According to reports, Co-founder and CEO of IROKO Tv, Jason Njoku has announced that the company will no longer focus on growing their business in Africa.
In addition to that, the company intends to lay off about 150 staff.
These developments, however, weren’t unforeseen.
Back in April, the streaming service placed 28% of its staff on mandatory unpaid leave.
Then, the company used the excuse of the ongoing pandemic (despite the increased user activity in the industry).
Fast-forward to August. The company is now scaling down its operations in the region.
This time around, unfavourable government policies are the cause.
Also, the company has struggled to meet up with its projected average revenue per user (ARPU).
It planned to increase ARPU from $7-8 to $20- 25; however, the pandemic seems to have changed the narrative.
Back in April, Nigeria embarked on a nationwide lockdown.
As a result of that, the average income of citizens in the country plunged.
As such, people tended to spend most of their income on necessities and medicine.
Unfortunately, streaming service subscription does not fall in this category for most Nigerians, and by extension Africans.
And that is why IROKO Tv hit a slope and struggled to meet their set goals.
“Consumer confidence started ebbing, then completely collapsed. We spoke to thousands of our customers to understand what was happening.
People were fearful; people were losing jobs. Entertainment is important, food is essential,” Njoku wrote in a statement.
Njoku also confirmed that subscriptions to IROKOTv in Nigeria dropped by 70%.
On the other hand, the platform’s international subscribers increased by over 200%.
Low productivity by outbound staff
At the beginning of lockdown, IROKO Tv’s outbound staff recorded all-time high productivity scores – averaging between 53 and 54.4%.
However, after laying off about 47 of its outbound staff, the numbers fell drastically.
Consequently, the productivity of the remaining 150 outbound staff also reduced in the following months.
It dipped further to 41.4%, 30.4%, and 25.9% in May, June, and July respectively.
Naira devaluation and unfavourable government policies
Other than the ongoing pandemic, IROKO Tv has had to battle with constant Naira devaluation over the years.
Back in 2015, the monthly subscription fee to access the streaming service was just $2.5.
At that time, the Naira to USD exchange rate stood at N166/$1.
Fast-forward to today. The exchange rate stands at N384/$1.
This constant devaluation has greatly influenced subscription fees over the years.
Currently, the subscription fee is set at N2,420 ($6.3), and this is still subjected to change before the year runs out.
Based on financial projections, Naira devaluation may peak at N550-N600/$, which may be very expensive for local subscribers.
Also, there have been regulatory onslaughts from the Nigerian government threatening the dominant position of IROKO Tv.
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Recently, the National Broadcasting Commission (NBC) released a 6th amended broadcast code.
This was in a bid to promote local competition among Subscription Video On Demand (SVOD) vendors.
Part of the amended broadcast code mandates Pay-TV/streaming platforms to sub-license their content to others.
This, among other unfavourable government decisions, is the primary reason IROKO Tv has decided to scale back its operations in Africa.
In conclusion, it is still early to conclude that the streaming service is exiting the country or continent as a whole.
However, the company’s stance will be known as future events unfold.
What do you think of the future of SVODs in Nigeria? Let us know in the comments section below.
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