Iraq is a market that still elicits a sense of pity and fear for many, but for those operating in Iraq, the opportunities are endless. The country is home to more than 43 million people, its GDP per capita is $4775, higher than all of the North African countries, bar Libya.
The country boasts a mobile penetration rate of 102 per cent and an internet penetration rate of 75 per cent. Its young population, of which at least 60 per cent are aged below 25, is tech savvy and hungry for tech-enabled services. Its potential has been recognised by the likes of Rocket Internet, which has backed super app Baly and expanded food delivery giant Talabat to the country.
Most of the startups that have launched in Iraq have been concentrated in the e-commerce space, a natural development in nascent ecosystems. As the market continues to develop, new, tech-enabled services are coming to the fore, among them streaming services.
Video streaming services like Shahid and Starzplay are already available in the country, but a local startup is now hoping to dethrone all other players to become the country’s most popular platform. Co-founded by Mohsen Khairaldin Garcia, 1001 was launched just before Ramadan this year and in its first three weeks, it attracted a million users, of which 80 per cent are based in Iraq, and the remainder comprising the diaspora around the world. Its speedy growth is down largely to its founding investor, Al Sharqiya, Iraq’s largest TV network.
While 1001 is a standalone business, it benefits from its licence to offer Al Sharqiya’s full roster of programmes.
“You need a foundation for a streaming platform. We have all of [Al Sharqiya’s] historic archive and IP, all of the popular shows, exclusively on the platform and consolidated on 1001. Last Ramadan, all of the new shows that Al Sharqiya typically produces were officially produced by 1001 and the episodes were first shown on 1001. It pulls the audience from Al Sharqiya to the streaming platform,” says Garcia, adding that all of Al Sharqiya’s new content is now first available on the 1001, ahead of being broadcast on television.
When asked why Al Sharqiya would proceed with such a strategy, Garcia believes it is a “natural and progressive way” to segment its audience.
“People interested in seeing it first are more likely to pick up their phone or device and watch it on demand, those who are happy to watch it on linear TV will watch it on TV anyway,” he says.
It is also another way for Al Sharqiya to monetise a digital ecosystem. Currently, the TV network’s main revenue stream is through adverts.
“Monetisation on a digital platform can be more effective, we will use subscriptions, ads and have a hybrid model,” says Garcia. 1001 has yet to introduce subscriptions and instead has focused on building its user base through free sign ups.
“It’s one reason why we’ve grown so fast, people are attracted to the content, it’s a frictionless environment and we are integrated with all the [telecoms] networks. Now that we have that ecosystem, we are in poll position to start upselling and encouraging people to subscribe rather than put up a paywall straight away,” he says.
In a country where just 20 per cent of the population has a bank account and credit card penetration is negligible, platforms like 1001 rely mostly on direct mobile billing (DMB). The success of any streaming platform in the region depends largely on its relationship with the telcos, who are the main gateway for subscriptions. It is why Lebanon-founded Anghami was able to grow its paid subscriber base in countries with miniscule credit card penetration rates. Speaking to Wamda shortly after going public on the New York Stock Exchange, Anghami co-founder Eddie Maroun described the relationship between telcos and streaming platforms as “instrumental”. By making it easy for users to subscribe to add on services like Anghami or 1001, telcos can increase traction for these over the top players (OTT) while ensuring they are not just “pipes”.
“Sometimes [the Anghami subscription] comes with free data package, and payment flexibilities like paying daily or monthly – all of this helped us to scale up and grow our subscriptions base,” said Maroun.
It is a strategy that 1001 is emulating. The platform has already struck a deal with Korek Telecom, which operates primarily in the Kurdistan Region of Iraq to offer 1001 to its users without eating into their data package.
To encourage greater conversion to paid subscribers, 1001 will also start to create its own content, targeting the Gen Z audience. The platform will host an esports tournament in Baghdad for which it will create a reality TV show around it. It will also engage with local influencers and celebrities.
“The Iraqi market is more mature than what we assumed when we launched,” says Garcia. “The biggest challenge is getting international content partners. We’ve gone through a six to nine month education process and getting them comfortable working with us in Iraq. It is a win-win, we are opening a whole new market for them and we’re helping them ultimately fight back against piracy.”
1001 has brought on board a leading Korean broadcaster to offer its range of Korean drama series to the Iraqi market. Acquiring broadcasting rights for just one country is a lot cheaper than offering it for a region. This is how 1001 aims to compete with the likes of MBC’s Shahid and Netflix, by offering Iraqis a wider variety of shows.
“The way we compete is to be super localised on Iraq. In doing so, we are able to provide something that is distinctly different and be much more efficient with capital spend,” says Garcia. “Shahid and Netflix are spending hundreds of millions on production and licensing, we are doing it with a fraction of the cost, that way we can try and win.”
1001’s main competitor however, is piracy. With little intellectual property rights laws and next to no implementation, Iraq is a free for all when it comes to piracy. In fact the country’s largest internet service provider (ISP) has its own streaming platform with content that it offers without any licences .
“As we grow, as we become one of the main conduits for legally licensed content, we will start pushing more aggressively through regulatory and governmental means to genuinely solve the piracy issue. We will be increasingly vocal about this,” he says.
Moving forward, 1001 is about to launch its Seed round, aiming to raise $15 million.
“We don’t treat this platform as being owned by Al Sharqiya, although it has the same UBO [ultimate beneficiary owner]. In the mid to long-term, if we want this business to win and compete, we need to diversify its shareholding beyond the media group,” says Garcia.
Raising investment as a startup in Iraq is a tiresome affair. The regional VCs are still uncomfortable with entering the market, with most of the fundraises relying on angels in the diaspora.
“None of them [VCs] are committed to Iraq, if they don’t see you try to [enter] Saudi Arabia, they’re not interested,” he says.
Instead, 1001 will target telecoms operators and ISPs and the government-backed media investment funds in the GCC “all of whom are turning their attention to Iraq”. “This is about their ability to win influence in the market and drive a different narrative [in Iraq],” adds Garcia.