The African video on demand (VoD) space has been much-hyped for years, but there is little evidence of any tangible successes.
Nigeria’s iROKOtv is the flagship “local” startup, competing against the likes of Netflix and Showmax, but the recent sale of iflix operations in Africa spoke to the major challenges associated with building VoD platforms on the continent.
One startup, however, believes it has cracked it, and the numbers certainly speak to that. Ivory Coast-based startup StarNews Mobile launched in July 2017, targeting the mass market with a network of over 50 mobile channels offering celebrity-based content priced at low daily subscription rates.
“StarNews Mobile works with local and international celebrities such as Davido, Fally Ipupa or Sauti Sol to create dedicated mobile channels where celebrities publish exclusive short videos,” founder Guy Kamgaing told Disrupt Africa.
It deployed in Ivory Coast in partnership with operators MTN and Moov, and broke the one million subscriber mark back in April 2018. Since then it has launched in Cameroon and the Republic of Congo, and is targeting 20 extra markets in total through its MTN partnership.
Users can subscribe to their favorite celebrities’ channel through their operator for as low as US$0.10 per day. Once subscribed, they receive a video link via SMS to watch exclusive videos daily. The revenue generated from the subscription fee is then shared between the operator, the content provider and StarNews Mobile.
“Basically we have found a way to adapt SnapChat, or Instagram Stories, to the African context,” Kamgaing said.
Africa is the fastest growing mobile market in the world, and the number of smartphone users is set to reach 690 million in 2025. The continent’s young, social media savvy population is hungry for locally-relevant content to consume on their mobile phones, but Kamgaing said exploiting this opportunity, finding the right content, and monetising it has been a challenge.
“In the past few years dozens of OTT platforms have launched on the continent and many have failed, because of technical limitations and costs of data and content licensing versus low disposable income levels,” he said.
“Others such as Showmax and iROKOtv are heavily funded and holding on, but the truth is that user acquisition is extremely hard in Africa. Free platforms such as YouTube or Instagram are popular but generate little to no revenue for content providers. Mobile operators also have their own mobile video stores, but they don’t always get the content right.”
Kamgaing believes StarNews Mobile has managed to find solutions to all these problems.
“We’ve got content that young people are passionate about, the videos are short and delivered seamlessly by our operator partners so the service just works, and users pay small amounts they can afford through their pre-paid data,” he said.
Bootstrapped to its current six-figure US dollar gross monthly revenue, StarNews Mobile is now looking for external funding to support rapid expansion.
“We’ve self-funded the business in the first 18 months but the company also started generated sizeable revenues soon after launch in the summer of 2017, so we’ve been able to bootstrap our way so far,” Kamgaing said.
“In October we signed a group deal with MTN to launch in an additional 20 countries in the next two to three years, so this means a steep ramp up. We’re now raising our first seed raise to fuel this growth.”
It did take some trial and error to find the right product-market fit, however, and Kamgaing said StarNews Mobile was fortunate it had previous experience working with mobile operators, a process he said can “break” many small companies. Other challenges included building the right technology to fit into a telecom environment, which Kamgaing said the startup is still struggling, and selling this unique business model to an audience of local content providers.
“But when it started taking off, it just kept growing, and we knew we had something. Now our challenge is about scaling from three to 20 countries, which means rethinking and rebuilding our technical platform in order to be able to sustain this rapid growth,” he said.