The Netflix of Africa Doesn’t Need Hollywood to Win

How Iroko built its low-budget, DIY, Nollywood-movie-streaming business.

Photographer: Ima Mfon for Bloomberg Businessweek

A scene from the Lagos set of Walking Away, a film from ROK Studios and Divine Touch Productions.

 

Walter Taylaur, a gangly, gregarious Nigerian writer-director, needed a place to shoot his movie, Gbomo Gbomo Express, a low-budget “comedy-thriller.” In the movie, the head of a music label hits it off with a socialite while out on the town in Lagos. On their way home, three working-class Lagosians kidnap the couple for ransom, but the hapless kidnappers realize too late that they’re in over their heads.

In Nollywood, as the Nigerian movie business is known, there are no actual studios. Filmmakers usually rent an abandoned or empty mansion and transform it into a set. But Taylaur hadn’t found one yet. Then a friend came through. He owned a derelict house with servants’ quarters in Ebute Metta, a congested neighborhood in one of the oldest parts of Lagos with faded, peeling apartment buildings, pastel-colored two-level bungalows, and a sprawl of open-air markets. Taylaur could use it if he wanted, for free. He’d just have to clean it up first. The street outside might present a problem, though. It was loud: generators rumbling, people shouting, horns blaring from vehicles languishing in traffic. No, Taylaur said, that sounded perfect.

When he showed up at the house two days later, Taylaur had to cut the padlock off the gate (his friend had lost the key). Inside, he found rooms knee-deep in trash; it took several hours—and dumpsters—to get rid of it all. He and the crew gutted, cleaned, and painted one space to use as a greenroom, adding fans, lights, tables, and mattresses for soundproofing. They also built sets that passed for an office and a hospital suite. When they began filming, they left the street noise in.

 

 

Taylaur
Taylaur
Photographer: Ima Mfon for Bloomberg Businessweek

Taylaur shot the movie on digital video for less than 10 million naira, or about $53,000, over 18 days in January 2015. “There’s a lot of freedom, and you can make anything happen, and people do,” Taylaur says of Nollywood. It’s a “do-or-die” trade, where productions shoot anywhere they want, provided they have the right fixer, and turn logistical challenges into plot twists.

Gbomo Gbomo Express came out in theaters last October, and then—a first for Taylaur—on an Internet streaming service called IrokoTV in January. Founded in 2011 by Jason Njoku, a 35-year-old Nigerian-British entrepreneur, Iroko Partners operates the service and has amassed a catalog of several thousand Nollywood films, most in English, but some in Yoruba. Starting in 2013, Iroko began producing its own original content, making it the West African answer to Netflix. It offers Africans, on the continent and in the diaspora, a way to watch Nollywood fare wherever they find themselves. After India’s Bollywood, Nollywood is now the world’s second-busiest movie industry, cranking out 1,000 titles per year. Other hits on Iroko include Mrs. Somebody, House of Gold, and 30 Days in Atlanta, a comedy in which the protagonist wins an all-expenses-paid holiday to America and brings his cousin.

Njoku and his partner, Bastian Gotter, launched Iroko after raising $3 million in an initial financing round from New York hedge fund Tiger Global Management and Swedish investment firm Kinnevik. They later raised an additional $5 million. (The company won’t disclose how many subscribers it has, but the number is estimated to be around 65,000.) Iroko says it’s now one of the largest funders, co-producers, and commissioners of content in Nollywood. The question on many minds, however, is whether Iroko has built up enough of a lead: Netflix itself announced early this year that it wants to become a global Internet TV network and intends to expand into Africa, though it hasn’t said when. Although Netflix has no specific plans for Nigeria yet, the country would have to be near the top of any list the company’s drawn up. (The Kenya Film Classification Board has already called Netflix a potential threat to “moral values and national security.”) Iroko has been the only company of its kind on the continent, surviving while similar ventures have failed, but is it ready for serious competition?

 

Njoku
Njoku
Photographer: Ima Mfon for Bloomberg Businessweek

When Njoku’s irreverent culture magazine, Brash, closed in Manchester, England, in 2008, he had a backup plan—several, actually. He started an event-management company, set up his own T-shirt brand, consulted for nightclubs hoping to break into the Manchester student market, and ran graphic design and Web development outfits. “What else did I do?” he asks himself on a recent afternoon in Lagos, trying to recall. Oh right, he almost forgot, the blog network he operated in his spare time. “I always had two or three projects going at the same time.” After none of them really worked out, he decamped to London in 2009, where he’d been raised by his mother in a state-run council flat. With a chemistry degree from the University of Manchester on his résumé, he reluctantly took a job with a market intelligence firm, only to quit not long after because it was “incredibly boring.”

Living back at home, discouraged and restless, he found inspiration for his next hustle in an unlikely place: his mother’s movie-viewing habits. “She went from watching typical soap operas to Nollywood movies,” he says. “That my mother could sit in front of them for three hours straight was pretty remarkable. Here’s someone who had Sky, satellite television, but chose these movies.” The films weren’t of great quality. “People were shouting, and the production values were low,” Njoku says. Still, the movies had a certain appeal. The fantastical stories, combining familiar family drama with elements of the supernatural, were far more entertaining than a church service, but just as morally instructional and virtue-oriented. They offered an escape from your own problematic life into the salacious troubles and scandals of outrageous characters, without the associated shame. When Njoku went to the shops and hair salons in the neighborhood where he grew up, Nollywood movies were always on, and their audiences were always captivated.

“What’s usually popular are the rom-coms for the cinema, and in the straight-to-home video market and DVDs, there’s usually a lot of voodoo and witchcraft,” says Taylaur, the Gbomo Gbomo Express director. He originally intended to make a film noir but was afraid the concept would go over most viewers’ heads; he injected slapstick to make it more palatable to the Nollywood market. Taylaur and other filmmakers aim to please their audience with a steady diet of humor, romance, betrayal, and spiritual redemption.

“I would never have discovered that [Nollywood films have a devoted following] if I hadn’t moved back in with my mother because I was broke, basically,” Njoku says. In early 2010 he got on a plane to Lagos, the first time he’d been to Nigeria as an adult. “I had nothing to lose. I came to try and explore the movie industry here.” He ventured to the infamous Alaba Market, a mazelike bazaar where vendors buy Nollywood titles from “marketers,” dealers who may have also financed the films they sell. The movies eventually end up in the hands of hawkers selling them on Nigerian streets, in other markets, in suitcases headed to other countries, or on YouTube, the easiest way to watch them abroad.

Because no Nollywood production house controls a major share of the movies, it was easier for Njoku to enter the market and disrupt it. He charmed his way into personal relationships with the traders and used some cash from his old friend and partner Gotter to pay in the low hundreds of dollars for each of the 200 titles he acquired. He then uploaded the films to YouTube, calling the channel NollywoodLove. He and Gotter say they ended up making $1.2 million in gross revenue during 2011. Hulu was big at the time, and a model of sorts. But Njoku wanted more. He wanted to control the viewer’s total experience.

Nigerian subscribers pay a monthly fee of 500 naira, about $2.50; for them, the bulk of the cost of watching Iroko is paid to carriers for the data they use while streaming. Internet access is expensive in Africa, though prices are gradually falling. Customers complain that “Iroko is eating all our data,” even though their money is going to their telecom providers, not the streaming service. Iroko has responded by offering downloads, which take up less data than streaming, for its films; it provides low-quality downloads as another data-saving option. As a substitute for Internet streaming, many in Nigeria have at least one or two movies on their smartphone they share via phone-to-phone file-transfer apps such as Xender. Iroko is also looking to link up with telecom companies to offer users a discount on their data use while watching movies and TV shows. Its viewership is overwhelmingly from the diaspora, a proportion Njoku wants to change.

Nollywood, the second-largest employer in Nigeria, makes up 11 percent of the country’s nonoil exports. The industry is known for its guerrilla approach. In the early 1990s mostly self-taught filmmakers, lacking financing or production studios, shot movies on video cameras over the span of a week, usually for less than $20,000. Low production values became part of their charm.

The love of Nollywood films around Africa, says Adi Nduka-Agwu, Iroko’s head of business development, has guided the company’s growth strategy. She works at a long table, one of several in Iroko’s three-story, purple-walled Lagos headquarters, where graphic designers, video editors, and other employees spend their day scrutinizing large-screen computers. The company also has offices in New York and London, but, Nduka-Agwu says, “we can grow our customer base a lot faster and a lot bigger here in Africa.”

On the set of Walking Away.
On the set of Walking Away.
Photographer: Ima Mfon for Bloomberg Businessweek

Iroko’s customers want love stories, comedies, and melodramas, says Tope Lucas, the company’s head of content acquisition. The company seeks out popular films for its platform, but it also receives submissions from filmmakers. Prospective titles are then sent to the London office, where another team watches movies all day and rates them by picture and sound quality, storyline, star power, and buzz. Lucas also rigorously checks viewer comments to see what they like, or don’t like, about each film—and requests for other films they want on Iroko.

Nigeria has weak copyright protection, so bootlegged DVDs are rampant. That’s Nollywood’s biggest headache. Pirated DVDs are sold alongside legal ones at Alaba. Even when Iroko buys exclusive rights to films, it has to trawl content-sharing websites such as YouTube to make sure no other copies are online. If they are, Iroko has them taken down. At the beginning, the company had to take down a lot of copies, Lucas says. Iroko spends more money for its titles to persuade filmmakers to come to it instead of releasing DVDs (which are easier for pirates to copy) and to secure exclusives.

Taylaur and other filmmakers are pragmatic about piracy, milking it for free publicity as long as they can make back their investment. Films released to theaters move on an abbreviated schedule, pushed from cinemas to DStv, Africa’s satellite TV network, or a platform like Iroko within a few months before everyone gets a pirated DVD. Iroko is “very good, because they’re buying content,” Taylaur says. For a three-year license, he says, fellow filmmakers are paid from $3,000 to $5,000, with an opportunity to renegotiate if the film does well. It’s not great, but it’s something.

Source: YouTube (5)

Iroko began as a freemium platform, meaning 90 percent of the content was free, with heavy advertising. The model ended up being not very profitable and unpleasant for users because of all the ads; it was killed in 2014. Customers would have to accept paying for content. “Here, it’s much more figuring out—based on the data that people have and can afford, based on when they have access to the Internet and how much they will truly be watching—how much are they willing to pay,” Nduka-Agwu says.

Iroko began charging a subscription fee and added a mobile app. It’s trying to make its platform as simple as possible for subscribers, who are mostly in Lagos, Abuja, Port Harcourt, and other big cities. “Data still feels so unaffordable, and the infrastructure in this country is genuinely unreliable and expensive,” Nduka-Agwu says. “There’s a shift that needs to happen. We need to convince more and more people that it’s [affordable].” The mobile app was streamlined with adjustments, letting users log on with their phone number instead of forcing them to come up with a unique username. The company is considering doing away with passwords altogether.

In 2013, Iroko started its own in-house production with ROK Studios, which has released movies and viral TV shows like Husbands of Lagos and Desperate Housegirls. It wanted to control the quality of its content and to capitalize on the addictive nature of series, with short episodes suited to mobile phone viewing. Iroko still posts free movies heavy on mysticism and traditional values—it calls them “village movies”—with advertisements on YouTube channels, which it says attracted more than 300 million views last year and drew new customers.

Shortly after Netflix’s announcement in January, Iroko revealed it had closed on $19 million in deals from investors, including French media company Canal Plus, to produce original content and expand throughout the continent. The new investors noticed the company had made “significant gains in content production and distribution,” Njoku says. Despite that vote of confidence, “there are no other profits,” he says. “None,” he repeats, laughing. He says he hopes to become “cash-flow positive” this year.

Iroko believes that, as a niche service for an audience that prefers Nigerian films, it can withstand the entry of a bigger company into its market. For Nollywood fans, Iroko will likely remain the most comprehensive database for the near future. For viewers interested in both Nollywood and foreign-made entertainment, their loyalties may be divided.

Netflix, too, won’t have it easy. “Streaming in this country is a very difficult thing. It’s getting better, but it’s not good,” Nduka-Agwu says of Nigeria. She allows that the streaming giant may have one advantage: It “can partner with every Internet service provider.”

Critics wonder how long the money-losing company can survive on venture capital funds. With no plans to raise the subscription price, Iroko would have to drastically increase its customer base—and soon—to stay afloat. Njoku remains optimistic.

“We’re breaking ground that hasn’t been broken before,” he says. Seeing Iroko as a long game, he’s planning accordingly: dubbing films in French, and soon local languages across the continent like Swahili and Zulu, to reach tens of millions of Africans. The outcome won’t be determined simply by budget, but taste as well. “This story could really only take place in Nollywood, in Nigeria, by a Nigerian who saw something which a lot of people overlooked,” Njoku says. “It was like I was coming from the future.”