IrokoTV to Lay-off 150 Staff, Reduce Investment in Africa’s VoD Market Due to Economic Woes
iROKOTV, a Nigerian video-on-demand (VoD) company plans to lay-off 150 staff as it looks to shift focus from the African market. According to iROKO’s CEO, Jason Njoku the move was necessitated following the stem of losses caused by the economic woes in the region.
“Between the COVID-19 fallout, rapidly devaluing the currency and hostile regulatory environment, it’s time to pause the burn. It’s time to hunker down and see what the next 18 months bring,”Jason Njoku, CEO iROKOTV
Going forward the company would focus on growing its market in North America and Western Europe.
“Over the next week, IROKO will be defocusing our Africa growth efforts and we will revert to focusing on higher ARPU customers in North America and Western Europe,” Jason Added
Bad Economic Times for VoD in Nigeria and Africa
iROKOTV moving slowly out of the African VoD market is a loud statement about the difficulty of thriving in that space. After debuting in Nigeria in 2011, iROKOTV is the longest-surviving VoD in the country.
Nine years later, iROKOTV’s model of streaming mostly exclusive content for its African users has proved insufficient. In a blog post, Jason explained that the business has been battling with the effects of the naira devaluation since 2016 which halved its subscription costs from N3,000 ($18) in 2015 to N3,000 ($8.33) by 2017.
Despite these troubles, iROKOTv still showed promise as the strongest indigenous VoD as at last year. The global brand it has built gave it stronger anchors to push further into the Nigerian Market.
The company sold ROK, its African film studio and international TV network, to CANAL+ Group and had since been targeting an initial public offering to boost capitals.
UK used to be the hub with the second-highest number of paying subscribers before Nigeria overtook it in 2017.
However, the economic fallout from COVID-19 did more harm than good to the company. An initial 200% spike international subscriptions in April was followed by a total collapse in subscription between April and July as iROKOTv lost about 70% of its subscribers.
The drop in subscriber base was accompanied by a further drop in subscription cost to $6.3 as Naira fell to N477/$. “We couldn’t adjust prices as the primary aim was to defend revenues and cash flows, so cutting subs revenues and vanity subscribers weren’t going to contribute to salaries come month’s end,” Jason explained.
Following the initial drop in revenue, the company also laid off about 83 employees and slashed the salaries of others. However, it was not enough as the company is now planning to drop 150 more as well as reduce its investment in the country.
Pivoting to Europe
As IROKOTv turns its sight to Europe, the company’s CEO revealed that the recent amendment to the broadcasting code by the National Broadcasting Commission (NBC) had a massive impact on the decision to discontinue investing in Nigeria.
The new code in part bans exclusive content which is a major selling point of iROKOTV and other VoDs like Multichoice, NetFlix and the new entrant, EbonylifeTV.
He further explained that the international arm of the company is growing effortlessly. He clarified that while there are also economic contractions in the market, the government was injecting stimuli to reduce the impact on the average person.
“Internationally, we were effortlessly growing. All of the macro and individual issues plaguing West Africa were essentially not major issues in the West. Yes, jobs were being lost. Yes, economies were contracting, but with all the stimuli leaders were injecting, it made the impact on the average person marginal.”
He narrated that as opposed to the $6.3 they now make per subscription in Nigeria they make an average revenue of $25-30 per user internationally.
“Even after pushing incredibly hard in Africa for the last 5 years, our international business represents 80% of our revenue today, so by taking out Africa’s growth-related costs, we cut our $300,000 per month burn to less than $50,000 per month.”
After standing for so long in the African VoD market, iROKOTV bowing out to the similar woes that led to the demise of VoD’s like Linda Ikeji TV (LITV) and Afrostream affirms the difficult nature of the VoD market in Nigeria.
Jason believes that while streaming media is booming globally, it is regressing in Africa. With iROKO dropping its crown, there are very few local VoD companies left to show that survival is possible in the market.
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