“Jason Njoku is only trying to distract everyone”: YNaija Investigates the iROKO TV business (Part 1)

One of the easy success stories from Nigeria’s evolving technology space, Jason Njoku can’t stop talking about how successful he has been become. So we dig just a little deeper

by Adegoke Oyeniyi, for YNaija

Jason Njoku
Jason Njoku

The question on the lips of everyone who pays attention to the iROKO TV business – Does the 3-year old business have the capacity to survive MTN, pirates, lawsuits, and the unpredictability of fast-moving technology?

Amongst Nigeria’s now celebrated tech and Internet business founders – including Chika Nwobi, Sim Shagaya, Tayo Oviosu, and Tunde Kehinde – Jason Chukwuma Njoku stands out as perhaps the most prominent, certainly the most controversial and criticised.

Jason, as he is commonly called, is founder of iROKO TV, Nollywood’s largest online distributor. It is a business of which many Nigerians across the globe are proud, but it is only one that has brought bucket loads of negativity.

He has been criticised by Nollywood content owners, criticised by bloggers for being an “asshole” – a Nairaland post crowned him “bully-man” – criticised by video marketers who find him exploitative, accused of a bias towards his gaming company, even criticised for funding (other) start-ups. And there’s yet more.

But if Jason Njoku is a bit fazed by all the negativity, he isn’t betraying an ounce of concern as we have lunch at the upscale French-styled Brazzarrie Restaurant in Lagos’ Four Points by Sheraton, where he has just imperially informed me that the start-up by his long-time friend turned competitor and sworn enemy, Hugo Obi – Maliyo Games – is “fucked.”

This is after the he had eviscerated Obi on his blog thus, “Fuck him”, and for good measure “MALIYO games were really not that great. No one played their games… I hope to crush (him).”

READ: He is “a hustler”: Jason Njoku speaks to Quartz

Obi, in a no holds barred interview with me fired back: “And what about Jason’s company too? He and his business partner Bastian are scared of the long-term viability of the iROKO TV business and revenue model. I believe this explains their rationale for diversifying into other spaces.

“Jason was massively bullish about iROKO TV Plus’ billing model. Knowing Jason’s antics, why is he not discussing data on iROKO TV & iROKO TV Plus? Jason is simply trying to distract everyone from the fact that iROKO is old. Where is the so called IPO?”

His remarks underline a few questions that many technology writers and observers have asked severally – some in genuine concern, some as a gong for a coming funeral – is iROKO TV really as successful as each foreign media article portrays?

Put simply: Is the Nigerian movie Internet distributor making profit or does it truly have the capacity to?

That iroko has fallen before

Serial founder and chief executive of Konga Shopping Company, Sim Shagaya had once tried to put Nigerian content online before Jason did, but the startup, called iNollywood, failed. And Shagaya is a fine entrepreneur. So what makes iROKO TV anymore sustainable?

“YouTube,” Shagaya tells me.

With a $1.65 billion acquisition from Google, YouTube comes with ready made free to use video upload and streaming infrastructure and a global audience. iROKO’s online distribution started off on the video sharing site in October 2010 with a channel called Nollywood Love. Back in 2005, iNollywood did not have such massive IT support as YouTube was non-existent. To host a video-sharing channel as highly viewed as Nollywood Love, Shagaya would have had to spend about a million dollars on server and maintenance cost; a service Nollywood love enjoys for free.

He explained further: “Jason is very smart. He got the distribution rights to home videos. I got the rights to NTA’s content – The Village Headmaster, and all those classics.”

Makes sense.

Nigeria’s home video industry is now a cliché as the second largest in the world in terms of production volume, after India’s Bollywood. It enjoys a cult-like following from not only the most populous black country in the world, but black Africans worldwide. In 2010, McKinsey & Co put the value of the movie industry at $300 million. Currently, it is estimated to be at $500 million, with piracy siphoning over $1 billion, according to experts.

“I don’t know why Sim didn’t get movie rights,” Jason is candid, as always, with me. “They were up for sale. I paid $100 per movie back then but I think being Igbo helped in the negotiations with the Alaba boys.”

According to him, iROKO TV now pays between $10,000 and $25,000 for 3 years’ distribution rights per title.

LOOK: Jason Njoku spoils wife with new Range Rover

When we contracted Alaba-based movie producers, there were reluctant to share information, but an actor turned movie producer disclosed the price “gets that high sometimes”.

The public relations manager of another urban movie producer, who is privy to the rights negotiations – and asked not to be named – explained that the agreed price “depends on the quality of the movie, the producer involved and the negotiation skills of Jason”.

IROKO TV has acquired over 5,000 films of an industry that produces an estimated 2000 movies yearly, attracting 121,217,058 video views on its YouTube channel, as at the time of this writing. According to Jason, for the 2011 financial year, his YouTube channels generated $1.3 million in advertising revenue, from a monthly record of six to eight million views; an average of $108,500 monthly.

In its early days, YouTube generated global traction as users uploaded traffic driving videos, which pulled, in substantial amounts of visitors to the site, earning the video sharing site millions of dollars from placed ads, without any compensation to its content creators. Consequently, in 2007, the site launched a YouTube Partner program which enables owners of highly viewed channels share in YouTube’s revenue from ads in the their uploaded videos.

Show me the money

Tracking earnings generated by these ‘YouTubers’ can be difficult as the partners are contractually forbidden to disclose performance or pay-per-clicks for their cheques.

Item 7 of the YouTube Partners Program Non-Disclosure Agreement reads: “You agree not to disclose Google Confidential Information without Google’s prior written consent. “Google Confidential Information” includes without limitation: (a) all Google software, technology, programming, specifications, materials, guidelines and documentation relating to the Program; (b) click-through rates or other statistics relating to Property performance in the Program provided to You by Google…”

Bastian Gotter, his co-founder, discloses that YouTube pays iROKO TV half of the ad revenue generated on Nollywood Love. “They give us 50% to cover our distribution license cost while they keep 50% to cover their infrastructure cost,” he says.

Meanwhile, it is public knowledge among YouTubers that the video sharing site charges media buyers $25 per 1000 views of InVideo ads.

That gives a reasonable explanation for $100,000 of iROKO TV’s monthly earnings from 8 million monthly views in 2011.

With an additional income stream from the 2012 launch of its subscription-based site, iROKO TV Plus, the digital distributor’s revenue has since grown “significantly past the $1 million mark”, Jason says.

Gotter, who was also iROKO TV’s first investor, says the new site currently has 15,000 to 25,000 subscribers. More than 90% of iROKO TV’s subscribers come from the diaspora, spanning about 200 countries. The 30 million people market is hungry for local content and the online distributor is positioned to meet the demand.

Take the random experience of Morenike Adebambi, who is one of the not-easy-to-find subscribers to the channel in Lagos. She pays $5 (N780) monthly to watch iROKO TV Plus’ movies.

Even with regular buffering due to the country’s poor Internet service, she says the experience is “not so bad”. And then complains that the “iROKO catalogue does not have all the latest releases”.

But that’s not the bad news. Now, she wants to unsubscribe.

Her increasingly tight schedule has eaten up her ‘movie time’. YouTube also presents new Nollywood releases uploaded by unauthorised distributors, and soshe can watch for free when she eventually finds the time. That’s not something you will read in Jason’s latest hagiography in Fast Company.

Piracy is a significant threat to Nollywood and iROKO TV’s business. Bastian laments that the illegal digital distribution of Nollywood movies and the patronage, has an estimated 25% damage on his company’s revenue.

———-

*Read concluding part of this piece HERE

*Follow the writer on Twitter @wellsbaba

 

 

 

Comments (11)

  1. Your statement “iNollywood did not have such massive IT support as YouTube was non-existent” is so very wrong. Pretty sure it existed but had not been acquired by Google.

    Clearly, the partners of Iroko lack business experience, technical expertise and clearly have no vision regarding the direction in which the industry is going. Not factoring the financial abilities of their target audience, factoring losses from piracy, factory the dynamic state of technology, etc in addition to such simple and foreseeable issues such as credit card fraud is a clear indication that the leaders lack vision. Also, paying such exorbitant amount for a 3 year license is bad business investment IMHO. By the time the business starts turning a profit, the license is set to expire or the product has depreciated considerably. Dang! I wonder what their ROI is on these.

  2. {Even with regular buffering due to the country’s poor Internet service, she says the experience is “not so bad”]. These are early days. I believe Jason has some foresight. For now, most of the revenue will come from abroad – due to their fast internet connections. Nigeria is getting there. I remember when we used to see 20kbps as "fast" back in 2006/2007. Now, you see average user speeds of about 400kbps (sometimes it gets up to 1MBps) on Glo and a few other networks. In a few years from now, when you can pay N10,000/month for up 100GB of data, the tables will tilt more in favour of Iroko TV and like services.

  3. My first reaction when I read this was, “why did I read this, there’s nothing new” Taking a closer look, This article isn’t useless at all. This article is for a certain audience. I think if you are in and/or follow the ecosystem closely, you’ll know everything in the article already. It’s an unbiased article for those who don’t follow the ecosystem closely. Good stuff.

  4. You know the truth, by the time the writer was done scribbling this, Jason had made some fortune in revenue from adverts.I wonder how this article managed to make it in website that celebrates youths and their achievements. While Jason and his team are busy growing his fortune,ppl in the same ecosystem as him are busy hating and writing all sorts of trash. Quit hating people.

  5. Whoever wrote this is going somewhere, particularly if they want to stick with business news. Good stuff.

  6. Seriously what is the whole point of this article? Public bashing or what?

  7. Well, let's see how Jason turns the tables. This is business and only the fittest survive. It is always about cash on the table and in the bank – no apologies. If other opportunities present themselves, then he should take advantage – Cassettes are now obsolete, so are Walkmans and Discmans. Nothing is forever. Technology is being disrupted at faster paces that when these innovations were in their hey days.

    I believe the dude is a hard nosed business man who can take hard decisions when need be.

      1. Who beat you, Loy, and why did you come here to cry?

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