Netflix has not yet arrived in Australia but local media competitors Nine, Ten, Seven and Foxtel are frantically shoring up deals to make sure the TV-on-demand service doesn’t get an easy run into town.
In fact, the US video giant hasn’t even confirmed it is launching in Australia, but there are major movements in the Australian video-on-demand (VOD) space ahead of its suspected arrival sometime in 2015.
Nine and Fairfax are the latest players to combine forces, announcing a new a $100 million online video streaming service, StreamCo.
They will spend up to $50 million each to establish the new service, which will give users access to movies and TV programs on demand for a $10 monthly subscription fee.
The move will pit Nine and Fairfax against Netflix, which has an estimated 200,000 Australian customers despite not being officially available here.
They will also contend with local services such as Quickflix, Foxtel’s Presto service and free services like ABC’s iview, SBS On Demand and Ten’s TENplay.
Seven and Foxtel talk local
Seven West Media, Network Seven’s parent company, is also in “advanced” talks with Foxtel regarding a joint venture that could also include Network Ten, according to the Australian Financial Review.
The merger would give the Australian pay-TV behemoth’s VOD service, Presto, access to Seven’s vast catalogue of local content.
Seven West Media boss Tim Worner on Wednesday confirmed the company was in talks to launch its own service.
“Over the last few months those discussions have accelerated and we expect to make an announcement soon but we’re not ready to make an announcement yet,” he said.
News of the arrangement also coincided with reports Foxtel is considering slashing its premium subscription service to less than $100 a month.
In bed with Nine and Fairfax
Analysts praised Nine and Fairfax’s decision to enter the growing online streaming business, which is the subject of considerable attention thanks to the success of Netflix.
“It does look like Nine has finally woken up to the idea that the Netflix of this world and on-demand streaming is coming about,” IG market analyst Evan Lucas said.
“I see it as a reasonably good step forward.”
But Mr Lucas said the success of the service would hinge on what content it offered.
StreamCo, which is set to launch sometime this financial year, has already secured “cornerstone” deals with content providers but hasn’t given any hints about the types of shows and movies it will offer.
Fusion Strategy founder Steve Allen said streaming-on-demand currently accounted for around three per cent of the overall television market, though it was growing strongly and would be boosted by the roll out of the national broadband network.
“It’s quite small but it is going to double in the next five years,” he said.
“It’s not going to be a large part of the landscape in terms of dollar, but as the NBN rolls out it is going to be more and more the thing that consumers are going to demand.”
He said the joint venture was a smart move for both companies and paired Nine’s ability to make content and its relationship with international providers with Fairfax’s experience in running a subscription-based service.
It also comes amid speculation of a potential merger between the two companies if the federal government relaxes media ownership laws.
StreamCo will be headed by Mike Sneesby, who previously worked for Nine as head of corporate strategy at ninemsn.
Nine boss David Gyngell described the joint venture as “groundbreaking.”
“The combination of our two businesses will provide the joint venture with unprecedented distribution and awareness,” he said.
“I look forward to building one of Australia’s greatest new media businesses.”
Fairfax boss Greg Hywood said subscription-video-on-demand (SVOD) was the next wave of media evolution.
“We’re delighted to join Nine in developing a compelling subscription video service,” he said.
“SVOD is a proven business model overseas, and we look forward to offering this service to our subscribers, and indeed all Australians,” he said.