According to recent findings by Roy Morgan Research, a consumer, industry and market research company headquartered in Melbourne, Netflix which debuted into the Australian market in March this year has already surpassed all other competitors in the country, reaching 1,039,000 viewers in May, up by many folds from the 97,000 achieved by Presto, 91,000 by Stan, 43,000 by Quickflix and 40,000 by Foxtel Play. Although Netflix's US and UK content was already being accessed by thousands of Australian households prior to its official launch in the country, the phenomenal rise of Netflix on the continent brings the existing competition in Australia's digital content market to a whole new level.
Before analyzing further into the competitive landscape of the TV and video market in the country, it is worth revisiting the evolution that has taken place in this space. Over the preceding years, the global TV and video market has focused its attention on the imminence of digital TV and video services and how these will eclipse the business of traditional analogue, satellite and cable TV players. There was much guessing on who will be delivering these new digital TV and video services and how they will be delivered. Will incumbent TV and video service operators launch their own digital channels? Will they launch the mobile versions and the accompanying apps? Will they work with ISPs and Mobile Network Operators to bundle their channels as part of their triple-play or quad-play offerings? How will the data used for streaming TV and video services over the Internet be accounted for?
The answers to many of these questions started to manifest with the growing popularity of everyone's favourite online video application - YouTube. While YouTube is simply a video sharing platform, and does not attempt to mimic a commercial TV or video service, it drove home a simple message - TV and video services can be highly customizable, accessible over multiple devices - over small and big screens, are commitment-free, are affordable, have no schedules and boast unlimited content choices. Since then, commercial versions of digital TV and video services delivered over the Internet began to sprout, starting off as digital video 'stores' which allowed users to stream, rent or download piece-meal content for a small amount of money and then growing to become fat libraries boasting thousands of titles available in neat catalogues and multiple genres. These services, the most popular of which include names such as Netflix, Vudu, Amazon Prime and HBO Go, are collectively known as the 'Subscription Video-on-Demand'(SVoD) services and involve users purchasing special streaming devices such as Chromecast, Apple TV, Fetch TV or using compatible browsers and apps on tablets and smartphones for continuously streaming throughout the day.
With SVoD, linear programming available on TV services now becomes available on video services, leading to some parties believing that both TV and video services will eventually converge. The SVoD service which has become akin to renting an entire video store, whole month long, for as long as the subscription is ongoing, today allows users to create their own line-up of content, for year-round viewing, as SVoD channels provide not only plenty of TV content such as sitcoms, drama, documentary, news, sports and other shows, but curate these shows into playlists and channels with 24/7 content offering. At service charges of around US$10 for each SVoD service, users can pick from multiple channels, access exclusive content over each channel and replicate a full TV experience.
In markets such as Australia, where the adoption of SVoD services is quite high with local players such as Presto, Stan, Foxtel Play, Quickflix and the video rental provider, Ezyflix already dominating the space for the past few years, at least before Netflix swept over Australia's shores and starting making its way into more than 408,000 households as per what Morgan Roy Research estimates, SVoD has become the new battleground for the TV and video services market, not only in Australia but in most countries where OTT digital content is growing rapidly.
Anyone who owns a stake in the TV and video market will want a share in the SVoD market, and from the momentous growth experienced by Netflix in Australia over the last 3 months, a few 'flix factors' seem to help some SVoDs to stay ahead in the game, namely content exclusivity (according to Morgan Roy Research, the 'Game of Thrones' could single-handedly hold up subscription numbers for a channel), tie-up with communication service providers (Netflix is bundled with Optus and iiNet while Presto is bundled with Telstra Bigpond and Foxtel Broadband), the broadcast quality (standard vs HD vs 4K) and whether, as what Morgan Ray Research highlighted, multiple SVoDs can be complimentary to each other, each offering unique value and content choices and targeting different market segments, allowing users to mix and match and create their own 'all you can eat' TV buffet.
