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Providing a Financing Model for Start-up Companies in the Video-on-Demand Industry

Document Type : Research Paper

Authors

1 Associate Professor, Department of Finance, Faculty of Islamic Studies and Management, Imam Sadiq University, Tehran, Iran

2 Graduated from the DBA Course of the Islamic Financial Association

Abstract

Abstract
Today، start-ups are considered key players in economic development due to their role in creating employment and economic growth. One of the most important challenges facing start-up companies and new businesses is the issue of financing. Appropriate financing can expand entrepreneurial activities and develop start-up businesses and increase their growth rate. One of the new businesses that has been developing in recent years is video-on-demand startups. Video on Demand is a technology that allows viewers to watch whatever they want، whenever they want. This technology is one of the services that allows people not to miss the available broadcast schedule. This technology provides the required content through a network and by sending it to a computer، digital receiver، or smart TV. 
One of the most famous VODs in the world is the Netflix platform. This company has more than 230 million active users from different countries of the world by the end of 2022. By modeling these businesses and harmonizing the content of such platforms with Iranian-Islamic culture، Iranian VOD platforms have also expanded in recent years، the most important of which are Filimo and Namava. The earning models of Iranian VODs are generally obtained in four ways: Selling subscription rights to customers، Contracting with Internet operators، Publication of advertisements on the site، and producing and sale of content.
The development of these businesses depends on the production of new and entertaining content، and this requires the provision of sufficient financial resources. Due to the nature of the assets of these businesses، which are generally intangible، the financing of these businesses is always a challenge. Therefore، this research seeks to investigate the financing method compatible with the conditions of these businesses. 
One of the often debt-oriented financial instruments that have grown significantly in the capital market of Islamic countries and Iran in the last decade is sukuk. Sukuk are certificates with the same value and tradable in the financial markets، which are designed based on one of the contracts approved by Sharia، and the sukuk holders jointly own one or a set of assets and benefits derived from them. Considering the diverse functions of different sukuk structures، the question that arises is which sukuk structure is more suitable for financing VOD companies. To answer this question، first، the characteristics of VOD companies are explained، which are:

They have passed the stage of idea creation and are in the stage of growth and consolidation. This means that these companies now own a share of the country's VOD market and have operating income.
The issue of control in these companies is very important، it seems that the innovators of these companies don't want to sell shares and want full control over the company.
Since the income of these companies is obtained gradually and from the sale of subscription rights and other methods، they are always facing the challenge of providing the necessary financial resources to increase future income.
These companies generally have less fixed assets، and their assets are intangible، which are generally not recognized as debt guarantees by financial institutions.

According to the mentioned features، it seems that the structure of Intifa sukuk can be considered a suitable model for financing these companies; because the underlying asset of Intifa sukuk is the continuous future benefits derived from certain assets or the right to use services or other transferable rights، and its basis can be intangible assets that are compatible with the nature of VOD companies. This structure also solves the problem of losing control of the company that innovators are generally concerned about.
This research is considered practical from the point of view of purpose، and descriptive survey from the point of view of its nature. The main goal of this research is to provide a model for financing businesses in the field of online viewing. Therefore، the steps for conducting this research are as follows:

In the first step، by reviewing the literature، a model for financing these businesses based on Intifa Sukuk is proposed.
In the next step، to examine the financial aspects of the proposed mode، a questionnaire with 11 questions is designed and distributed among 59 experts.
Next، the descriptive analysis of the data was done based on frequency، mean and standard deviation، and the inferential analysis of the data was done using the one-sample t-test and non-parametric Kolmogorov، Smirnov، and Friedman tests.

The results of the research show that the proposed model of Intifa Sukuk for financing VOD companies is approved by experts from a financial point of view.

Keywords

References
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New Media Studies
Volume 9, Issue 33 - Serial Number 33
May 2023
Pages 424-391
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