Streaming video on demand (SVOD) is a very hot topic at the moment. But what exactly is it? Who exactly is playing along? And, let’s be real, what does it really mean to you and I?
Streaming has been given the spotlight because American giant Netflix announced that March this year will signal its Australian launch. This has prompted Australian based companies to beat the drum ahead of Netflix’s approach. Presto backed by Foxtel and Seven West soft launched in March 2014. Nine ent. and Fairfax joint venture Stan launched on Australia day, and Quickflix has been in Australia for years now.
By the end of March we will have four established online streaming TV and movie providers.
But, do we as Australians have an appetite for it? While it’s difficult to speculate on the uptake of each of these platforms, the appetite for content from Australians is certainly there. Not only are we a country founded by convicts; it appears we are pirates too. We established ourselves early last year as the leading country to illegally download the Game of Thrones finale. Younger people are adept at watching TV online and the habit of watching streaming is one that will surely grow as our data allowance and connections speeds increase.
Foxtel is at a higher price point than the existing streaming services and while Foxtel is certainly making protective moves with its box set channel and fast tracking shows from the US, they could still potentially be at risk of content licensing battles.
I have done a lot of reading on the topic and there are many conflicting opinions and beliefs. I am going to stick my neck out and offer my own.
I do not believe that the hype behind these streaming services is justified. I believe the noise in market is not justified by the potential impact. In a recent Deloitte research piece, findings concluded that SVOD accounts for less than 3% of the global pay TV market. Yes, there is a need for a SVOD player(s) in the Australian-market, however, I believe that it will form part of consumption habits, not replace terrestrial TV or Foxtel. In the same study (based in the UK) it was reported that 75% of SVOD subscribers were still subscribers of a pay TV service. People will still watch TV for news and Australian-made content and people will still watch Foxtel for sport. SVOD perhaps poses the biggest threat to the DVD box set.
I believe that over time this may change, but not in the first few years. We are seeing the UK music industry suffering on the back of music streaming, and the US TV streaming habits boom and grow exponentially. Both these markets are more mature, with established content streamin,g and both have very established suppliers.
Before the end of 2015 there will be less SVOD players in the market. There is not enough exclusive content out there for four streamers to have exclusivity, and therefore, a persuasive offering. Already we see Presto, Quickflix and Foxtel sharing the rights to HBO content. There will also be significant marketing efforts and potential price warring, with the big players throwing their weight around at the expense of the smaller providers. Before the end of 2015 the number of streamers will have halved, with the winners extending their content libraries at the expense of fallen competitor.
While content is powerful, so is distribution. There is so much power in the hands of the online providers to purvey or bundle these offerings. Take Telstra for example. Telstra has an ownership stake in Foxtel, which links to Presto, meaning that if Telstra were to include Presto with any of its internet services- it means automatic subscribers for Presto. Likewise, refusal to bear a streamer’s services by any of our telcos would mean a severe hit. Telcos will have a significant say in the rise or fall of a streaming platform
I am perfectly aware of the irony of writing a piece on streaming video suppliers and then complaining about the noise, however…
I believe that the noise in the market around streaming services doesn’t match up with the impact that they are going to have on both consumers and advertisers.
I believe that it will form a part of the Australian media landscape, as there is an appetite for content in this form, but it will not transform the landscape.
By the end of the year there will only be two SVOD suppliers in prevalence.
Either way, it will be interesting to watch from the sidelines and I look forward to watching House of Cards, Season 3.
Ben Nilsen
Senior partnerships manager
UM Australia