to recoup funds spent – somewhere in the region of $15 000, often far less – and make a tidy little profit for one’s efforts. Now, with Njoku’s distribution, it is possible to get between $10 000 and $25 000 extra, the amount he pays for distribution rights to each title for a period of three years.
Another was the smaller outfit Pana TV, founded by Harvard alumnus David Ogbonna, which hit the headlines in June 2014 when it acquired exclusive rights to Half of a Yellow Sun, a Hollywood-Nollywood mash-up. It has since faded out. More recent competitors include TRACE Play, Ibakatv and Netflix, which entered Africa in 2016.
On the matter of views, irokotv also trumps the others by a large margin. While Njoku’s company has aggregated just under one billion views across its YouTube channels, Real Nolly lags behind with 243 million views. As for Pana TV, no single video has more than 15 000 views on its YouTube channel. Irokotv’s website also has massive user traction, and with more than 600,000 movies available to subscribers, the company appears to have, as Njoku boasts, “not just altered the status quo, we’ve redefined the industry and added value, having developed and pioneered a whole new distribution arm for Nollywood, pumping millions of dollars into the industry and giving viewers a better choice of what they can watch, wherever they are.” It is hard to dispute this when the figures are stacked in his favour. iRokotv remains the largest global distributor of African content, most of it from Nigeria’s film industry.
These days, Mrs Njoku finds it less stressful to watch her favourite movies now that her boy is off the couch and heading the largest distribution Nollywood has ever seen. As she curls up on her couch clutching her preferred streaming device, the memory of a frustrated Njoku moving back into her old flat must be fading into oblivion – very much like a Nollywood ghost.