Afrostream is shutting down
okayafrica.comI've always wondered whether VOD is an inherently unsustainable business model. The big daddy in the space charges $8-12 per month yet people regularly watch upwards of 10 movies per month on the service. That's less than $1 per movie?! Also, this forces anyone doing a similar business to charge even less than that to break into the market, so there reaches a point where we're talking fractions of pennies per movie on some services. How is any of this sustainable given the massive cost of acquiring the content in the first place, and is there any VOD service with healthy profits that you can point me to?
Once you've acquired the content, the marginal cost of a view is very low. So it makes sense to get as many customers as possible even if that means charging a lot less per view. And the stability of subscription income is nice too. I'm sure there are lots of people who have a $10/mo subscription going for years who hardly use the service at all.
I haven't seen any data for video content, but I imagine some content is pay $$$ to steam to as many users for a limited time, but much of it is probably pay $$$ to be able to stream it, plus $ each time it is streamed. And I imagine some deals are based on a share of revenue. I wouldn't be surprised if content was significantly more expensive than bandwidth.
It's expensive to do VOD right, because videos are such huge pieces of data. Plus, the "user experience bar" that Netflix, Hulu, and YouTube have set are pretty high and actually require a fair bit of engineering. There's no "15 minute blog demo" for VOD. The last company I worked for started out in that space, but had to pivot to doing linear television because the market just wasn't there. They built some of the same infrastructure that cable companies now use to do their on-demand services.
The only VOD services with healthy profits are actually content creators themselves. All of the services I just mentioned in the other paragraph have their own original content, and at least Hulu & Netflix are pretty successful at that. This original content keeps people on their service, generating more ad revenue, which is how they make money. Basically, if you're a major studio and have billions of dollars to throw away, VOD is pretty easy ;-)
Source: I worked for a failing VOD/broadcast video company for a couple years.
what is the kind of infrastructure that needs to be built ? Very curious to know what are the big tech challenges if someone wants to build a VOD startup in a niche.
How did Viki make it ?
Here are some tech challenges, this is strictly my opinion and shouldn’t be read too deeply, just a casual observation during lunch.
My background is (as a hobby) I’ve built medium-sized >700m PV/m esports analytics apps targetted for Asia, covering CN/most of SEA, and have had to get local connectivity and local hosting as an "outsider"
These countries are fairly insular.
China: GFW (we all know about this), ICP license, network pricing (China Telecom, Unicom, CN2, etc) for international traffic. It’s extremely difficult or impossible to serve Chinese customers from outside of China, especially if you need stable high bandwidth transport (and STUPIDLY EXPENSIVE). Almost all network peering ports in Los Angeles for CN/CU are oversubscribed to death, and CN2 traffic is disgustingly expensive internationally. It’s generally not possible to do anything at all without a “local partnership” type arrangement.
Korea: GFW (Korean censorship is heavy and extreme; there is really no other way putting this, people think SK is very “western”, it is not even close)[0]. You might see news about how Korea has fastest home internet - Korean connectivity is crap as soon as it leaves the country; the country is effectively a LAN, hosting outside of Korea is awful to inside, not possible to compete like that when all your assets are outside the country, and getting hosting is a bitch, and cost is hilarious.
Korea has KYC/“real name verification” laws like China, things like needing to get KSSN via a credit bureau via iPIN/mobile phone verification (since mobile phones also require KSSN to get; and <18s mobile phones are keylogged anyway) collected at registration if you want to do anything social for the most part.
The smaller countries in SEA tended to be a "if you don't speak the language, if you aren't from here, then fuck you, enjoy your highway robbery" to me. I paid bribes or else hardware would "go missing" or things "were impossible to do unfortunately", I paid prices significantly higher than any domestic purchasers would, the companies that had English sites you could literally see the prices have an extra decimal place just switching between the two versions.
I had to do a bunch of logic wrt balancing traffic. I had a server that had multiple physical NICs, each connecting to a different ISP. They don't necessarily like each other, so if I served a PLDT end-user from a Globe connection instead of PLDT, traffic may get forced intentionally through another country. There are incumbent ISPs that control a majority and charge far more that intentionally refuse to peer with any other ISP, and force domestic traffic out of the country to punish those users for not using them.
My site showed user profiles, which obviously includes their usernames. I had physical hardware shut down and removed by police in Thailand because someone had a username mocking the royalty there.
edit: I forgot my [0] - https://www.eff.org/deeplinks/2011/08/south-korea-only-thing... - the person involved is actually on the censorship board
I feel ya. You have no idea how much I've paid in bribes to do even basic things in Thailand.
And a company I used to work for frequently had the same problem with Mexico. Traveling two and from on business led to frequent searches and impounding of very expensive equipment unless a bribe was paid. We started writing it off as an "airport tax."
This is mind boggling. Thank you for sharing this. I never knew that internet and traffic insularity was a thing outside of China.
Especially because this is such an alien concept in India.
Maybe crunchyroll? https://en.wikipedia.org/wiki/Crunchyroll http://crunchroll.com
I imagine that one could do well if you break into a niche that isn't really represented in other platforms. If you could make an indie VOD you may be able to get content cheaper and then you can market to those who like indie films.
Or old content.
Spotify provides access to a huge back catalogue and although it probably reduces the value of some content it monetises other old content that was basically dead.
Currently Netflix has a tiny library, when you take into account 50 years of film ripe for rediscovery.
Anyone know what the blocker is?
The blockers are that old content that people are willing to pay for is more expensive than you think (tons of competition right now), and that rights management is incredibly expensive and Byzantine even for the big companies. To take the simplest example, what do you do when an attractive property is owned by a company that went out of business, or that can't be reached? And that's just the easiest scenario.
I've never heard of this product but it's sad to see it not work out. There is a huge gap when it comes to black media representation in the United States specifically and I believe it will be a huge opportunity to whoever can tap into it's potential. Black millennials in particular are such a driver of culture in America it's surprising to see how little they are catered to in terms of product. Especially in regards to social media, the impact of Black Twitter is well documented. Also, for anyone who used Vine it seemed like Black creators were really the base of the content that Vine was known for.
Yes agreed. I'd also argue that black millennials (and younger) aren't just drivers of culture, they're also tech early adopters! Vine is a great example, Worldstar is a somewhat notorious example, BlackPlanet... those are just off the top of my head.
> Let’s take the example of an African-American independent or Nigerian film (Nollywood) at € 3,000 per year of use.
What about giving away shares for content? I mean, if Afrostream gave away X% of the shares, in return for the rights to content outside the home country, the cost of content reduces to close to zero, and the money spent on operations and marketing starts to approach 100%.
This is a far less than ideal model, to be sure, but then, the company closing is a lot worse! Shares are worth nothing until there is a liquidation event, so maybe the play is to get the content providers to become shareholders?
I could see a play where content providers that have content worth essentially nothing (unless there is a marketplace for streaming Nollywood in the west I am unaware of {which is indeed extremely possible}) but for which they may be able to grow a market that, over time, has value. That seems like a win-win, or at least a no-lose-no-lose, situation.
Is that not worth pursuing?
As some comments imply it was strength of or "approach to diversity" in the market that caused the failure, it should be noted the post outlined: What caused Afrostream to close is not lack of traction or market demand but lack of capital. The more subscribers gained, the more content thus, more funding required. The VOD industry has high operating costs (content acquisition, marketing, localization, tech, etc) and a longer breakeven timeline (note cited examples of other much bigger but not yet profitable companies including Netflix). Afrostream addressed a sizable but ignored niche with demand demonstrated in user growth and it is unfortunate that they couldn't get more funding.
> "Diversity is a business opportunity"
No it's not, few people care about what skin colour the characters in a work of entertainment have, unless it is fundamental to the plot or an aspect of the source material. At very least, they do not care enough to self-segregate and bear separately the cost of producing an entirely different set of works of entertainment which are of competitive quality.
No untainted mind watches Game of Thrones and thinks "You know, it's weird that this fiction styled after old Europe is full of white people.". Nobody watches Narcos and thinks "You know, it's weird that this fiction set in Colombia is full of Mestizos and white latins". Nobody watches Big Brother Africa and thinks "You know, it's weird that this reality game show set in sub-Saharan Africa is full of sub-Saharan Africans".
> No it's not, few people care about what skin colour the characters in a work of entertainment have, unless it is fundamental to the plot or an aspect of the source material. At very least, they do not care enough to self-segregate and bear separately the cost of producing an entirely different set of works of entertainment which are of competitive quality.
Do you have any evidence to support this ridiculous claim? Two of the largest movies of the year (Get Out and Girls Trip) are predominantly black produced. The issue is getting Hollywood to fund such ventures, not demand for them.
> No untainted mind watches Game of Thrones and thinks "You know, it's weird that this fiction styled after old Europe is full of white people.".
Actually, people do say this. It's a completely fictional universe, and even if it wasn't written into the source material, the show creators could have made an effort to ensure that it wasn't so eurocentric, at least by casting. No such luck. The main representations of people of color that I remember—the sand vipers—were hands down the worst part of the entire show so far. You think people don't notice this shit? What kind of bubble do you live in? People care that they see people who look and talk like them on TV. Everyone else in game of thrones speaks with out of place ethnic accents; way to screw over everyone but the danes and the brits.
Finally, I'd just like to point out that diversity increases the strength of TV shows. If you watch Friends, it's like they were living in this tiny bubble that only existed in NYC coffee shops. Their world is nearly unrecognizable to me despite having lived in the same city about the same age. Had they had any diversity on the show, maybe it would stand the test of time better. Now it just looks dated and white as fuck—way whiter than you'll ever find in NYC.
> Do you have any evidence to support this ridiculous claim? Two of the largest movies of the year (Get Out and Girls Trip) are predominantly black produced.
It's a bit silly to say that Get Out was successful because it was "black produced"; it was clearly well written and produced, it stands on its own merits.
> Had they had any diversity on the show, maybe it would stand the test of time better. Now it just looks dated and white as fuck—way whiter than you'll ever find in NYC.
Who cares? I live in Toronto, and my Panjabi, Mumbaikar, and southeast Chinese flatmates are thoroughly entertained when they put on Friends.
They're of clear mind, so they're not thinking "what's with all these white people?", they're thinking "LoL, that definitely wouldn't cure a hangover, so it's funny that they depict it as doing so; LoL, Joey is factually oblivious but really has his finger to the pulse when it comes to people, how charming!".
When I watch a Japanese or Korean drama with a friend, or a Hindi movie with my flatmates, I'm not thinking "what's with all these coloureds on my TV?".
> The main representations of people of color that I remember—the sand vipers—were hands down the worst part of the entire show so far.
Your comment is quite funny since Dorne is inspired by Spain :)
>Do you have any evidence to support this ridiculous claim? Two of the largest movies of the year (Get Out and Girls Trip) are predominantly black produced. The issue is getting Hollywood to fund such ventures, not demand for them.
Do you have any proof he's wrong? I can't say I've ever given two thoughts to the race of the producer/writer/director of movies I've enjoyed. I assume there's a laundry list of independent blockbusters that simply didn't make it in mainstream hollywood due to the race of their producers that you can point to.
>Actually, people do say this.
I've literally never heard anyone say this in real life. Once.
> No it's not, few people care about what skin colour the characters in a work of entertainment have, unless it is fundamental to the plot or an aspect of the source material.
I guess I'm one of the few, but I actively look for diversity in my entertainment. I'm not looking for diversity within a particular show, I'm looking for stories about other cultures, and entertainment from the perspective of other cultures than my own. So the point about race vs source material is irrelevant.
> At very least, they do not care enough to self-segregate and bear separately the cost of producing an entirely different set of works of entertainment which are of competitive quality.
They who? You are speaking for the Afrostream subscribers who did exactly that?
> Nobody watches Big Brother Africa and thinks "You know, it's weird that this reality game show set in sub-Saharan Africa is full of sub-Saharan Africans".
I think you're constructing a straw man argument here. The issue isn't that specific shows have an odd race balance. The issue is that our media as a whole is lacking stories of Africa and Asia and Latin America, among other places. We lack stories from the perspective of women and old people too. It's getting better, in part due to market demand, but there are still too many new shows being made that are mostly full of young male LA B-actors.
I remember an LA Times story where they compared the top 10 shows black people watched versus ones white people watched, and they were very different (60 Minutes and Friends, not so much). So there might be opportunity in a better-curated VOD service.
Yeah, I just figure having completely separate streaming services and content for separate ethnic groups is probably lower return than the equivalent for different genders; and neither sounds like it would have all that much to offer.
It would also be supremely easy to compete them out of existence for any establish VOD provider, because all they have to do is add some categories or a survey; and put some tags on their content. If they have a lot of customers in a demographic and they know they want stratified content, they can just commission it.