What’s Next for Nigerian Production Studio EbonyLife Media?

BRIAN KENNY: “Content is king,” or so Bill Gates told us in a 1996 article on the future of the internet. Well, darned, if he wasn’t right. 25 years hence, some say we are living in the golden age of original content powered by lightning fast networks and increasingly sophisticated delivery platforms. Last year, 25.3 million U.S. households cut the cord on cable services and moved exclusively to streaming content. The global video streaming market size was valued at 50 billion dollars in 2020, leaving traditional TV service providers and content producers scrambling for ways to grab revenue share from established players like Netflix and Hulu. It’s not a business for the faint of heart, just ask Quibi. But there is still room for success for those with the vision and determination to find their place in this very complicated ecosystem. Today on Cold Call, we’ll discuss the case entitled, “EbonyLife Media,” with Professor Andy Wu. I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Presents Network. Andy Wu studies strategies for how tech entrepreneurs organize and mobilize resources to achieve scale for competitive advantage. And he is a repeat guest here on Cold Call. Andy, it’s great to see you and have you back.

ANDY WU: Brian, thank you for having me again.

BRIAN KENNY: We’re recording this remotely today. We had a snowstorm in the Boston area last night. So after we’re done, I get to go out and snow blow 12 inches of snow off my driveway. Really looking forward to that.

ANDY WU: Don’t we all.

BRIAN KENNY: But it is a good day to sit on the couch and curl up and watch some streaming content, I guess.

ANDY WU: Absolutely.

BRIAN KENNY: That’s my segue into this topic. I think people will be really interested in hearing about this because this is a content streaming platform that’s taking place in Africa. So why don’t we just… Let’s just dive in. Sound good?

ANDY WU: Absolutely.

BRIAN KENNY: All right. So why don’t… If you could start off by telling us sort of, what’s the central theme of the case? And when you step into the classroom to start the discussion, what’s your cold call?

ANDY WU: Brian, the central theme of this case is, understanding the strategy for growth in the media business and the operations of a nascent digital platform. And so when I step into the classroom, I like to start this class discussion off with the decision of the case. I’ll ask a student, “Should EbonyLife grow its own first party platform for distributing its films and TV shows direct to customers? Or instead, should EbonyLife abandon it, and instead focus on distributing its content through third parties like Netflix and other established streaming services?”

BRIAN KENNY: And we’re going to talk about what EbonyLife is and the protagonist is Mo Abudu. And I know you just discussed this. I’m pretty sure you just discussed this case recently, because I saw a picture of you with Mo and your co-author, Feng on Instagram, I think. So, is that right?

ANDY WU: That’s right. Yeah. So, we just taught this case for the first time in the fall. We had Mo Abudu come visit class and the case was taught in the Technology and Operations Management required course in the first year of the MBA program. And it was a lot of fun, great success. And Mo Abudu was very excited about having the chance to visit HBS and she shared it on Instagram. And I have to say, Mo Abudu is actually a celebrity in her own right. And let me put it this way, my photo with Feng and Mo Abudu is by far, the most likes I’ll ever get on any Instagram post. Something like tens and tens of thousands of likes.

BRIAN KENNY: That’s great. That’s amazing. Well, tell us a little bit about how this case relates to the research that you do. I mentioned a little bit about your work on tech entrepreneurs. How does it relate to the kinds of things that you think about, as a scholar?

ANDY WU: So, my research centers around strategy for launching and growing technology businesses. So, why am I interested in a Nigerian media business? So at a fundamental level, the media business is about creating and capturing value from intellectual property, like copyrights. In this case, it’s about movies and TV shows. But the lessons that we can learn from managing media content can also apply to strategy from profiting from say, hardware patents or software licensing. At the same time, the media business has, for some time now, at least over a decade, been in serious upheaval from technology. The transition from linear broadcast and cable television, that we all grew up with, to the now over-the-top streaming services that dominate today. The change in technology has completely changed both the business model of media, but also the global distribution of the media business, which of course, brings us to Nigeria.

BRIAN KENNY: Yeah. Tell us about Nigeria. What are the economic conditions like there, just for people who aren’t familiar with it?

ANDY WU: My interest in Nigeria dates as far back as 2019, which of course, feels like either yesterday or a century ago, depending on who you ask.

BRIAN KENNY: Right.

ANDY WU: And so as a professor, I spent much of my time educating students. But Harvard also likes to take time to educate its professors. So in the summer of 2019, I traveled with the group of 30 plus Harvard faculty to visit business and government leaders in Lagos, Nigeria. And that was my first time in both Nigeria and Africa. And on that trip actually was then, regular citizen, Srikant Datar, now our current Dean, who’d done a lot of great work in Africa and was a great resource to teach newbies like myself about Africa. And so when I got out of the airport in Lagos and we drove through the city to our hotel, I’m never going to forget the sights, sounds, and smells. Just, wow. And so the easiest way I can describe it is, it reminded me of my childhood memories, visiting my father’s family in Shiyan, China in the early 1990s.

BRIAN KENNY: Yeah.

ANDY WU: Which is to say, Nigeria can certainly be rough around the edges. Look, it is an emerging market and there’s a stark contrast there between the wealthy business districts and the densely populated slums. But at the same time, like Shiyan, China of the 1990s, there is an energy, a vibrancy, that gives you a sense of economic potential. There’s so much action and so much business activity, so many people busy at work across all sectors. And the economic indicators of that potential for growth are certainly there. So for instance, from 2015 to 2020, the number mobile phone subscriptions increased in Nigeria from 151 million to 208 million.

BRIAN KENNY: Wow.

ANDY WU: There’s more mobile phone subscriptions in Nigeria than people. And so, this is the kind of thing you can see in person in Lagos. If you look across the skyline in Lagos, there are cell towers popping up all over the city, on what feels like every single building. And so, that experience convinced me that Nigeria is going to be the growth story of the 21st century.

BRIAN KENNY: We all subscribe. I subscribe to so many services, I forget how many I subscribe to. And I think a lot of other people can probably relate to that. But I don’t know that we think about sort of what’s happening behind the scenes there. It’s a complicated ecosystem. Can you describe it a little bit? What does the global landscape look like and who are the players in this media and entertainment space?

ANDY WU: So, the entertainment and media industry changes rapidly. So if I go into too much detail now, everything I say will be out of date too quickly. So, let me keep it simple in terms of what I think is going to persist into the future. So, I like to think of the media business in two parts, content production, and then content distribution. So content production includes those who source and write the content, those who raise and provide the financing for content, and then those who actually make the content and edit it. On the other hand, content distribution includes those who actually produce physical media, like Blu-ray DVDs, cinema, and operate linear TV and streaming services.

BRIAN KENNY: Okay. So I said in the beginning of the show, I sort of quoted something that Bill Gates said back in 1996, that, “Content is king.” Is that still true? I mean, who holds the leverage in this ecosystem?

ANDY WU: So based on what we’ve learned from researching this case and observing the action of big players in the global media industry, I would say, content is still very much the king. The top content owners and producers are able to extract exorbitant prices for licenses of their content to distributors. And the distributors just have to pay up in these bidding wars. So Netflix had to pay a hundred million dollars for a one year license to the TV show, Friends. And at the same time, many distributors clearly feel that they themselves need to own and produce their own content in order to be viable. So a five year license of The Office is apparently 500 million dollars, even though Comcast essentially licensed it to itself from Universal Television to NBC, its own businesses.

BRIAN KENNY: Yeah.

ANDY WU: But to be clear, that’s the amount of external revenue Comcast had to forego in order to keep its own content.

BRIAN KENNY: All right. So, that brings us a little bit closer to EbonyLife now. So let’s talk a little bit about the issues that the case surfaces around the company. One of the things that it refers to is, this notion of Nollywood. Who does Mo’s company compete with? Tell us a little bit about, I guess, what they do first, and then who is sort of in their competitive set?

ANDY WU: So the EbonyLife business is primarily in the production of TV shows and movies. And so, the companies it’s competing with most directly are other Nigerian production companies. But in the last decade, Mo Abudu has done a great job really leading the forefront of and positioning itself as the best high quality content producer in Nigeria. So keeping in mind that Nollywood is actually the third largest source of film and TV content in the world, after Hollywood and Bollywood of India.

BRIAN KENNY: Wow.

ANDY WU: And so… At the same time though, we have to keep in mind, it is an emerging market and a huge amount of that content is what we would, by Western standards, consider low quality. And what Mo Abudu would consider also low quality and not good enough to compete globally. Mo has really taken company up to produce the kind of content that is good enough to be relevant globally.

BRIAN KENNY: So tell us a little bit about Mo. She has an interesting background, and she’s not necessarily a likely candidate to be leading an entertainment and media enterprise. Right?

ANDY WU: Mo is certainly an exceptional figure and it’s really amazing how far she’s come with her career. Originally born in London, to Nigerian parents and she grew up between the UK and Nigeria. And she was originally a human resources executive and started her own human resources business.

BRIAN KENNY: Mm.

ANDY WU: But at the same time, part of her experience between the UK and Nigeria led her to understand that there was a big challenge, in that the world had a big misconception about Africa. And she wanted to tell the story of Africa to the world, and all the dimensions of that story. And so, she eventually decided that she wanted to go into the media business. She actually put herself through professional training to be a television host. And then actually started her own television talk show, Moments With Mo, a very popular show in Africa. And she started from there and then grew out into a broader media business, eventually going into a linear television channel, a streaming service, and film production.

BRIAN KENNY: And she found some inspiration, I think, for Moments With Mo from Oprah Winfrey. Is that right?

ANDY WU: That’s absolutely right. She was definitely inspired by Oprah Winfrey. But I have to say that Mo Abudu today is essentially the Oprah Winfrey of Africa.

BRIAN KENNY: You have your picture on Instagram with her, so that’s pretty cool.

ANDY WU: That’s right. Yeah. It’s very satisfying.

BRIAN KENNY: So it didn’t take long for her to start to think more broadly, after having great success with Moments With Mo. But to think more broadly about the impact she could have and the scope that her company could reach, can you talk a little bit about the inspiration where she wanted to go with it? And then, how was she able to get the financing that she needed to take that next big step?

ANDY WU: Mo is exceptionally ambitious, as an executive. She wanted to produce the type of content that would appeal across Africa and then around the world. And so in order to do that though, that’s actually quite a difficult challenge, because high quality content production is actually very, very expensive. And she had to be very resourceful about raising financing and sponsorship from local businesses, first in order to start. But then beyond that point, she was also very resourceful about finding creative ways of getting the film studios and actors and scripts that she needed to develop the content that she wanted to develop.

BRIAN KENNY: So, can you give us an example of some of the types of things that she was producing?

ANDY WU: Yeah. So after her talk show, Moments With Mo, she moved into producing a variety of hit television shows, which include both comedies and dramas. So for example, in 2014, EbonyLife introduced, The Governor, which was a scripted TV drama centered on the struggles of a fictional first female governor of Nigeria, as that governor navigated power and betrayal at the helm of the state’s affairs. And so they do both entertainment television, as well scripted comedy and drama. And these are absolute blockbusters. So five of the top six Nigerian Nollywood blockbusters are produced by EbonyLife today.

BRIAN KENNY: Wow, that’s impressive. I would imagine this is an expensive undertaking. You mentioned it before, it costs a lot of money to produce these kinds of things. How did she sort of get the financing, convince people to invest in what she was trying to do?

ANDY WU: Really, Mo deserves a lot of credit for her exceptional skills in bringing together the resources to create these films and this content. So, these types of pictures at the high end in Nollywood can be several hundred thousand dollars, which is cheap, by Western standards. But by Nigerian standards, it’s actually a lot of money. If we were in Hollywood, raising these resources essentially, is dependent on raising money from very deep pocketed producers. And at the same time in Nigeria, those producers aren’t quite available. There’s not those kinds of deep pockets. And moreover, Western financiers are not as interested today in backing the Nigerian filmmaking industry. she had to reach out to local businesses and get advertising sponsorship to back some of this content. And then beyond that the government provided the early filming studios where they used to make some of the early content. And they also increasingly were, as they launched their linear television channel, were also getting revenue from a carriage fee from that linear TV channel.

BRIAN KENNY: And they also had a relationship at one point, with DSTV. Can you talk a little bit about that, and sort of how that evolved, and then eventually blew up, I think? Right?

ANDY WU: That’s right. Yeah. So, this is an important part of the EbonyLife story. So in the earlier history of EbonyLife, one of its core distribution channels was having its own linear television channel on the satellite television service, DSTV, which distributes across Africa. And they collected a carriage fee for that television channel, which is to say that the satellite service was paying EbonyLife for the right to carry its channel, in the same way that Comcast pays ESPN a fee to have ESPN on Comcast. And so that was important for the early growth of the business and sustained it for a while. But the challenge of operating that kind of television channel, is that you have to produce a significant amount of content, including what EbonyLife would consider low quality content, in order to fill up all the hours of the television channel. What eventually happened though, is that DSTV came back at the time of the contract renewal, and changed the terms to a level that was unacceptable to Mo. In particular, they essentially refused to pay the carriage fee. And they said that in order for EbonyLife to work as a television channel, EbonyLife would have to generate its own advertising revenue. And DSTV would not pay EbonyLife directly. Now zooming out a bit, what does this tell us about the media landscape? What it tells us is that this is the transition that we see, as people cut the cord and move away from satellite and cable television. And so really for DSTV, the scripted content and the entertainment television that was on EbonyLife’s channel was increasingly facing competition from online streaming. And at the same time, really its live TV, things we think of as like sports, that was valuable to DSTV.

BRIAN KENNY: So this in some ways, kind of pushes her, forces her, I guess, to think about a different strategy. What’s the next step in her progression here? Where does she go from here?

ANDY WU: So once the DSTV deal was challenged, Mo had to really go back to the drawing board and figure out what to do. So keeping in mind that they still had access to distributing films over DVDs and cinemas, they also needed to make up the revenue they were losing by losing the DSTV carriage fee. And so the key thing that Mo did at this time, is explore the strategy of launching their own distribution platform, what they called, EbonyLife ON. And you could think of this as a streaming service, essentially like Netflix, where they would host their own content and license third party content in order to distribute it. And then make revenue off subscription fees to that streaming service.

BRIAN KENNY: Mm-hmm (affirmative). Yep. I would imagine that’s a huge undertaking and another very expensive way to go. What were some of the things that she encountered, as she tried to move down this path?

ANDY WU: So as she moved into launching her own distribution platform, it turns out that building out the basic technology was reasonable. They got the service up and the app and stuff, and that seems to work reasonably well. But then you run into some serious challenges, and to be clear, these are exactly the same challenges that WarnerMedia faces today with HBO, and that ViacomCBS faces with Paramount+. And I’ll just list a few of those challenges. First that, again, content is king, but the problem is, today, people can consume an enormous amount of content, limited only by our waking hours. And so in order to maintain a subscriber base, you’ve got to keep an enormous amount of content on the platform and constantly replenish that content. That is very, very expensive to do. And second, there’s also an advertising challenge. So you have to expend a significant amount of money doing direct response advertising. You can think of that as like Facebook or Instagram ads in order to get subscribers to sign up for the service. So if you’re not Disney and you don’t have Star Wars right away, it’s hard to get people to notice your streaming service. And then finally keeping in mind that its most obvious initial customer base is going to be in Nigeria. And in Nigeria, there’s still challenges with the telecommunications infrastructure, where not every area has even 3G or 4G. And as a result, that many of the potential customers don’t even have the ability necessarily to view the content in a productive, enjoyable way.

BRIAN KENNY: So one of the things the case goes into as she moves down this path, is the notion of co-production. It’s another strategy that she pursues. And maybe you can describe that for us. And then talk a little bit about some of the tradeoffs in getting into this kind of a co-production relationship with other content producers.

ANDY WU: So as the EbonyLife ON streaming business was operating, Mo also began exploring the possibility of a co-production business model. And essentially what that means, is that EbonyLife would partner with global distributors like Sony Pictures Television and especially Netflix to produce content. And then Sony or Netflix would then distribute that content. And when I say, “co-production”, it’s not exactly an equal relationship. What really happens there is that EbonyLife is sourcing the ideas and actually making the movies, but Netflix and Sony put up the money for the movie to be made. And so, it’s really a financing and production partnership.

BRIAN KENNY: Yeah. And for Mo, it opens up a whole new global audience, right? The reach that she gets from this kind of a relationship probably really benefits her in terms of her goal of reaching new audiences.

ANDY WU: That’s right. So for Mo Abudu, remember her original mission was to tell Africa’s story to the world. And she’s very excited about the access to the global market and the ability to put her content up on Netflix and have it appeal to the world. At the same time though, the financing is also very important for her to tell that story. Netflix does provide a lot of that financing. I do want to pause here and mention some of the downsides though, of the relationship, potentially that could arise in the future. And again, Mo Abudu is very satisfied with that relationship today, but I’m a strategy professor. And as a strategy professor, we’ve got to look forward and think about the competitive consequences of the future.

BRIAN KENNY: Of course.

ANDY WU: And this is not just a potential issue for Mo Abudu, but for all the other producers out there that have chosen to partner with these streaming services. So first up there’s, what I would call, a hold up problem, from being dependent on the partner. So increasingly as these content production businesses are distributing content through Netflix, their own independent brand name diminishes. And their own ability to operate independently without Netflix diminishes. At the same time, there’s a commoditization problem in that, remember, Netflix is scouring globally. And the moment that Nigeria and Nollywood become too expensive, I can assure you, Netflix is going to go move on to another country. At the same time, within Nigeria, EbonyLife in the long term has an incentive to encourage other content producers to be successful as well. Netflix doesn’t want to be dependent on EbonyLife in Nigeria, either in the same way that EbonyLife wouldn’t want to be dependent on Netflix. And so, we’re going to have wait and see where that’s going to play out.

One thing that was interesting about this case and about interviewing Mo, is that Mo considers Netflix to have been a very fair player in all this, and very supportive.

BRIAN KENNY: One thing I didn’t ask earlier and I should have is, what is Mo like as a leader? What would her employees say about her?

ANDY WU: Mo Abudu is a force of nature. That’s the shortest way I can describe that. She is amazingly visionary as a leader, and also very inspirational. But she’s also the kind of person that can rally the troops and get people marching in one to get amazing things done. Again, a movie is very expensive to produce and she’s achieved that multiple times, gotten all the money and the people behind these big projects. And especially building a business in Nigeria. That really requires putting everything together. So for example, you have to get all the actors and the equipment to different filming locations. And it’s not very easy to hire a contractor to do that. You essentially have to operate your own logistics business, in order to move all the people around.

BRIAN KENNY: I also like the way that she’s sort of thinking about replenishing her own supply of talent within Nigeria. Can you talk a little bit about the academy that she started up, and kind of what her vision is for that? And then, other ways that she’s diversified her portfolio by creating destinations, things like that.

ANDY WU: Mo Abudu is really dedicated to advancing Nigerian filmmaking as an industry, as a whole. One of the challenges she realized as she got into the media business, was that there’s a lot of essential skill sets and talent for filmmaking that are in short supply in Nigeria. And you can think of actors and screenwriters and film editors and post-production staff. And those are the kind of skill sets that we need more of in Nigeria. And so, one of the key initiatives of Mo Abudu, is to launch the EbonyLife Creative Academy, which is an academy that enabled students to attend classes in Nigeria, free of charge, funded by the government of the Lagos state. To Mo’s credit, she was actually able to convince the governor to fund this academy. And that’s actually the first governor to ever fully fund a creative academy of that sort.

BRIAN KENNY: Mm-hmm (affirmative).

ANDY WU: Mo’s also expanding her business in other ways. So, she’s also launched EbonyLife Place. And so, EbonyLife Place is a multipurpose resort in Lagos that includes two restaurants, a boutique hotel, five movie theaters, meeting rooms, and a multipurpose function hall. And so right now, it’s a basic resort. In the long term, Mo Abudu won’t say this, but I’ll say it, I really think this needs to become Disney World.

BRIAN KENNY: Well, hopefully somebody from Disney World is listening and maybe they’ll take you up on that suggestion. Opening up a resort in 2019 probably seemed like a good idea, and then we had the pandemic hit. I’d be remiss if I didn’t ask, how has the pandemic affected Mo’s ability to move forward on any of these initiatives? Is it having an impact?

ANDY WU: Obviously, the pandemic really curtailed EbonyLife Place. So that was a very terrible two years for EbonyLife Place. And at the same time, there’s also been significant hits to the movie production process. And then on top of that, it’s been challenging, for example, the cinema business. So EbonyLife still distributes movies through cinemas. And that business has been and heavily hit. At the same time though, it’s been an exciting time period for streaming. Mo Abudu and EbonyLife have been able to continually work with Netflix and get content funded and produced through the streaming businesses that have seen great success in this pandemic time period.

BRIAN KENNY: Yeah, that makes a lot of sense. I know you wrote a follow-on case to this, which I also read. I’m wondering if you can share with our listeners, what path did Mo decide to pursue, and how’s it going?

ANDY WU: Mo eventually decided to abandon their own streaming business, in favor of focusing on distributing content through Netflix and other global distributors like Sony Pictures Television. And so you would never know this when you see her, but Mo Abudu is in her late 50s. And she always tells us that at this point in her career, her passion is in the content and in telling powerful and authentic stories. And so working with Netflix and these partners allows her to do that. But she also believes the streaming business is very much possible, if she were 20 years younger and had enough time left as an executive to see through the full growth of the streaming business. But you have to keep in mind, she’s also a fiercely independent leader. To grow the streaming business would require raising significant amounts of venture capital and private equity in order to buy the content and to build the technology. And Mo tells us that she has no interest, at least today, in having to report to any private equity overlords at this point in her career.

BRIAN KENNY: Yeah, I don’t blame her. Andy, this has been a great conversation. I can’t let you go until I ask if there’s one thing you want our listeners to remember about this case and about Mo, what would it be?

ANDY WU: Brian, I think there’s two things I’d like our listeners to remember about the case. The first is that, even in emerging markets like Nigeria, visionary, ambitious entrepreneurs, like Mo Abudu can make big things happen by being resourceful about getting the financing and the people together to make these big projects happen. And the second thing I’d like our listeners to remember about this case, is that EbonyLife’s movies are available on Netflix. So let me suggest two films. So one is called, The Wedding Party. That is a comedy romcom-type film, if you like those.

BRIAN KENNY: Sure.

ANDY WU: And the second is, Ólòtūré. Ólòtūré is a high action drama about human trafficking in Nigeria. A very, very authentic story. It’s a tough watch, but it is very educational and very compelling.

BRIAN KENNY: Yeah, those both sound good. I probably would lean towards the latter. But maybe when I’m done snow blowing today, I’ll come in and watch the romcom one. That sounds a little more easy going.

ANDY WU: Yeah. Depending on whether you need to learn something or you want to just uplift yourself for a quick two hours of enjoyment.

BRIAN KENNY: Andy, this has been great discussing. It’s a really interesting case. I hope our listeners will look it up. And I thank you for being here to discuss it with us today.

ANDY WU: Great. Thank you, Brian.

BRIAN KENNY: We are excited to be celebrating the 100-year anniversary of the case method at Harvard Business School. If you want more on the history of the case method, visit our website: www.hbs.edu/casemethod100. Cold Call is a great way to get a taste of the case method, after all each episode features a business case and its faculty author. You might also like our other podcasts: After Hours, Climate Rising, Skydeck, and Managing the Future of Work. Find them on Apple Podcasts or wherever you listen. If you enjoy Cold Call or if you have any suggestions, we want to hear from you. Write a review on Apple Podcasts or wherever you listen or email us at coldcall@hbs.edu. Thanks again for joining us. I’m your host, Brian Kenny, and you’ve been listening to Cold Call, an official podcast of Harvard Business School, brought to you by the HBR Presents network.