Nine CEO Hugh Marks believes streaming platform Stan can be bigger in Australia than global giant Netflix.
He told a media briefing that the pandemic played a role in the decisions to create an ad-free Stan Sport service.
“It's a recognition that audiences are increasingly consuming on demand and we need to respond to that,” he says.
“We had free-to-air but no subscription play. We didn't think it would be in a position to do something now but because of COVID, and the progress of Stan through that period and its growth in the cash flows, that was the time."
Nine earlier this week announced Stan Sports after taking the rights to rugby from Foxtel in a $100 million deal. The media group followed this with an announcement securing the international tennis broadcast rights for Wimbledon and Roland-Garros.
The live and on-demand premium sports package will be offered as a bundle to Stan’s customers from 2021.
The subscription video-on-demand (SVOD) business had already been highly regarded by market analysts, boosting valuations of Nine by between $900 million and $1 billion.
The move, a key competitive play in the streaming content market dominated by Netflix, effectively ends Foxtel’s 25-year partnership with Australian rugby.
"If you look forward, we’re a local business and Netflix and Amazon are international businesses," says Nine's Marks.
“I think it'll be hard for them to adopt a local market strategy market by market. They really need to operate as global businesses.
“It's really taking advantage of a unique mix of assets and saying, before anyone else gets into the space, that we've got the assets, we've got the cash side, we've got the ability to have the customer base -- we can market to them -- let's take advantage of that."
In August, announcing annual results, Nine reported Stan with 2.2 active subscribers and revenue of $242.1 million, up by more than half on a year ago.
Telsyte research shows Netflix with 5.4 million subscribers in Australia. Amazon Prime Video had 1.7 million and Disney+ 1.1 million.
“Despite a hiccup during the shutdown period, sports video subscriptions are set to continue to grow strongly as fans turn to apps instead attending stadiums,” says Telsyte managing director Foad Fadaghi.
Telsyte estimates the total sports SVOD category grew by 11% to 4.9 million subscriptions at the end of June. Telstra Sports Live Passes, Optus Sport and Kayo Sports made up around 95% of total sports SVOD subscriptions.
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