iRoko turns to North America, Europe
Nigerian video-on-demand company iRoko is planning to target markets in North America and Europe rather than focusing on African growth.
The move is part of efforts to reduce ‘cash burn’ and curb losses caused by, among other things, Covid-19, which have led to the axing of around 150 jobs.
Jason Njoku, iRoko’s CEO, said that even though international subscriptions grew by 200% in April, consumer confidence ebbed and collapsed as a result of the economic impact of Covid-19.
The pandemic came at a time when the company’s revenues were being further squeezed by the latest rounds of naira devaluations and an amendment to the Nigerian Broadcasting Commission code regarding payments to artists.
“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,” said Njoku.
“Our annual ARPU [average revenue per user] internationally is US$25 to US$30. When people talk to me about Netflix and its impact globally, and then in Africa, I always smile. My response is the same. Globally, streaming media is booming. In Africa, it is regressing.
“iRoko is now ‘pausing the burn’ and plans to hunker down and see what the next 18 months brings. Even after pushing incredibly hard in Africa for the last five years, our international business represents 80% of our revenue today. So by taking out Africa growth-related costs, we cut our US$300,000-per-month burn to less than US$50,000 a month. Still high, but once things normalise we should have a clear path to free cash flow and profits in 2021.
“We still believe in Nigeria, we still believe in Ghana, we still believe in Africa. It’s a strange thing to realise that even after almost nine years with iRokoTV, five exclusively focused in Africa, we still may be too early for Africa.”
Last year, iRoko sold its African film studio and international TV network ROK to French audiovisual firm Canal+ Group, which bought the company to strengthen its content production reach across Africa.