The streaming media war has already been won by Netflix. The real battle is for second place in Australia
PwC, in its 18th annual Australian Entertainment & Media Outlook, says the dominance of Netflix in streaming video on demand (SVOD) cannot be ignored.
The majority of consumers take Netflix and a second service.
"Australians are spoilt for choice when it comes to SVOD services," says PwC. And the range of services available is expected to continue growing.
Local Australian launches from international heavy hitters Apple and Disney are rumoured.
"In the small Australian market, this level of competition will likely prompt further consolidation," says PwC.
"Who will win the coming battles for the second SVOD service: will Stan, Foxtel Now, Kayo or Amazon Prime give way to Disney or Apple TV+?"
The total market for subscription television is forecast to grow to $4.62 billion by 2023 from about $4 billion in 2018, says PwC.
The big driver will be the SVOD players -- such as Netflix and Stan -- forecast by PwC to jump 90% to $2.68 billion in 2030 from $1.41 billion in 2018.
Premium box delivered services -- Foxtel -- are forecast to fall by 25% to $1.94 billion in 2023 from $2.59 billion in 2018.
The forecasts show advertising revenue in advertising supported video-on-demand and broadcaster video-on-demand (BVOD) is growing strongly over the next five years. Foxtel is the only SVOD on the market that also offers advertising inventory.
This will be driven by greater penetration of smart televisions with OTT (over the top) television capability embedded, as well as other internet enabled hardware devices.
Software developments are another driver, with free-to-air networks investing in platform user experience.
Another is the increasing quality of the viewing experience of BVOD services, which have made headway to closing the usability gap between themselves and Netflix.
The PwC forecasts:
PwC says that in an economic environment with minimal inflation, flat-lined wage and household expenditure growth, advertiser-supported business models may become an increasingly important option for consumers, therefore driving growth of BVOD platforms
“With cost pressures on Australian households increasing, we expect the current growth of broadcaster video-on-demand (BVOD) services to continue, leveraging the willingness of consumers to pay with their time by consuming brand advertising in exchange for content,” says Justin Papps, PwC Australia Partner and Entertainment & Media Outlook Editor.
“Video streaming businesses should focus on finding their niche, building a strong content pipeline, quality control and balancing acquired and commissioned content.
“Another sign of the growth opportunity for BVOD in Australia over the next five years is the rise of the smart home."
Ownership of smart speaker devices globally is forecast to rise at a 38.1% compound growth rate to hit 440 million devices in 2023.
"The NBN and 5G will turbo charge the smart home revolution in Australia, bolstering the user experience of downloading content and streaming on the go,” says Papps.
The PwC forecasts in detail:
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