- On the BFM Breakfast Grill radio telecast last Monday, iFlix CEO Mark Britt was interviewed about its venture to pioneer the mobile IPTV VOD entertainment arena in Malaysia. Below are salient points of the interview.

- Vision and strategy: o iFlix’s strategy is aimed at meeting a need in emerging markets for quality content at an affordable price, particularly on mobile. o iFlix is betting on the new media consumption trend towards consuming non-scheduled content via VOD at the convenience of consumers. It is also targeting the growing “binging” trend of consumers – i.e. watching entire seasons of TV sitcoms at one go. o iFlix is targeting to achieve 30mil-50mil subscribers in five years in Southeast Asia.

- iFlix’s operational statistics:

• Subscription packages offered:
  • RM10 per month (month-to-month subscription), or;
  • RM8 per month (annual subscription)
• Mark Britt said that iFlix had achieved 50,000 subscribers to date. However, we believe that many are still in the trial period.
• iFlix had also invested a significant amount on content. It had added another 1,000 hours of content since launch, amounting to a total library size of ~11,000 hours.

- Upcoming developments:

• iFlix is aiming to continually provide unique content that are not available on other TV and internet platforms (e.g. Black Sails), and is also talking to local producers to produce local content to meet local tastes.
• iFlix is still developing download capabilities onto users’ devices.
• It is also looking at partnerships with telcos to sell its product more effectively.

- We view iFlix as a potential threat to Astro (HOLD, FV: RM3.30) and Media Prima (HOLD, FV: RM1.70), given its attractive pricing points and content offerings. It has also proven to a certain extent, decent product execution on both mobile and desktop devices. We noted that the service is still not supported on certain devices.

- However, we have not factored in the increased competition into our media stock valuations until there is further clarity of take-up rate for iFlix services. Our view is that in the short-to-medium term, IPTV mobile VOD service will remain a complementary product that is consumed alongside other traditional media.

- In addition, the iFlix IPTV VOD model is slightly different as it focuses on sitcoms and older movies, while Astro and Media Prima provide current content and focus on a wider holistic package suited for families, including live content. Nevertheless, it still competes for media consumers’ eyeballs and time.

- Another critical factor is whether iFlix is able to achieve scalability quickly enough to remain sustainable in the mediumto- long term. iFlix, like other Internet startups, operates on a loss-making model in its initial stages to gain market share and hence will require large capital injections in the near future. CEO Mark Britt mentioned that they are already looking to raise a second round of capital soon. Recall that the initial capital raised for iFlix was USD30mil.

- Potential catalyst: If iFlix secures an attractive telco partnership to package/sell its products, it may be a boon for the take-up rate of its services given the improved visibility and access to a wider group of consumers.

Source: AmeSecurities Research - 26 Jun 2015