Business / #ForbesBusiness

September 4, 2017,   11:42 AM

Icflix: An Arabic Equivalent Of Netflix

Samuel Wendel


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Set in Tunisia, the 2015 film Borders of Heaven portrays the tragic story of a couple coping with the loss of their infant daughter.

Anchored by haunting acting performances, the film attracted glowing praise from critics and garnered a best actor prize at the Dubai International Film Festival for Lotfi Abdelli, who played the distraught father.

Yet, it’s not these accolades that sets Borders of Heaven apart, but the way the film was made. In a departure from how a movie is typically developed in the region, the film was co-produced by Icflix, a subscription video on-demand (SVOD) streaming service from Dubai.

Akin to Netflix or Amazon Prime, Icflix is an online platform where users can stream thousands of hours of movies and TV series, but its focus is on Arabic-language films and TV shows, along with a mixture of dubbed content from Hollywood and Bollywood.

Its monthly subscription costs $7.99. Founded in 2012, most of Icflix’s content is licensed from copyright holders—but not Borders of Heaven. It’s one example of the company starting to produce its own original films and TV shows.

“Our key primary focus and heavy investment is going into original product, which will make us unique and exclusive,” says Carlos Tibi, the 41 year-old cofounder and CEO of Icflix.

According to Tibi, the service has 150,000 subscribers and is particularly popular in Egypt; another 1 million viewers use the service through free trials or promotions. To date, Icflix’s subscribers have streamed Borders of Heaven roughly 5 million times.

The company is currently increasing production on original content. Tibi reports the company has 35 films and five TV shows in the works. So far, it has produced 10 films and one TV series.

Icflix’s transition into creating its own original productions is part of a global trend among streaming services. Netflix in particular has pioneered the strategy, with hit original series such as House of Cards.

Tibi says Icflix initially began pursuing original productions because the Arab world’s entertainment industry doesn’t produce enough content to satisfy viewer demand. But another motivation is differentiating Icflix from other streaming services in the region.

There’s a host of other companies targeting the video on-demand market, from big broadcasters to startups. Examples include OSN Go, Starz Play Arabia, Cinemoz and Telly.

Regional broadcasting behemoth MBC even has a streaming service for its programs, called Shahid.

They’re all competing for a market of roughly 400 million people, but so far, no platform has truly separated itself from the pack. And Icflix isn’t the only one exploring original production. Beirut-based Cinemoz expects to release its first original TV series next year, according to CEO Karim Safieddine.

Like Icflix, Cinemoz’s decision to produce original content appears to be motivated by a desire to differentiate itself.

“Big studios and networks have figured out how to distribute on video on-demand, and will break free from third party licensing,” says Safieddine. “The myth of ‘one destination for all your content’ is clearly crumbling.”

Launched in 2011, Cinemoz also caters to audiences seeking local movies and TV shows. Its service is free to use, relying on ads to generate revenue. “There will always be a market segment and demand for free, high-end and premium entertainment experiences,” says Safieddine.

Earlier this year it reached 1 million active monthly users. Others, such as Dubai-based Starz Play Arabia, prefer to focus primarily on Hollywood content. Launched in 2015, Starz Play Arabia costs $7.99 per month and has 700,000 subscribers.

Tibi is convinced, however, that viewers in the region clamor for local movies and shows. “If Hollywood was the answer for this region, you’d already have a billion-dollar company,” he says.

Until recently, regional streaming players enjoyed the comparative luxury of mostly having the market to themselves. That’s because global industry leaders like Netflix didn’t offer their services in the Middle East or North Africa.

That changed last year when Netflix rolled out its service in the region, followed quickly by Amazon Prime.

Their expansion hasn’t yet upended the market however. Netflix’s content offering in the Middle East is still limited due to licensing constraints. Furthermore, it doesn’t yet have a wide library of Arabic content, although it does offer subtitles. So far, the only big splash Netflix has made in the region came in 2016 when it acquired worldwide streaming rights to Rattle the Cage, an Emirati film produced by Image Nation Abu Dhabi.

If anything, the entrance of global competitors is simply another indication that the region is overflowing with opportunity. The market features a huge youth population that voraciously consumes online content.

London-based research firm Digital TV Research predicts that SVOD revenues in the Middle East and Africa will increase from $124 million in 2015 to $1.2 billion by 2021.

Icflix declines to share its revenues. Ultimately for a company such as Icflix, the strategy of producing original content is just the latest development in a larger bid to unlock that potential. So far, it’s been a journey with plenty of twists and turns.

Back in 2009, as Netflix’s popularity as a streaming platform began to accelerate, Tibi was running a real estate business in the U.A.E. Although born in Beirut, he grew up in Canada and later lived in the U.S., where he worked in management for Oracle.

Seeking a change after nearly a decade with the tech company, he moved to the U.A.E. to start a business selling condos in 2009. As part of the venture, Tibi designed his condos by working closely with an architect named Fadi Mehio.

They became friends. Coming from a tech background, streaming intrigued Tibi; he discussed the topic with Mehio. In the region, it seemed no one was exploring the potential of streaming Arabic movies and TV shows.

“That’s when we started talking about streaming and how it would be a great idea to create a company for Arabic content,” says Tibi.

Together, they formed Icflix in 2012. Mehio serves as chairman and president of the company. The pair financed the startup costs out of their own pockets. To date, the founders are the company’s only investors, having injected $60 million.

The company is currently seeking to raise $200 million from outside investors. From the beginning Icflix also developed all of its software and technology in-house.

It didn’t take long for challenges to emerge. The first major obstacle was simply licensing content and loading it up to their platform. Frequently, Tibi had to introduce the entire concept of streaming to local producers and studios.

“They did not comprehend the internet,” says Tibi. “It was very old school.” Still, Icflix was able to acquire nearly 8,000 hours of Arabic movies and TV shows.

Then came the problem of digitizing it. Tibi estimates nearly 80% of that local content arrived to them on tape. “A lot of it was sitting on 35-millimeter tapes,” he recalls. The company digitized it themselves.

The whole process of acquiring and uploading content took almost a year. In general, Icflix avoided competing for exclusive rights to distribute content. “In the digital age, there’s no such thing as an exclusive license,” says Tibi. “It’s very hard to get a return on investment.” Not only do companies have to pay top dollar to acquire it, but it’s difficult to ensure that content is truly exclusive in a region where online piracy goes largely unchecked.

[caption id="attachment_27005" align="alignnone" width="1141"] Icflix team[/caption]

Although Icflix does license content from Hollywood and Bollywood, Tibi is resigned to the fact that competing platforms will also have it. “Hollywood has been so oversold. You can buy Spider-man. Iflix will have it.

Starz will have it. Netflix will have it,” he says. Once Icflix’s service was operational, it had to contend with inconsistent broadband speeds around the Arab world, which affects the quality of streaming. Tibi says Icflix uses the latest compression techniques and technologies to try and ensure smooth streaming, but in markets like Egypt there are unavoidable limitations on internet speeds.

Monetization was another issue. With more than 80% of adults in the region lacking a bank account, it’s difficult for Icflix to process payments online. Furthermore, most Icflix users are young, between the ages 16 to 35, making them even less likely to be banked.

That’s a big issue for a company that relies on users to pay a monthly subscription. A big way Icflix gets around that is by partnering with mobile operators across the region, allowing users to subscribe the same way they would buy phone credit.

It’s partnered with telecoms such as Saudi Telecom Company, Zain in Bahrain, Asiacell in Iraq and Orange in multiple countries. This takes time though. “We had to go country by country,” says Tibi. Icflix is now available across the Middle East and North Africa, with the exception of Syria. It’s also available globally in a limited format.

Shortly after launching, Tibi was already planning to produce original content, having seen that global streaming companies were moving in that direction.

The strategy made sense in the region. Outside of Ramadan, when many new programs are released, the Arab world’s entertainment industry doesn’t produce large volumes of programming, says Tibi. Although Egypt has a rich cinematic history, overall there isn’t enough production to satisfy the entire market.

Dialects of Arabic also vary greatly across the region, especially in North Africa, making it difficult for some markets to regularly access relevant programming.

For Tibi the demand for local content was clear. In short order, Icflix set up offices in Egypt and Morocco. There, the company partnered with existing producers and began developing films.

Its first original product arrived in 2014, a film called HIV. For comparison, Netflix didn’t release Beasts of No Nation, its first original film, until 2015 (this year it produced the Brad Pitt movie War Machine, which was filmed partially in Dubai).

So far, Icflix doesn’t produce lavish, big budget films. Case in point is Borders of Heaven, a modest character-driven drama. “We are very conscious of how much we spend. We have very tight budgets and tight timelines with directors and actors,” says Tibi.

Icflix largely works with new directors and relatively unknown actors, rather than going after established stars. However, Tibi is quick to point out that this doesn’t necessarily affect the quality of Icflix’s movies. He notes, with evident pride, that five of Icflix’s 10 movies have won an award.

Nevertheless, competition is only increasing. In April, Iflix, a similarly named SVOD platform from Malaysia, became the latest player to launch in the Middle East.

Tibi brushes it off. He thinks by the time most competitors start investing heavily in original content, Icflix will already have a sizable advantage. “I think that’s a key differentiating factor,” says Tibi.

Time will tell. At least for now, Icflix’s story ends with a cliffhanger.

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