Aidi — Introducing: Monthly Reviews

Today I’ll be sharing tidbits of events that have happened globally and within the Nigerian startup ecosystem. Let’s dive into it

1. Will Ads work for Netflix: On 20th April Netflix reported the loss of 200, 000 subscribers and is expected to lose even more in the coming months. Opinions, predictions and solutions were shared by a ton of people. But let’s take a look into the issue; why did Netflix lose subscribers? What are the implications for them and streaming services entirely? Will Ads help boost its subscriber base?

During the pandemic and the lockdown most countries put in place to curtail the spread of the virus, Netflix’s subscriber hit surged. The lockdowns have been lifted and life is gradually returning to normal with offices either returning fully to the office or adopting the hybrid method. This change is said to be one of the reasons why the giant streaming platform is losing subscribers. 

Platform proliferation is also one of Netflix’s big challenges. With HBO Max, Disney+ and Paramount+, it seems like Netflix is in for a long ride. Added to the stiff competition this streaming platform faces, the content war is one that is unending. For example, The license for its most-watched show (Friends) wasn’t renewed and instead, is now streaming on HBO max. Other global streaming platforms are beginning to tow the path of streaming popular originals. This implies that; subscribers might begin to migrate to these other platforms where they can find the content they want instead of sticking with Netflix. 

In addition to this dilemma, Netflix and its competitors are in competition with Local Subscription Video On-demand Services (SVOD) like Blim in Mexico and other regional services in Northern Europe and Asia. 

If you’re wondering why the loss of 200,000 subscribers from a total of 200 million subscribers affected the share price by 35% and is inducing panic across streaming platforms, grab your tea let’s analyze this together.

Because Netflix is distinctively an SVOD platform, they focus just on one thing- subscription television. In their annual report, Netflix recorded that the main source of its revenue came from subscription fees.

Unlike Its competitors who are offshoots or corporate extensions (eg Apple Tv complements Apple’s technology business) and are under no pressure to turn a profit, Netflix has to rely on its subscribers and subscription fees to turn a profit. And so, any little change to their subscriber metrics casts a dark shadow on the future of the business as they have no other means or business source to manage losses. 

Following the recent development, Netflix plans to crack down on password sharing and introduce Ads on its platform. 

Deliberations have been made on this solution but it isn’t yet clear if this will be the answer and solution to its problems.

2. The Equiano cable and Google’s African Development Centre in Kenya: Google in partnership with the West Indian Ocean Cable Company (WIOCC) has announced the launch of Equiano- a submarine internet cable, in Lagos. Named after Olaudah Equiano, this cable has 144 terabytes of capacity and will introduce 20x more power and will last longer than the last one built for the West African Region. This will aid technological efforts in the region, reduce retail data costs, improve broadband penetration and the overall quality of service. So yeah, I guess it will soon be goodbye to lagging networks, outrageous data costs and painfully slow downloads of large files. 

Subsequently, Google opened its first Product Development Centre in Nairobi, Kenya and is currently recruiting for multiple roles. In line with this, Google’s CEO revealed his plans to invest $1billion over the next 5 years in projects that will give fast, reliable and affordable internet across Africa and support the entrepreneurs and small businesses that support Africa’s economy.

Additionally, an AI research centre has been established in Ghana to drive innovation. 

With this move, more employment opportunities will be created for the African tech market. But what does this entail for startups and emerging companies who have to compete with Google for these talents? Will tech companies be able to match the pay gap or will this see a mass exodus of African Tech talent to Kenya? 

3. What we are reading: We are currently reading The prosperity Paradox authored by Clayton Christensen, Efosa Ojomo and Karen Dillon

Economic growth is reliant on entrepreneurship and market-creating innovation. Christensen’s book dives deep into how innovation propels entrepreneurship, what innovation really is, the characteristics of innovative businesses and how to build an innovative business. You can obtain a copy of the book on RovingHeights

4. Opportunities

• VC4A is hosting a venture showcase for Africa (women founder edition). If you are looking to raise between $250k - $10M dollars then apply  here
• Apply for Africa’s Business Heros prize competition (courtesy of the Jack Ma foundation) and get up to$1.5m in funding

Until next time,

Cheers.