From zero to local hero: Stan CEO shares secrets of SVOD's rapid rise

Arvind Hickman
By Arvind Hickman | 25 January 2017

Australia Day celebrations may focus on high-achieving individuals, but 26 January marks the anniversary of one of the nation's fastest-growing media and entertainment companies.

In just two years, Stan has grown from an unknown entity into a brand with nearly 90% recall - and all of this at around the same time global entertainment juggernaut Netflix hit the Australian market.

Stan launched just prior to Netflix in Australia, but the two SVOD “co-pioneers” have revolutionised the way Australians consume media.

Stan CEO Mike Sneesby tells AdNews the past two years has been a “whirlwind for the entire team” and the greatest achievement of Stan has not just been rapid in growth, but how quickly the category has taken hold.

“What has been even more amazing and incredible is the rate of change of consumer behaviour,” Sneesby says. “If you look at the penetration, the Australian market has around nine million households and the penetration of SVOD services is around two million of those.

“Two years into the rise of streaming, Australians, particular those who use streaming services, are watching more television in totality. There’s a large amount of incremental viewing because of this mass of amazing, world-class content that’s being brought to consumers."

And the figures don’t lie. Netflix is estimated to reach about 2.2 million households in Australia while Stan, which had no brand profile to at launch, is estimated to have about 650,000 active subscribers, including the “biggest period of growth and signups” over the past few months.

Binge watching is now common in many Australian households with all of the major television networks having launched their own ad-supported video on demand (AVOD) services to cater to changing consumer habits.

Another important measure of success and sustainability is Stan’s conversion rate, which sits at about 75% and is on the rise.

“The stickiness of our subscriber base in terms of the longer-term retention is continuing to improve over time as well,” Sneesby says.

In terms of the bottom line, Stan is either on plan or ahead of its projected KPIs and, importantly, on track to become profitable in fiscal year 2017-18.

“Stan is undoubtedly the local market leader in this category today,” he adds – the only other major local SVOD, Presto, wound up late last year.

“When we took off there were a lot of doubters out there about us – we started from scratch and knew there would be international players joining the market. What has fundamentally allowed us to become successful, is understanding and judging the market.

“Our business plan took a very bullish view to the rate of growth of this category in the Australian market. This business plan was created before there was a market…we had to take a view on how quickly the market would grow from virtually zero over time.”

Sneesby quote

Growing a brand

The marketing investment, one of Stan's largest areas of spend, has focused across multiple channels, including TV, print, radio, outdoor, digital and more.

The backing of Fairfax Media and Nine Entertainment Company has been critical in allowing Stan the freedom to make large content and marketing plays.

While Stan pays for all of its media placements, Sneesby tells AdNews Fairfax and Nine have helped it gain opportunities for premium placements that would otherwise be out of reach.

This has had to be fully accountable, mixing the science (or data) with "gut instinct", and all heavily underpinned with robust market research.

The focus of marketing has shifted from loud, all singing and dancing brand awareness campaigns to begin with, ably helped by Australian Hollywood star Rebel Wilson, to more educational messaging that focused on Stan’s burgeoning catalogue and service capability.

“You make the investment in content, but we started with a brand that had noo equity and no awareness and now Stan is a brand that has 90% awareness in the market. It’s got to be one of the fastest growing consumer brands that we’ve seen in any category in Australia from zero to nearly complete awareness,” Sneesby adds.

“That challenge has been building a consumer brand and co-pioneering a category with an international player like Netflix, moving the needle for Australian consumer behaviour from doing what they’ve done on television for decades and shifting that to a new form of consumption.” 

A sustainable content strategy

While marketing has been fundamentally important to helping grow the business, it all amounts to nought without the right content strategy as trial users fail to convert into paying customers, as Presto discovered to its peril.

The critical development in Stan’s content strategy was signing an exclusive content output deal with US production powerhouse Showtime to exclusively bring first-run shows like Billions, Sherlock and Better Call Saul to the Australian market.

“We’ve become the powerhouse in delivering first-run, fast-track exclusive content from the major studios and networks from around the world, coupled with our own original productions here in Australia,” Sneesby says.

“When we signed up with Showtime nearly 12 months ago, it was about aligning ourselves with one of the four major global players. In Australia today, the four players are now here, we are Showtime, Netflix is here, Amazon has now entered and HBO has a long-term exclusive output deal with Foxtel. Those are the four incumbent homes of the major network production.”

What sets Stan apart from Netflix and Amazon is that the global SVOD giants are moving away from output deals with Hollywood studios and more towards producing and distributing their own original productions. Netflix has announced it wants 50% of its content catalogue to be Netflix originals, while Amazon has similarly lofty production plans.

This means that Showtime and other Hollywood studios will lean heavily on local content partners like Stan as global SVOD dollars are diverted elsewhere. Stan's long-term arrangement with Showtime allows it to handpick the shows it wants and the deals provide life of run for the whole series.

“We end up in a place where Netflix and Amazon move more and more towards a slate of their own original productions, we become the home of Showtime, the biggest place to get the biggest television series form major Hollywood studios and the home so Stan originals,” Sneesby explains.

“We’ve carved out a very successful space that is sustainable and the dynamic of the global market is really driving massive support for a strong local leader like ourselves.”

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