Jason Njoku, the chief executive officer of IrokoTV, one of
Africa’s first mainstream online movie streaming websites, says the company
will let 150 staff go as part of a resizing process.
In an article published on his website, Njoku said the
business has been battling with the effects of the naira devaluation since 2016
which halved its subscription costs from N3,000 ($18) in 2015 to N3,000 ($8.33)
by 2017.
At N477/$, the IrokoTV subscription cost is now $6.3 while
the average revenue per user in the west, according to Njoku, is between $25
and $30.
“We couldn’t adjust prices as the primary aim was to defend
revenues and cash flows, so cutting subs revenues and vanity subscribers
weren’t going to contribute to salaries come month’s end,” he wrote.
“Internationally, we were effortlessly growing. 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.”
“Our annual ARPU internationally is $25-30. When people talk
to me about Netflix and their impact globally, and then in Africa, I always
smile. My response is the same. Globally, streaming media is booming. In
Africa, it is regressing. It’s impacting everyone.”
The Iroko TV boss
also said the recent amendment to the broadcasting code by the National
Broadcasting Commission (NBC) has a “had
a massive impact on the decision to discontinue investing” in Nigeria.
Pay-TV and streaming companies like IrokoTV, Multichoice,
NetFlix, EbonylifeTV are likely to be hurt by the new NBC code, which mandates
sub-licensing of hitherto exclusive content.
“Between the COVID-19 fallout, rapidly devaluing the
currency and hostile regulatory environment, it’s time to pause the burn. It’s
time to hunker down and see what the next 18 months bring,” Njoku said.
“Over the next week, IROKO will be defocusing our Africa
growth efforts and we will revert to focusing on higher ARPU customers in North
America and Western Europe.
“Even after pushing incredibly hard in Africa for the last 5
years, our international business represents 80% of our revenue today, so by
taking out Africa growth-related costs, we cut our $300k/month burn to
<$50k/month.
“This will, unfortunately, lead to a pretty dramatic change
in the size of our Africa teams. There will be around 150 job losses.
“We are still working on the numbers, and in order to soften
the blow, we are speaking with a number of companies who have taken an interest
in our highly trained telesales agents.
“The ambition in this terrible jobs market is to try and
give our departing teams the best odds of success in what is, unfortunately,
one of the worst job markets in decades. We wish them well on their adventures,
it is no fault of their own. They definitely tried their best. We all did.”
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