Just me. Jason Njoku.

I am Jason Chukwuma Njoku, Founder of iROKO. Arguably one of the most awesome internet companies in Africa. as a professional (and certified) geek I read Chemistry at the University of Manchester, in 2005, I embarked on my journey of becoming a modern day Capitalist. These are my opinions. I own them and make no excuses for having them.
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Early last year, before we integrated an actual subscriber management analytics platform, we knew we had a problem. A casual search on Twitter any day for iROKOtv you would see tens of people searching for passwords. iROKOtv+ passwords. This has only amplified since we’ve gone paywall only. We suspect, based on data, we have double the number of users than actual subscribers. 

The greatest offender was an account called Chicken. We debated for some time what we should do with Chicken. She was being used 100% of the time. Across 30+ countries and hundreds of devices. To my mind the solution was simple. You kill her. So we did. 

Much easier said than actually done. This is an industry-wide problem. From HBO GO to Netflix or any subscription service. 

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There are actual accounts (see above) which are in use 100% [Active Day Percent] of the time, across 10+ locations and have been accessed with 100+ devices. All for the princely sum of $5/month. We have identified this activity across 2,000+ accounts. Every time we kill the chickens, within 24hrs they arise from the dead. I don’t even know how this is possible so quickly. But is something we need to ultimately face and solve. Subscription business is data and technology focused. If you don’t know either, I think you will struggle immensely. Because we did. for the longest time. 

Engineers need to be in house. 

Chickens are one of the 87 KPIs we are tracking and improving. The number one reason we killed our advertising business was so the entire company could become super awesome, if not the best, operating online subscription business in Africa. This is a brutally difficult type of business to operate. There are no compromises. We kinda suck now but expect to get x10 better by this time next year. It’s the reason we are building out an experienced engineering team in NYC, arguably one of the most expensive markets in the world for technology talent. When I hear all the new VOD services launching, the first thing I look for is whether they have ‘technical partners’ or engineers in-house. We are moving almost everything in-house. We want to own our technology stack, not have a 3rd party vendor supply it like the noisy new entrants (it’s okay. I ain’t mad atcha). The recent announcements in Nigeria and SA both don’t own their technology. We believe that doesn’t work in Africa. Off the shelf is good to start but you need to have a technology soul, the DNA of working through problems yourself. Internet time. And just to reiterate, subscription businesses are content, data and technology. 

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But that’s none of my business. 

Today iROKOtv.com announced that it has licensed from Starz Digital Media two of the top award-winning Hollywood dramatic TV series from Starz, Spartacus and Magic City. The acquisitions come as part of the adding increasingly better content to establish ourselves as a leading African Internet TV platform, a move into international content distribution, as part of its English Speaking Africa package, launched earlier this month. 

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Spartacus is a thrilling tale based on the Thracian historical figure, who led a huge slave uprising against the Roman Empire from BCE 73-71. Starring notable actors, including Andy Whitfield and Liam McIntyre, this four-year series has been praised by critics both in the US and abroad, winning Saturn Awards in 2011 and 2012, as well being nominated for Screen Actor’s Guild Awards (2012 & 2013) and a People’s Choice Award (2013).

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Magic City, set in 1959 Miami, Florida shortly after the Cuban Revolution, tells the story of Ike Evans (Jeffrey Dean Morgan), the owner of Miami’s most glamorous hotel, the Miramar Playa. Evans is forced to make an ill-fated deal with Miami mob boss Ben Diamond (Danny Huston) to ensure the success of his glitzy establishment. The series was nominated for a Golden Globe® (2013) and an Emmy® (2014).

Oh and part of the deal we also acquired Party Down, A group of actors move to LA to make it big, but end up working as caterers. too

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“Licensing Spartacus and Magic City onto iROKOtv.com as part of our international catalogue for ESA is a great coup for us. Awesome, amazingly produced content that brings the best storytelling to the screen - no matter where it’s from in the world - is what we are all about and these TV series are perfect specimens of that. Both series have proved massively popular with audiences in the US and Europe and we hope that our audiences in Africa will love them too.”

So. Ladies and gentlemen, for as little as $2.50 a month, iROKOtv.com subscribers throughout ESA can now access an unrivalled yet affordable international online content package, to include Hollywood, Bollywood, Telenovela and Korean movies and TV series, as well as a Nollywood catalogue of 5,000 movies (10,000 hours).

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Part of the Built to fail - the realities of VC-backed companies

I was talking to some young founders yesterday night. It was 8.40pm and I was just about to leave the office. They asked me how was iROKOtv? I began explaining that things are not easy. This big switch is creating all kinds of pain internally. Dramatic things usually do. They looked at each other and laughed. That things are not as bad for me as it was for them. 

I smiled and replied. No one is killing it in Nigeria*

Hype aside. iROKOtv is NOT successful. Yet. Small internet companies and the larger funded ones are all experiencing the same problems, just on different scales. We are all constantly trying to stare into our data to gain interesting insights to help build long term sustainable businesses. For the most part we are ALL too early to know whether we are actually making the right choices. All of us. I speak to most of the funded internet companies in Nigeria and we all share the same angst. Except if you are an iROKOtv or a Konga. To change some fundamental aspects of the business it may take 3-12 months. With a small startup (<20) it can take a a few weeks. When I make strategic decisions it effects tens of peoples’ careers. We only have around 120 people. It costs us like $700k per month just to keep the activity up and lights on. Burn cash baby. Burn. The other internet guys have 300+ so who knows how fast we collectively burn through cash. With the switch to building out Internet TV in Africa, we banished the opportunity to become a profitable entity for the foreseeable future. We exited $2m worth of 2013 revenue which we will now need to replace. So we need to raise more external capital to fund that growth. Founder equity will go down (obviously), our hope is we create more value in the long run.  

There is a misconception that because we are VC funded, we have ‘made it’. Whenever I hear this I realise how little the ecosystem (or people in general) truly understand about the nature of value creation in technology. The reality couldn’t be further from the truth. When you raise funding the stakes have just changed. Forever. And not necessarily in your favour. In 2011, before we were VC funded, we were a nice profitable business. We were making $30k/monthly in free cash flow. Once we accepted the money we embraced the reality of losing money year after year after year until we either failed (most likely scenario) or created a huge success. Note that no revenue numbers were mentioned. 

I sent an email to Bastian this morning concerning the $970m acquisition of another VOD play Twitch. Good for video at large as these deals always are. 

Twitch started out as a mere channel on social live stream company justin.tv (which was founded in 2006), its growth blew away the rest of the channels so they spun it out independently in 2011. Justin.tv raised $8m over 7 years before closing in 2014. The original idea failed. Twitch growth accelerated and went on to raise $35m over 2 rounds. There, it now sees 55m uniques per month. They had created a unicorn. It just took 8 years to realise that. In the West. In the most advanced internet economy in the world. 

Most Nigerian internet companies are less than 3 years old. In this market we haven’t started yet. Our internet users are immature in their understanding of what is possible online, buying data in Nigeria is still among the most expensive I have seen, the power and payments infrastructure is fucked and the venture capital is largely nowhere to be seen. 

So, people of the internet. Internet company building is hard. No matter the stage. And no one is really killing it in Nigeria. And 75-90% of all today’s startup activity will likely end in failure. Those who are funded have merely bought extra time. 

Hype aside. That is reality.  

* except the sports gaming guys. They are destroying it. 

 

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HBO launched in 1972. I read a book which was written and published in 1987. 

Inside HBO: The Billion Dollar War Between HBO, Hollywood, and the Home Video Revolution. 

In 1973, Home Box Office was a small cable TV operation that its parent company, Time Inc., could not sell. In the following 15 years, HBO has become Time’s largest single source of profit. Author George Mair chronicles the behind-the-scenes events that shaped this great untold American business success story.

1973 - 8,323 (subscriptions)
1975 - 287,199
1977 - 600,000
HBO launches on their one thousandth affiliate cable system
1980 - 4m
1987 - 19m
Burning Cash
1973 - $1m ($5.5m)
1974 - $4m ($21.9m)
1975 - $3.15m ($17.3m)
$44.7m lost in first 3-years. 
In 1985 HBO made a profit of $125m
Churn 
HBO Churn
- 35% who sign up cancel in the first 90 days
- 60% of all new subscribers disconnect in the first 6 mths
- 42% who signed up disconnected within a year
- In 1981 7.1m signed up. An additional 5m signed up and disconnected
If you don’t manage your subscription inputs and understand the outputs, you can literally never make any money. We are aiming to take the number of subscribers we amassed over 2 years and then double it in H2 2014. Long way to go for that. Then we are trying to become a top5 PayTV network in the next 3 years. 
Data driven decisions will be the key of that. 

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Monday 18th August 2014 was my 2nd wedding anniversary. My wife has been in Accra for the last 6 weeks so I thought it was an awesome idea to go and see her there. Behold. Another awesome idea was to travel back to Lagos by road. Google maps as you see above, said it was 6h 29mins. Road trip!

In reality, it was 13hrs. That’s a long ass time. Our driver, my son, my wife and I. We were using the Vogue, so the ride was as good as can be, the rear entertainment eased the pain, but after the 5th hour it quickly became apparent that my wife had other more normal ideas of how to spend her 2nd wedding anniversary (I missed the first one). Nonetheless, here we were. Navigating through Ghana / Togo /  Benin Republic and onto Nigeria. It was super illuminating to me as I haven’t really travelled throughout Nigeria. I have only really been to Lagos, Enugu, Owerri and Abuja. The most interesting thing in these Ebola-plagued times was how porous our borders are. People in cars were subjected to all types of pointless protocols. Pay here. Sign off over there. Change money here. Have passport stamped there. Of the 13hrs we spent on the road, easily 6hrs alone was spent navigating the silly border controls. Whilst I whiled away previous time no moving I noticed market men/women and general civilians (on foot) wandering both directions across the borders with nothing but a smile. No international passports, no checks, no balances, no ebola/HIV checks, no charges, no multiple FX transactions. Nothing. I then knew all the screening/temperature taking activities at the airport were a joke. Typical Nigerian cosmetic applications to real problems. 

The charges were ridiculous. It could’ve been the vehicle but we were taxed to the limit. Each border had a Byzantine array of different charges and I badly miscalculated how much I should have brought with me. By the Nigeria borders we had ran out of cash. Minor digression. Each country’s border had 2 parts. Example. At the Ghana / Togo border there were two sides. The leaving Ghana protocol, then the entering Togo protocol. Same from Togo to Benin Republic. The Leaving Togo protocol and then the entering Benin Republic protocol. Two barriers to end per crossing. 

Nigeria had something a little, well, Nigerian. We had to go through about 11 different checkouts. Most manning them didn’t even have uniforms and were literally less than 20m apart. In a long row. Each asked for our passports. Each asked us to open the boot for inspection. Each talking about certain levies we had to pay to enter Nigeria. Even though we all had Nigerian passports. After the 7th checkout, we basically ran out of money. 100% no cash. By this time it was 10pm. We had to beg them, well my wife and crying son did. And obviously they didn’t believe us. One even insisted we MUST settle him before we pass. We found N50 in the side pocket of the car and asked him to manage. So that wasted more time. I know there are fears of the Boko Boys engaging in terrorist activities, but I am pretty sure they’re not driving Vogues on their suicide mission. Of course I could be wrong. The military man did tell me. This is Nigeria. Everyone is a suspect. 

Nice.

I definitely won’t be doing that again. Which is a shame. But flying is so much simpler 

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This afternoon I bought a very good quality copy of Half of a Yellow Sun. For $3 (N500). This made me sad. I was one of the many millions who read the book. As an impressionable young Igbo boy, I even went as far as to buy copies and pass them around to friends to encourage them to read the ‘Biafra Story’. I was amongst the throngs of people who patiently waited over the last few years for the release of the widely anticipated cinema adaption. One of the most requested movies on iROKOtv is Half Of a Yellow Sun. So I knew things were real. I desperately tried to acquire the title for iROKOtv but thus far, I have been unsuccessful. 

I have written before about the Titanic struggle going on at the heart of distribution of content in Nigeria; the overarching power of Alaba in all things distribution and their ability to essentially do as they please. 

Alabanomics’ is real. 

We are still nowhere in terms of protection of intellectual property. We are nowhere in terms of realising the vast potential of capturing (legally) the hundreds of millions of dollars in value created from content in Nigeria. HOAYS just crystallised this for me. The distribution of game is all about Content, Cost and Convenience. 

Any platform. Online or off. PayTV, DVD, Internet TV, Free to Air TV, Digital TV, Cinema - they are all bound by these fundamental 3 C’s. 

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All content is available in Nigeria. Game of Thrones, Suits, Iron Man 3, Spartacus, Breaking Bad, Thor et al. They are all here. They are free or inexpensive to acquire. Costs? Like, $3 each and they are super convenient. We have maybe 50 screens in the whole of Nigeria. Between Anthony and Ikeja (a 1km drive) I saw 6 different sellers and I wasn’t even looking. I would hazard to guess that HOAYS is available on most street corners in Lagos (if not Nigeria). Illegally. Cinema just cannot compete. 

From my dealings with Alaba, I know an average Nollywood movie can move 50-100,000 copies. Blockbusters can move 1m+ units easily. HOAYS is comfortably the most well know title to ever be released by a Nigerian production house. With tons and tons of free press. From my understanding, the piracy started before it even, after great delay, hit the cinemas. 

I hear HOAYS has been widely embraced in Nigeria at the cinema. I think it would have done significantly better had it managed to go out on its initial release date. Nonetheless, it will still generate upwards of N50m ($300k+) locally. It could have done significantly more than that but the dislocation between the 170m population potential and the devils waiting in the distribution of content here in Nigeria is evidently still apparent. The Hollywood folks I have spoken to don’t even really consider Africa (outside of SA) a relevant market. The building blocks are not really in place to capture the value of what has been created. And that is a shame. But that is still the opportunity for PayTV (DTH, DTT and Internet TV) to add value. There are literally billions of USD in the system. It just needs to be discovered. 

But it will take time. The odds are stacked against the new entrants. It will take huge amounts of capital and require abnormal amounts of emotional and intellectual capital. And still, the most likely result is failure. 

Still work in progress. iROKOtv International, NYC

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The above picture was taken in 2005 (yup 9 years ago) in a beautiful loft in Manchester’s Northern Quarter. This was shortly after I met Jessica who had joined to edit a couple of magazines I had launched. Brash and Panache. This was, I think, one of the happiest times in our short and brutal adventure in publishing. It all went terribly downhill from there. 

Shortly after this picture was taken my little company, Brash, entered into a brutal cash crunch which ended up killing the company. The biggest social contract I broke was not being able to make payroll. Having never really employed people I never knew the magnitude effect this has on someone. As sorry and embarrassed as I was it didn’t mean shit. Rent and groceries still needed to be bought. And I had failed the most basic of employer - employee contract. So the team left. All 7 of them. Jessica included. Paul (to my right) too. It hurt. But I totally understand. Oh they all totally hated me too. I was pond scum to them all. 

One of the most dramatic things I remember of the time and my life was Jessica force-walking me to the nearest cash machine (ATM) to pay her the money I owed her. She had tired of my excuses and needed to settle some bills in her life. This is definitely one of the most humiliating things to happen to me. Ever. Little did I know it was only the beginning. 

Jess and I didn’t speak for several years. Not one word. I think it was like 4-5 years later we spoke. Can’t even remember. But somehow we were drawn back into each other’s orbit. In early 2012 after struggling to manage the narrative of this little Nollywood thing I was building I decided I needed help. Jess was working for the Jewish Museum. I basically begged her to join. She accepted. Happy days. The old crew was getting back together.

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Her first month on the job we both flew out to New York to set up the office there. Well. Jess set up the office. I did other things. If you think Jess is great a communications, she is awesome at organising things. 

But she is super dupa awesome at communications. 

iROKOtv has arguably more international press coverage than any other Nigerian company. Internet or not. Yes we have a great story, but so do so many others. Yes, I can speak forever, but it all starts with someone helping me gather my voice. Helping me develop my style. Someone honest enough to call me out when I am off message or being inconsistent. Jessica is fearless in that regard. She knows how to manage me. Very few human beings can. She understands how to articulate me without me explaining. That is the nature of our relationship. Although she has largely sat in London, and I in Lagos (or on a plane), she has helped sculpt the notion of ‘Jason Njoku’ (yes I just referred to myself in third person - but it’s in context). We are definitely one of the most open and communicative companies in Nigeria. The good, the bad and the ugly. You will always hear our perspective on things. This has defined us and made us thought leaders on all things internet in Africa. 

Our wins have been evident. WSJ, Techcrunch, Pando, FT, CNN, BBC, Mashable, Variety, Fast Company, CNBC Africa, Le Monde, CCTV, BET, Reuters, Hollywood Reporter, USA Today, Mail&Guardian and Bloomberg. Whether it has been Radio or TV or print. We have won so many hearts and minds around the distribution of Nollywood. In terms of global evangelism we stand aside everyone else as true missionaries spreading and explaining the exists of that to the unknown. Jessica has totally embraced Nollywood. She can speak enthusiastically about it as only a true fan can. 

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Early this year when it dawned on me I had to close the London office. And those who think it was an easy decision driven by mere cost cutting aren’t even near to the truth. This was a difficult time but a great opportunity for Jess to do something I had been encouraging her to do over the years. Start her own communications company. Many people who are awed at our communications and media coverage have asked me who is responsible. My simple answer. Jessica Hope. But you can’t have her! 

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Now you can. We sat down. I spoke to her about the office closing. How it was the perfect opportunity to start a new adventure. At first she was a little afraid, but after a quick discussion with her partner [shout out to Wax], she embraced it whole heartedly. Enter Wimbart. A truly global public relations and media firm. Happy for iROKO and Spark to be her first clients. Because no doubt if she uses the same intensity that I know her to possess Wimbart will do truly transformative things. 

Jess and I are entering our 10th year of knowing and working each other. This to me is super surprising but not at the same time. We have had our awesome ups and lowest of lows. But all through we have managed to remain friends. With a healthy respect for each other. ATM shakedowns aside. 

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