Generation Start-up: Starzplay doesn't see Apple, Disney or Netflix as threats - for now

The streaming service co-founders started out with just a PowerPoint presentation and an Excel spreadsheet​​​​​​​​​​​​​​​​​​​​​

DUBAI, UNITED ARAB EMIRATES - April 17 2019.

CCO and co-founder of Starzplay, Danny Bates at Dubai Studio City.

(Photo by Reem Mohammed/The National)

Reporter: Jennifer Gnana
Section: BZ
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PROFILE OF STARZPLAY

Date started: 2014

Founders: Maaz Sheikh, Danny Bates

Based: Dubai, UAE

Sector: Entertainment/Streaming Video On Demand

Number of employees: 125

Investors/Investment amount: $125 million. Major investors include Starz/Lionsgate, State Street, SEQ and Delta Partners

A binge once had a negative connotation: secretive, shameful, and gluttonous. However, these days, it seems everyone freely admits to the act – binge watching, that is.

While Apple and Disney only recently announced plans to make video-on-demand streaming available to customers, the founders of Starzplay were in early on the act, beating Netflix to the Middle East in offering streaming services to paying customers.

Co-founders Maaz Sheikh and Danny Bates met while working for OSN in Dubai, one of the largest satellite cable providers in the region, where, around 2014, they realised a gap in the local market for watching shows and movies.

The world's a big place to launch a service. It's not a winner-takes-all type of market.

Customers were shelling out Dh300 a month for a cable package with OSN; paying nothing for an advertising-heavy experience with free-to-air satellite broadcaster MBC; or were guiltily watching Friends reruns or new Sherlock episodes by pirating content illegally online. And many were doing a combination of all three.

Meanwhile, around this time, Netflix had surpassed 50 million viewers in 40 countries, according to market research company Nielson, and the streaming service and its main competitor Amazon Prime were competing for Emmys and Golden Globe awards for their original shows like Netflix's House of Cards and Amazon's Transparent.

“We had many ideas,” Danny Bates, co-founder and chief commercial officer of Starzplay says with a laugh, recalling his efforts with Mr Sheikh to come up with a viable start-up that would allow them to jump ship from OSN and get on track to entrepreneurship.

While they considered credit referencing or price comparison sites – similar to Experian or Souqalmal – they ultimately decided to go with the business they knew best: entertainment.

There was one thing the co-founders were sure of: “People love Hollywood,” Mr Bates says. The duo decided to start the Middle East's first streaming video-on-demand service.

The numbers back up their decision. By 2023, the video streaming technology market is forecast to surpass $1 billion (Dh3.67bn), on the momentum of rising numbers of smart devices and internet across the Middle East and Africa, according to Research and Markets, while developments in broadband and telecom infrastructure are also expected to further fuel growth in video streaming.

Established in Dubai in 2014, Starzplay now has over 1 million subscribers from the region and Pakistan, where it opened an office in Lahore at the end of last year. In the UAE, it counts 300,000 paying customers and inked deals with Android TV, Samsung and Sony PlayStation to have its app pre-downloaded on smart TVs and gaming consoles shipped in the Middle East and North Africa.

Telecoms Etisalat, du, Orange, Viva, Ooredoo, STC and Maroc Telcom have all added Starzplay to their offerings, so customers can pay for their streaming subscription as part of their monthly mobile bill.

The business has secured $125 million in three rounds of funding, with major investors including US entertainment studio Starz/Lionsgate, State Street Global Advisors, and SEQ Investors, Delta Partners and the founders themselves investing.

Part of its Starz/Lionsgate partnership is licensing to stream Starz Original content such as Outlander, Spartacus and The White Queen. Its other partnerships include Warner Bros, 20th Century Fox, CBS, Disney, Paramount, Nickelodeon, Showtime and Sony. Arabic content producer partnerships include Sadaf Distribution, BLink and Eagle Films.

But before they raised any money or set up big-name partnerships, the co-founders were armed with a single PowerPoint presentation and an Excel spreadsheet that mapped out their business plan when they, through a mutual friend, met the man who built HBO Nordic, Peter Eckeland, who introduced the American TV juggernaut to streaming customers in Denmark, Finland, Iceland, Norway and Sweden.

It just so happened that Mr Eckeland was looking for his next opportunity.

Mr Eckeland brought with him deep technical expertise and a small senior staff for programming, finance and technology. Then he introduced the fledgling team to the chief executive and president of Starz, Chris Albrecht, who had previously run HBO when Sex & the City, The Sopranos and The Wire cemented the premium cable channel as the market leader in making good TV.

Starz at the time had no distribution to customers outside of the United States and was keen to tap into the Middle East market.

With Starz involved, State Street Global Advisers committed $40m on the condition that the start-up cleared three hurdles: gaining content licensing, having a working technology platform and adhering to Mena’s legal frameworks for starting a content distribution business.

In early 2015, with those pieces in place and a team of 50, Starzplay introduced its service in the Middle East.

The first six months were tough – the team had underestimated how few people were comfortable paying for anything online with a credit card and their digital marketing efforts were not driving enough growth or providing much insight on their audience.

But they reacted quickly and brought on an executive from Booking.com in Europe to build a digital marketing agency within the company. From there, they kept learning from what worked and what didn’t – and they kept improving their service.

Within two years, Netflix officially came to the Middle East. Mr Bates recalls this as a boon for the company, because it quickly got a large segment of home viewers comfortable with the idea of a subscription-based streaming service.

“The world’s a big place to launch a service,” Mr Bates says. “It’s not a winner takes all type of market.”

These days, Starzplay is eyeing expansion in Africa and mulling the prospect of producing its own original content.

Making shows and movies is “always in the back of your mind, always possible”, Mr Bates says, pointing out the company’s strategic partnership with Starz, which was bought by film production and distribution studio Lionsgate for $4.4 billion in 2016.

Mr Bates also sees the spectre of new streaming options like Disney, with Disney+ and Apple’s Apple TV+, as opportunities. Disney has an agreement with Starzplay so it is “not anytime soon that Disney won’t be part of Starzplay”, Mr Bates says.

As for Apple, he hopes they can work together. “We’re excited to see them expand their service and maybe there’s collaboration there”.

As for Starzplay’s own ambitions, Mr Bates says, “the key will be finding great stories” – and he’s already looking.

Q&A: Danny Bates, co-founder and chief commercial officer of Starzplay

What is the biggest challenge for entrepreneurs in the Middle East?

The monetisation of ideas that are great on paper remains the biggest challenge in my opinion.  It’s relatively easy to come up with a workable idea, however commercialising it successfully needs a huge amount of effort and luck.

What surprises you most about the UAE’s TV or movie viewing preferences?

We have observed that around 18 per cent of our subscriber base in UAE loves to 're-binge'. Re-binging of comedy content is a prevalent trend that we have observed. On Starzplay, the most re-binged series are The Big Bang Theory, Friends and How I Met your Mother.

What already successful start-up do you wish you had started?

I love the media space as it is an industry that I am extremely passionate about. The opportunity to start a business within this field in an exciting market like Mena has been a great experience for me. While I admire many other start-ups, I think that the experience of being part of the co-founding team at Starzplay is something I wouldn’t trade for anything else.

What is the next milestone or goal you’d like to reach with Starzplay?

Starzplay is already a leading brand in Mena, however we are still far from being a household name when it comes to entertainment in the region. The next milestone we are pursuing is for Starzplay to become part of the TV culture in our region.

PROFILE OF STARZPLAY

Date started: 2014

Founders: Maaz Sheikh, Danny Bates

Based: Dubai, UAE

Sector: Entertainment/Streaming Video On Demand

Number of employees: 125

Investors/Investment amount: $125 million. Major investors include Starz/Lionsgate, State Street, SEQ and Delta Partners