Two cents blog

The next media evolution coming to a device near you

by Dianne Grice on 10 September 2014

With the imminent arrival into Australia of U.S. video streaming behemoth Netflix, local broadcasters are revamping their offerings to combat the expected competition for eyeballs, resulting in cost savings, flexibility of channel choice and more content for consumers.

Here’s a snapshot of the various options coming to a TV, DVR, desktop, laptop, tablet, smartphone, and game console near you…

STREAM CO

In a deal announced last week, Nine Entertainment and Fairfax Media have joined forces to launch STREAM CO, a $100million subscription video on demand service (SVOD) that will take on the likes of Foxtel, Quickflix and Netflix video streaming services.

Expected to launch in this financial year, Stream Co will give us both recent programming as well Australian content that is not yet available on other services.

The joint venture also provides the opportunity to sell “cross platform” advertising deals across television, newspapers, radio and digital, as well as provide a ‘back door’ revenue stream for Nine to capture advertising dollars that are currently migrating from free-to-air television (FTA) to digital platforms.

FOXTEL

Hot on the heels of this announcement, FOXTEL has slashed its fees for new subscriptions by 50% and revamped its premium programme tiers to attract more customers and to combat a predicted surge in competition from internet streaming services. It will also launch new channels including Boxsets – a channel created to satisfy the growing trend of ‘binge viewing’ (watching TV shows in marathon sessions). Entry level costs will be cut from $49.50 to $25 per month in a bid to lock in new subscribers before Netflix arrives, while existing customers will be offered extra channels and content for free or be given the opportunity to replace their old contracts with the newly revamped packages. Foxtel’s movie streaming service Presto is now also competitively priced at $9.99 per month.

And just when you weren’t sure what you want to watch…

watching tv

QUICKFLIX

Quickflix provides home delivered DVD and Blu-ray rentals as well as instant streaming of movies and hit TV Shows. A monthly streaming subscription costs $9.99 per month or you can stream on an ad hoc basis at individual movie/episode costs. Quickflix offers a catalogue of over 60,000 titles to choose from including all HBO Shows, close to broadcast.

EZYFLIX

EzyFlix.tv is a transactional video-on-demand and download-to-own service with more than 4500 titles on offer from all major Hollywood studios including 20th Century Fox, NBC, Universal, Paramount Pictures, Roadshow Films, Sony Pictures Home Entertainment, The Walt Disney Company and Warner Bros, as well as content from the Australian Broadcasting Corporation (ABC). The benefit to Ezyflix – buy latest release movies before they go to cable or streaming services.

TELSTRA BIGPOND /FETCH

Telstra/Optus – bundled movie offerings from the telcos. Foxtel is looking to launch ‘triple play’ packages in the first quarter of 2015, which will include TV, broadband and home phone services.

Netflix-Deutschland-post-thumb-464x309

NETFLIX

Officially not yet available in Australia.

Unofficially, an estimated 200,000 Australians have found a way around the geo-blocking to sneak into the US service each month at a cost of USD10. With the internet feeding us information as we desire it, it is a hard call to make Australian users wait for what content the rest of the world is already watching, and with a VPN and unblocking instructions just a click away, the number of users is growing daily.

When Netflix does officially launch, it won’t bring its full U.S. service to Australia, due to local rights agreements already in place, therefore it’s unlikely that its current ‘Australian subscribers’ will choose the local alternative preferring to stay (unofficially) with the U.S. offering.

Netflix has very deep pockets (having just agreed to pay $2million an episode to Sony TV for The Black List as an example) and will be a force to be reckoned with from a content perspective.

There are no plans for other US based services HULU PLUS and AMAZON PRIME to enter the Australian arena at this point, however both are available to those with a geo-unblocker service. HULU will serve US ads while AMAZON (and Netflix) are ad free.

FREEVIEW PLUS

Also launched in the last few days was FREEVIEW PLUS – a single interface that allows you to watch catch up services from free-to-air channels using your TV. Consumers will need a certified Freeview Plus TV, or a separate set-top box or PVR. The concept of having catch up on your main TV is not new as most smart TVs include individual apps for each catch up service already. The difference is, catch up will now be integrated into the electronic programme guide (EPG) without the need for individual apps. Further advancements are in the pipeline as the service gains traction, including the opportunity for tailored and relevant advertising, targeted to specific viewers based on all manner of verticals including their preferences, household demographics and postcodes.

binge-tv

What will you be watching?

So, there’s free-to-air television, if appointment viewing is your thing, or you can record shows to playback later (75% of Americans still watch FTA TV each week, while 46% pay for a streaming service).

Stream Co will likely concentrate their efforts to the 70% of the population who don’t currently access subscription TV and will position themselves as the preferred ‘bolt-on’ to FTA. It will be interesting to assess the pricing structure (rumoured at $10 a month) and the catalogue on offer as to its value to subscriber newbies.

Will advertising be introduced at the outset, or eased into the offering depending on the package. 67% of Netflix subscribers rate ‘less commercials’ as part of the appeal of the service.

Foxtel is clearly on a subscription drive to increase customer numbers – with the price barrier dramatically reduced, many consumers can at last decide to find out what it is they’ve been missing. Foxtel may well steal a march on the likes of Stream Co and Netflix with the new rollout starting as soon as November.

Quickflix may be the loser in this battle. Nine Entertainment recently purchased 8% of Quickflix shares for $1million – to potentially block a buyout attempt by Netflix, or to garner better relations with HBO?

Catch up, commercial free, binge viewing and convenience watching are the catch-cries of Netflix. Key to their success in this market will be their ability to win over a ‘non-paying’ population, with an affordable price structure, flexibility of choice and outstanding content.

Content will be king in the race to secure subscribers. As the local rights agreements end, the SVOD landscape will be controlled by the operator(s) with the biggest wallets.

In the meantime, I’m off to catch up on my Catch Up and binge viewing!

Dianne Grice is a Senior Channel Planner at BCM

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