Market Research Report Store Australia – Video Streaming, Broadcasting and Pay | Page 2

There are two major categories of paid online video content: Pay-per-view video-on-demand (PVOD)
and subscription video-on-demand (SVOD) services. SVOD has emerged as the major category of paid
online content in Australia. The global streaming revolution is gathering pace. Streaming is closing in
on broadcast TV. The entry of SVOD providers Netflix, Presto TV and Stan saw a rapid update of
SVOD services. This rapid increase in the rate of adoption of SVOD is occurring where high quality
broadband is already available. The NBN will accelerate this trend as the mass deployment of high
quality (fibre) broadband takes place via the NBN and will significantly decrease cost of delivery of
SVOD.
The Internet now rivals broadcast TV as a vehicle to deliver consumer content. Its shift in user
behaviour continues to drive change in the TV and media industries, prompting a move away from old
formats and business models and ushering in an era of high-quality, on-demand entertainment. The
broadcasters have been late entering the market – their focus has been on protecting their traditional
business which are under threat from declining revenues, rather than on establishing a strong foothold
in the SVOD market. Amongst the existing pay TV or free-to-air subscriptions there will be increased
pressure on profitability as competition for content pushes up the cost of licensing. One of the few
options left for broadcasters (and other traditional media companies) is to merge, in order to cut costs
and increase their customer base.
In addition to Free-to-Air TV, pay TV is also under increasing structural pressure from SVOD
providers such as Netflix. Fetch TV is emerging as a strong competitor to the incumbent Foxtel. Slowly
but surely the NBN is being rolled out and this is something that also benefits Fetch, whose services are
delivered via broadband. This distribution media supplies a great opportunity to offer an alternative to
Australia’s leading pay TV service Foxtel.
With such a large number of national and international players competing consolidation is starting to
take place. Quickflix has been forced to exit the market in 2016, followed by Foxtel’s Presto service
later on in that year. BuddeComm predicts that the rate of SVOD growth moving into 2018 and 2019
will begin to taper off and eventually level off in around five years time.
Key Developments