The owner of Afro Stream Inc., Tonje Bankang has explained in details the reason he had to shut down his Video On Demand service startups he launched about 2 years ago in elaboratory details. First of all, he wrote the epistle this epistle that everyone who wishes to start something like a streaming service in Africa should read before jumping his whole fish into the idea. Without wasting time, we at
Without wasting time, we at TechProducts will like to state that this article was originallywritten in French and it was converted to Nigeria official language by TechPoint.ng team. Here we wish everyone will learn.
So start we will like to state the major encountered by Tonje Bankang was the long legal procedure he has to face as he had to go into a binding agreement with the almighty Hollywood owner of the major copywrites.
Dear subscribers, partners, entrepreneurs and friends,
On September 13, 2017, two years almost to the day after the launch of the Afrostream video-on-demand service , we stopped the marketing of subscriptions. The service closes definitively in France, the United Kingdom Belgium, Luxembourg, Switzerland and in 24 African countries including Benin, Burkina Faso, Cameroon, Congo, Gabon, Guinea-Bissau, Senegal and Togo. Thanks to the thousands of subscribers who have trusted us and the hundreds of thousands of fans who have followed us on social networks.
Entrepreneurship is a piecemeal game, you just have to miss one so everything stops.
This is the end of a great entrepreneurial adventure begun in November 2013, almost four years ago. The closing of a company is always a shock for an entrepreneur but it is also an experience and lessons that will be a precious capital for other projects as well as a reserve of knowledge and best practices that I will be delighted to share with other entrepreneurs.
I have led Afrostream so far but it is possible to go even further.
Many people live the announcement of this closure with sadness. Some are already speculating on the reasons that led us to this premature end. I would like to share with you a first step back on the birth, growth and then closure of Afrostream in France.
A UFO in the audiovisual landscape
Afrostream is born from a simple observation, the African, Afro-Caribbean and Afro-American films and series deserve to have wider dissemination. A public in search of representation or discoveries does not always have easy and legal access to these aspirational contents . The solution we have provided is a legal subscription streaming service offering more than 2000 hours of content available on computers, phones, tablets and since the summer of 2016 on the boxes of more than 12 million homes in France, offers Bouygues Telecom and the Orange TV .
An impossible mission
Launching a digital media requiring the legal acquisition of film and series rights from major Hollywood studios, American chains and more than 100 African producers seemed to be an impossible task when starting a project alone. The fact that Afrostream could have existed is almost a small miracle in the media industry in Europe and particularly in France.
To realize this vision, I began by surrounding myself with a talented team. A team specialized in the media, whose members went through M6, the Lagardère Group and Molotov. I was accompanied and trained in the ecosystem of startups with TheFamily and their training Koudetat and Koudetat fundraising , I benefited from the training to Entrepreneurship of Cantillon and the start-up incubator Orange Fab .
At the time, on the Facebook page of Afrostream , the 50,000 fans who were following the genesis of the project imagined that Afrostream was already a big company with strong kidneys when we were only 2 people, my co-founder and I -even.
The enthusiasm of the fans on the social networks for the arrival of Afrostream was one of my main arguments to persuade the holders of the rights of films and series to begin negotiations on the purchase of licenses to broadcast their content.
The partnership with TF1
In spite of my limited personal resources (I had abandoned all other professional activities to devote myself solely to Afrostream) I invested massively on social networks to promote the concept to potential customers. This strategy was validated when the TF1 team contacted us to create a partnership between MYTF1VOD , their video-on-demand platform and Afrostream which was at that time only a Facebook page and a homepage on the Web. This partnership gave birth to Afrostream VOD , a selection of Afro films broadcast for the first time via the largest European media.
Thanks to a new notoriety generated by this strategic alliance and after financing the birth of Afrostream on my own funds it was time to meet investors and raise funds.
The Art of Fundraising: Episode 1
The founders of the private startup support structure in Europe, TheFamily , Alice Zagury , Osama Ammar and Nicolas Colin were the first supporters of the startup ecosystem to believe in Afrostream’s potential. Thanks to their training and accompanying program, I was able to mount the necessary file to seduce the VCs. Oussama Ammarput me in touch with about thirty fund managers in Paris and London. Despite courteous interviews, none of my investor interlocutors really understood the problem that Afrostream wanted to solve. At the time, they were also not convinced that Africa could be a continent of opportunity for a paying media. This first road show was a bitter failure. I found myself facing a wall that could have led me to throw in the towel.
Why raise funds instead of remaining independent?
Many internet users do not understand that to broadcast movies and series on a video-on-demand service, Afrostream must pay fees. Often our fans consider that the content is free since it is also on illegal streaming sites that monetize their piracy through advertising . It is the illegal nature of these websites that allows them to have a large catalog that they make available to free surfers.
For a legal offer like ours, we had to be able to pay between 1000 € and 15 000 € per episode for a series and between 2000 and 50 000 € for a film, only for one year of exploitation and on a list of well-defined territory. The amount of duty depends on several factors; notoriety of the program, notoriety of the casting, quality of the production, availability of a French version, exclusivity, piracy of the programme.
Get your calculators
Take the example of a series of 2 seasons of 10 episodes per season at 1000 € episode per year. For this price it is an independent series, often confidential, without dubbing and subtitle available in French.
- 2 seasons x 10 episodes x 1000 € per episode = 20 000 €.
To create the French subtitles of an episode in English it is necessary to add 500 € per episode or 10 000 €. We are thus at 30 000 € for 1 independent series without great notoriety which will be available on Afrostream. To promote this program, we have to create new trailers with the Afrostream graphic charter, create visuals and invest in online advertising ( Facebook Ads, Mailchimp , media partners …) and create events . The marketing budget for an independent series like this one is at least 10 000 €.
We are therefore at € 40,000 for one year of operation of an independent series of 2 seasons.
«Go big or go home»
But a series is not enough to create a sufficient supply for a subscriber. How many sets does it take? 10 series? On the basis of my example this represents a budget of 400 000 € for one year. 30 series? € 1,200,000 for one year of operation. Keep in mind that in my example I used the price per episode the cheapest.
For films it is obviously the same mechanics.
Let us take the example of an African-American independent or African Nigerian film ( Nollywood ) at € 3,000 per year of exploitation. For this award it is a film released 2 or 3 years ago, without renown in French-speaking countries, without dubbing and subtitles available in French.
To create the French subtitles of a feature film in English + Nigerian local languages, add 1000 €. We are therefore at 4 000 € for a film without much notoriety. To promote this film we must add a marketing budget of a minimum of 10 000 €.
We are therefore at 14 000 € for a year of exploitation of an African-American independent or African film Nigerian released 2 years ago.
How much film does it take to make up an interesting catalog? 50 movies? On the basis of my example this represents a budget of 700 000 € for one year. 100 movies? € 1,400,000 for one year of operation. Here too I used the cheapest movie price.
You can not go into a gladiator’s arena with a straw sword
So for 30 independent series of 2 season and 100 independent African or Nigerian African films with subtitles in French, you need a budget of € 2,100,000 for one year of operation.
A service like Netflix has nearly 3000 movies and series ( source) but despite this figure, many subscribers find that the choice of content is limited. So imagine their reaction to a service with only 30 series and 100 films …
To amortize the cost of these 30 series and 100 films (€ 2,100,000 per year), it takes about 25,000 subscribers paying a subscription to € 7 per month for 12 months without interruption.
The budget for content does not include budget to develop the streaming platform, server costs, application development for smartphones, tablet and box of phone operators. It is worth 500 000 €. It also includes operating costs, team salaries, consultant invoices, lawyers, offices, travel abroad, marketing of the offer. In total, this amounts to approximately € 1,000,000 per year.
In this minimal scenario, for the year of launch of the streaming service of Afrostream the need for funding for the content + technology and operating costs, amounts to 3,600,000 €. To depreciate this budget, approximately 44,000 subscribers are required to pay a subscription of € 7 per month for 12 months without interruption.
In May 2015, it was not possible for me to raise € 3,600,000 with a crowdfunding campaign among our 60,000 Facebook fans! Faced with these colossal figures and the refusal of European investors to follow me, the project was at an impasse.
The American Dream: Welcome to the Silicon Valley
Our salvation will come from the United States, precisely from Silicon Valley to Y Combinator .
In June 2015, we are fortunate to be selected by the most prestigious startup accelerator in the world. This selection allows us to receive funding of $ 120,000 and support for the development of our company for four months in San Francisco. At the end of this program, we would present our progress and ambitions to more than 400 investors on a day of Demo Dayto try to raise the necessary funds to launch our service.
The $ 120,000 investment from Y Combinator was a huge amount for me, even though that amount still did not allow me to launch my streaming service.
Let us put that $ 120,000 back into context.
Get your calculators out
- Housing in Silicon Valley, one of the US regions with the highest rents: 4 months x $ 5,000 rent for a 3 rooms = $ 20,000
- Flights A / R + computers + transport and food for 4 people for 4 months = $ 10,000.
So there are $ 90,000 left to finance our € 2,100,000 in content, our € 500,000 technical platform and the € 1,000,000 in fees for the first year … Mission impossible I told you.
The Art of Fundraising: Episode 2
What progress could we make in four months to impress Silicon Valley investors? Start the service? Impossible ! We obviously could not afford it. Again, this is the impasse.
On the advice of Michael Seibel , partnerat Y Combinator, we are launching a pre-subscription campaign to Afrostream for our Facebook fans. The idea was simple, to prove to potential investors that we were addressing a public willing to pay for a service designed to meet a need they had expressed. We therefore proposed to subscribe in advance to an annual subscription to benefit from 40% reduction and access to the service one month before the others. The formula offered was 39.99 € for 1 year of movies and series. We offer these presales to our 60,000 fans and after 3 months we sell 2000 annual subscriptions. It’s less than 4% of our fan base but significant enough to prove our target’s commitment. And I want to thank again those first subscribers without whom nothing would have been possible!
Following our presentation to investors , I managed to raise a total of about $ 4,000,000 to develop Afrostream for 2 years.
For those who skipped the previous paragraphs $ 4,000,000 may seem like a colossal sum to spend in 2 years. It’s nothing when it comes to a media.
The comparison with the Netflix giant
To put this figure in context compare it to what Netflix to spend for its launch in France the 1st year ( source ):
- Approximately € 33 million for marketing
- € 900,000 for the salaries of the 6 employees
Neither film and series rights nor IT development costs are included in the expenses of the Netflix subsidiary in France.
At the end of December 2015, Netflix France had about 500,000 paying subscribers in France. This means that, excluding cost of content and technical cost, Netflix France spent 66 € to recruit each subscriber. I repeat this does not integrate the billions of dollars that Netflix devotes to content and its technology.
At € 66 acquisition cost, Afrostream would need a marketing budget of € 2,904,000 to recruit 44,000 subscribers … That is almost one third of the $ 4,000,000 raised. When I tell you that 4,000,000 is not much in the end!
The Trojan Horse
Shortly after the launch of our offer on September 1, 2015, despite the shortcomings of the service (bugs, catalog size, subtitles problems) we met a strong increase in subscriptions. What was only a project became a service to which thousands of people subscribed. I was so committed to creating a strong branding around the brand that most subscribers were expecting an impeccable quality of service comparable to that of Netflix.
No one knew our biggest secret … The one that I was both ashamed of and I was also proud of … While we had thousands of subscribers, Afrostream’s permanent team consisted of only four people ! Three engineers, responsible for creating and maintaining the technology, and I, responsible for business development,
Soon we signed strategic partnerships with major American studios ( Sony Pictures , Warner Bros , Viacom , Lionsgate , Disney ), with African channels like the RTI in Côte d’Ivoire and the BET channel for a distribution of their contents live and replay.
The end of the beginnings
In April 2016, eight months after our launch we crossed the 10,000 subscriber mark . An impressive figure given our reduced marketing budget. So it was time for me to go back on my fundraiser cap and convince our first investors to reinvest and help us convince others.
Then the beginning of the end
After setting up a new business plan to increase our financing needs to: increase subscriber base in France, invest in original content and finance expansion in 24 African countries . For this ambitious plan we needed $ 10 million for three years. While I thought Afrostream’s growth would be enough for investors, most of them criticized us for not being profitable before soliciting them for a new fundraiser. It is true that startups are recommended to be in balance, ” break even “, or profitable when they undertake their 2nd fundraising.
It was at this point that I realized that contrary to what I thought Afrostream was not a startup but a medium with financing needs related to the audiovisual industry.
In our industry, it is quite normal not to be profitable in the first years.
On the road again
Despite the reluctance of some of our historical investors, I went back to Paris, Geneva, Milan, London, New York, Los Angeles, San Francisco, Abidjan, Lagos and Johannesburg to convince new investors to finance us our growth.
When the success of your offer becomes your weakness
Because even if it sounds counterintuitive, the more subscribers we needed the more funding for the content. We found that the most loyal subscribers viewed most of the titles that interested them in three months. In order to preserve them, we had to constantly highlight our catalog and buy new content. In addition, 2000 subscribers and 10,000 subscribers with the same catalog size are not satisfied. The more subscribers we had, the greater the range of subscribers’ tastes. Simply put, when you decide to go to the cinema with four friends the choice of the film is a little more difficult than when you go to two because the tastes differ.
When you have empty pockets, it is better to wear a beautiful suit!
In the summer of 2016, still on the road, far from my team, trying to raise funds, I decided to recruit talent to better structure our sales and marketing force.
Faced with the impossibility of financing the purchase of new content my strategy was to better highlight the richness of our catalog and better market our offer through a distribution in box Orange and Bouygues, selling subscription cards prepaid in 20,000 bricks in France, on e-commerce sites, and to offer payment in CFA francs in certain African countries.
Innovate or die
We innovate by launching Afrostream Life , a portal of free articles dedicated to pop culture Afro. Shortly after we produced and broadcast our first original program, a podcast: The Tchip . A talkshow offering an unprecedented point of view on the news.
These two projects aimed to familiarize a broad audience with the universe and values of Afrostream. The Tchip is an immediate success as Afrostream Life struggles to develop because with a small team, this ambitious project had no driver to carry it out.
In November 2016, more than a year after our launch, advanced discussions with two investors leave me thinking that we were coming out of the tunnel. After the end-of-year celebrations, while the negotiations around the fundraising trample I decide to go abroad again to convince the last hesitant investor. On March 17, after some false hopes, the bad news falls. One of the investors changed his mind at the last minute, he withdrew. There will be no more investment in Afrostream.
This event marked the clinical death of a growing project, a project for which the team was fighting relentlessly, a project with a real social and cultural impact, a project to which I devoted four years of my life.
Get ” saved ” or Die Tryin ‘
For our subscribers, for all those who believed in the good of Afrostream’s mission and for those who were inspired by my entrepreneurial journey and who believed in me, I had to not give up so easily and any attempt to save Afrostream.
While we no longer had the means to buy content, the more the means to carry out marketing actions in a burst of energy and motivation I decided to launch a light version of Afrostream in the United Kingdom. Indeed I had acquired the rights of exploitation of a part of our catalog for this country. This quick launch creates a buzz around Afrostream which allows me to approach more serenely competitors and partners for the sale of Afrostream. I wanted at all costs to avoid the closing of the service leaving to join a large group and lose a bit of my independence and that of my team. Because the scope of a project like Afrostream exceeds my desiderata of founder and entrepreneur.
On the road again and again
Between April and August 2017, I began discussions with more than 10 potential buyers, I moved to Los Angeles, Miami and New York to convince them to move forward quickly because I know that our cash flow would not allow us to pass the ” summer. Even though they are passionate about Afrostream, the team, now eight, need their salary at the end of the month. With the expiration of certain broadcasting rights and without marketing the amount of revenue related to monthly subscriptions drops quickly.
End of August, I can not afford to pay any wages … It’s time to hang up the gloves.
The closure of the service
I would have liked to take my project higher, farther but it does not work forever as expected. So I accuse the blow, I paused … To restart better!
As the discussions with the American buyers were unsuccessful, I decided to suspend the activities of the French subsidiary, Afrostream Studio France, and to market the offer in France, Belgium, Luxembourg, Switzerland and in 24 countries African.
The Afrostream brand and the developed technology remain the property of the American company Afrostream Inc, the parent company of the French subsidiary, a sale is still conceivable for some time.
A gold team
Afrostream was and remains a formidable human and entrepreneurial adventure.
My team and I have proven that we can not limit our expertise to an Afro cultural theme or to the African market. We created a digital media in France, created a paying content offering for thousands of rather urban subscribers, aged 20 to 40 years. We have created a brand with a strong reputation among a community of fans sharing a common interest. In Europe, we have created value around content that the French audiovisual industry often considers unusable. What the Afrostream team did in a short time is a small miracle that is not due to chance but to the audacity and experience of a team of media experts. There is no doubt that each and every one of them will quickly find opportunities to highlight their talent and express their creativity.
My future ?
It is not because I am not a millionaire that I have lost … I have become rich with an invaluable experience.
As for me, I am more than ever convinced that there is a growing space for innovation, experimentation and disruption in the media, especially in the production of original fiction. So I’m going to continue to create value in this creative industry where I started working at age 16.
Hundreds of project leaders, inspired by my career, see me as a mentor. I am passionate about their passion for entrepreneurship and innovation.
I also want to share in more detail the lessons of my many entrepreneurial experiences with those who want to get started. My international network of entrepreneurs, investors and influencers is a capital that I will share with an ecosystem of startups that have supported me so much.