The highly anticipated arrival in Australia of online video streaming service Netflix has spurred local operators to broaden their own services, raising the question of whether the service has left its run here too late.
The successful United States entertainment website has not confirmed an official launch date for Australia, but it is widely expected to be in the latter half of next year.
Netflix charges a fee to watch television series and movies ad-free and now has 50 million digital subscribers in the Americas and some parts of Europe.
The company also produces original television content, including House Of Cards and Orange Is The New Black.
Australian residents are blocked from accessing the US website, but it is estimated as many as 200,000 people are getting around the geoblock to sign up.
A survey of Australian finance application Pocketbook’s customers found nearly a third of those who subscribe or rent media are using Netflix.
Pocketbook’s Bosco Tan says that represents a three-fold increase in 18 months, in contrast to Foxtel subscriptions remaining steady amongst the same group.
Expectations of Netflix’s impending official arrival were heightened after reports Netflix representatives were in Australia discussing access to content with local television executives.
Foad Fadaghi, managing director of research firm Telsyte, says cementing deals to digitally distribute TV and film is crucial to the success of ventures like Netflix.
“Those that have the content relationship stitched up are the ones in the box seat going forward,” he said.
It is a sentiment not lost on Australia’s operators with Channels 9 and 10 setting up their own online subscription services.
Foxtel recently launched Presto and a new ad-free channel, and Dendy Direct is expected to be available next week.
There is also Quickflix, Fetch, Ezyflix and Big Pond Movies which are all trying to bolster their services and content ahead of Netflix’s arrival.
Netflix will succeed if ‘cost ratio is correct’
With a highly fragmented market and complex content deals, analysts say it could be possible that Netflix has left its run in Australia too late.
“If the service doesn’t have the content, all those trial services or all those initial services will come to an end for those who are not satisfied,” Mr Fadaghi said.
Megan Brownlow, from PricewaterhouseCoopers, said the Australian market has already developed without Netflix in the field and is doubtful Foxtel’s dominance will be seriously challenged.
“Content has been carved up according to geographic rights and a lot of the most attractive content, certainly attractive to Australians, has already been spoken for,” she said.
“They’ve built up some pretty strong defensive capability that they will use to good effect when other global players come to town.”
Some have also questioned whether any fee-charging streaming service can overcome the prolific piracy of entertainment media in Australia.
“In some ways the piracy cat has been let out of the bag and so many people do it today that it’s difficult for them to change their habits and go on to paying something that they’re already getting for free,” Mr Fadaghi said.
But Mr Tan said that could depend on the price being right.
“People are more than willing to pay for content, if the value and the cost ratio is correct,” he said.
The success of Netflix in Australia will depend on whether it is willing to take a gamble on Australians’ good intentions and the quickly fragmenting market.