When Netflix Met Its Match

In emerging markets where bandwidth is poor and payments are difficult, a new model for streaming video is quickly gaining traction.

Streaming live from Hollywood: while a phrase like this may have turned some curious heads just a few years ago, today it’s celebrated by binge-watchers everywhere.

Streaming services like Amazon, Hulu and Netflix have transformed the way we watch television shows and movies—there’s no doubt anymore that we prefer on-demand entertainment over flipping through channels, as clunky cable boxes become dreadfully obsolete.

Because of easy access to high bandwidth, streaming our favorite shows and makes makes instant gratification so simple across the developed world.

But what about countries where telecommunications infrastructure is still developing—and consumers are just as thirsty for entertainment? The solution is simple for Malaysian-based company Iflix, whose business model is simple: download the videos first, and then watch it anywhere on your mobile phone. Maybe it’s on your long daily commute, your lunch break—or anywhere.

Iflix is tapping into the idea that in emerging markets, the primary device that people use to watch video content is their mobile devices rather than television screens in living rooms. With now more than 5 million subscribers across Asia—primarily in the Southeast Asia region—the company is targeting consumers in areas where bandwidth is often poor but mobile penetration is still high.

And then there’s Tribe, which is also based in Malaysia and making a big push in Southeast Asia. Like Iflix, the company has low monthly fees and, having teamed up with local telecom companies in Indonesia and the Philippines, brings live events to people’s mobiles—like major sports events.

Streaming video titan Netflix has expanded into Asia—and the company has also made some of its content available to download. But Iflix is still reinventing the wheel for emerging economies in the region by not just looking at how to stream for mobile, but also by focusing on non-linear programming.

In layman’s terms, that means Iflix is looking at metrics outside of traditional television ratings. In particular, the company is instead examining which DVDs are pirated the most to determine their top lineups.

What about issues with payments? In Southeast Asia—and many developing economies across the world—credit card penetration is staggeringly low. Consumers mostly prefer to use cash, and this can tend to make automatic payments difficult.

To get around this problem, Iflix pairs up with local telecom companies for payments—adding the subscription fee to the mobile phone bill. Iflix recently expanded to the Middle East and North Africa, and partnered with telecom Zain.

“Most of the population have a pretty low willingness to pay. So we looked at that in Southeast Asia and realized that those aren’t just their problems; those are emerging market problems,” Iflix Head of MENA Nader Sobhan told Variety.

And Iflix’s model has proved so far to be a success—in August, it secured $133 million in funding in an investment round led by Hearst, which also counts media bigwigs Buzzfeed and Vice in its portfolio.

Disney has also just hopped on board Iflix: After recently announcing it will pull its content from Netflix, Disney is now offering up its branded content through Iflix’s streaming service in Southeast Asia.

While Netflix is cornering the market in developed cities and Iflix is edging out competition in emerging markets, there’s still unchartered territory: the sky. And turns out, Netflix already has a leg up on a plan. Starting next year, the streaming service will offer wi-fi for passengers’ mobile devices on certain airlines—incentivizing them to stream their content.

The possibility of accessing streaming services from anywhere—whether it’s on a bus in traffic-choked Jakarta or from the seat of a plane soaring over the ocean—is edging closer.