In a sad turn of events, one of Africa’s most prominent start-ups, Iroko TV is shutting down. Founded in 2010 by Nigerian entrepreneur Jason Njoku, Iroko TV quickly rose to fame as a pioneering platform for Nollywood content, garnering subscribers worldwide. However, for the entertainment start-up, it appears the curtains have closed.
In 2011, Iroko TV’s journey began with a vision to revolutionize African entertainment by making Nollywood movies and TV shows accessible to a global audience. The video on demand network was often referred to as the African Netflix. It arrived in Kenya in 2015 via StarTimes. 2 years before, it had made in frays into the South African market via DVDs.
The platform grew exponentially, attracting investments from both local and international backers. The start up was able to raise a total of US$ 42 million in funding. The last round of raising was in 2016. It symbolized the potential of African tech start-ups and their ability to make a global impact in entertainment.
What led to Iroko TV Closure
It is not clear what has led to the demise of Iroko TV. Globally, on demand streaming services have been faced with revenue challenges and stagnating or declining subscriber numbers. This could be one of the challenges facing the African Netflix. In 2020, the company laid off over 150 employees citing “the COVID-19 fallout, rapidly devaluing the currency and hostile regulatory environment“. At the time, the company management acknowledged they were spending more money than the startup was making.
The CEO later explained that the start-up had been struggling in the wake of the Naira devaluation since 2016, which saw its subscription costs plummet from N3,000 ($18) in 2015 to a mere N3,000 ($8.33) by 2017. In 2019, the company had sold its ROK film studios, the CEO said the funds from the sale would help Iroko Tv focus on growing its subscriber base.
“We intend to continue to focus our efforts on subscriber growth as the only KPI which really matters“: Mr. Njoku wrote.
In recent months, global streaming services like Amazon Prime have introduced in stream ads to help raise revenue. Others have also raised their rates. Recently, Netflix also announced it’s raising the price for its top tier streaming packages.
The global streaming industry evolved rapidly, with giant players like Netflix and Amazon Prime entering the African market. These global behemoths offered substantial competition to Iroko TV, making it difficult for the company to maintain its market share.
Funding Challenges may have affected the start up. Over time, securing further funding became increasingly difficult due to the shifting dynamics of the African tech start-up ecosystem. In Africa, the entertainment sector received just 0.9% of the total investment given to the continent. This made it hard for iroko TV to invest in the necessary infrastructure and expansion efforts. Ironically, the company is shutting down just when Sony has announced a US$100 million kitty targeting African entertainment startups.
The closure is a significant loss not only for the company’s investors but also for Nollywood and the African start-up ecosystem as a whole.