Advantages of B2B model for VOD startups more apparent as iROKO goes Global

Nigel Gambanga Avatar

Jason Njoku and iROKO are names that have earned a solid reputation in African tech entrepreneurship, content distribution and the definition of building a business dependent on the internet.

One of the reasons behind this is, of course, the way iROKO is playing apart in molding models around the distribution of content.

iROKO, which is in attendance the ongoing filmmakers meet and conference, DISCOP, officially launched its global content distribution and licensing division, iROKO Global.

Under the direction of a seasoned broadcast and media professional, Justine Powell, it will handle the licensing of iROKO’s library of Nollywood films and TV series to online and offline platforms, across Pay TV, Internet TV, Inflight and YouTube channels.

This is a follow through on iROKO’s movement into linear TV earlier this year through two new TV channels on Africa’s StarTimes. According to the formal statement from iROKO, the new division is already generating seven-figure revenues for the company thanks to deals such as the TV channel distribution route.

Does this mean that a consumer focused business for VOD isn’t that lucrative in our market just yet? It’s hard to not look at the birth of iROKO Global and not draw such conclusions.

On his blog, Jason Njoku has pointed to the huge earning potential of a distribution model. According to him, this B2B type of distribution (which has to be set up in London because of technical and likewise financial limitations in Lagos) has become the largest revenue generator for iROKO, experiencing 397% growth between 2014 and 2015.

The earnings won’t dissuade #TeamiROKO form Africa though. Njoku has gone on to reiterate his commitment to the building of a large consumer business based in Africa, or in short, has said that iROKO won’t abandon the potentially huge market.

For now, the massive growth of B2B distribution however, seems to leave it at just that – a potentially huge market, with the wholesome returns coming from a distribution or selling of content to business clients.

In a sense, that is what content curators chasing the iROKO model might have to consider as well. The real revenues that warrant praise for a growing demand for African content are yet to be realised from a subscription based model in our environment.

As Njoku and iROKO have proved once again, they are now crafting a new approach to the model of monetising content.

Rather than pinning all ambitions for revenue on a sVOD (subscription Video on Demand) model that is choked by a host of African realities (limited broadband access, strained disposable income, power shortages, device and console modalities, competition against monsters with economies of scale) why not sell the content to enterprises that handle the distribution themselves?

As has been highlighted by iROKO’s portfolio so far, these aren’t just Pay TV merchants. It’s easy to think that way when you notice  all the loud efforts made by well-heeled veterans of the game like MultiChoice.

However, one can consider brokers of in flight entertainment and, because of the internet, we now have buyers of content for Internet TV and even YouTube channels.

As a VOD platform with a clearly crafted identity and a growing momentum created by understanding digital trends and what the market really likes, you then source licensing and distribution arrangements on behalf of the right producers, then broker deals with the end buyer.

This would transform your African VOD platform into a verification point for measurable interest in types of content, while ensuring that your business doesn’t focus on the gut wrenching exercise of trying to squeeze whatever limited revenue you can from a fragmented market.

To be clear, iROKO hasn’t crafted the same sort of model outright. It’s route has other cul-de-sacs that make it iROKO, but some of the key elements hold true here.

Let’s also not forget how iROKO has expressed an undying commitment to distribution of content via consumer channels in Africa. One thing to keep in mind, though, is how they have the advantage of Nigerian type market numbers at their disposal.

VOD services that do not have a Nollywood type niche or aggregated numbers of potential subscribers (I’m looking at creators outside Nollywood territory or the culturally knit East African bloc) don’t have that sort of privilege. So perhaps, going B2B just might be the magic needed after all.