Streaming Wars: Video Services To Reshape The Media Landscape

29/01/2015

Why does everything have to die? In a world where everything changes, nothing changes! I remember a presentation back in 1998 with the opening slide posing the inflammatory statement: The death of Television.

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I cannot recall how many times I have been asked or presented that question in the last 17 years, what I can recall is only last week I was asked it again by a ‘media expert’. Let’s be clear the likes of Netflix, Presto, Quickflix and Stan will not kill television, in the same way the same way that the likes of Spotify, Rdio and Pandora have not killed Radio. These new live streaming offerings will not kill television, the same may not be said of video and dvd stores though! Seriously though, what they will do is fundamentally change the shape of the media landscape in a way that Australia has not experienced before. They will ensure that television and other publishers of content future proof and evolve their businesses and quickly. It will be more evolution and fast paced change rather than the death of a media channel. The SVOD’s will have a profound impact on the Australian marketplace, to what extent will probably be a little clearer in 6 months’ time.

2015 is already a watershed year, it is now down to the Australian consumer to decide how far reaching the impact on the advertising and media industry these newcomers will have. If the content is right and the price is right then consumers will like it, then ultimately advertisers will like it. The battle begins Australia Day 2015 marked the formal commencement of a battle for eyeballs and revenue streams with the launch of Stan – the joint venture between Fairfax Media and Nine Entertainment. By the end of March there will be four (legal) major streaming services available to the 23.7 million Australians with Netflix the last to join the war.

We are already serial streamers, watching nearly 10 hours of video (desktop, phone and tablet) each month, this rises to 24.5 hours amongst 18-24 year olds. Watch this space. What does this mean for consumers? Choice, choice and more choice, this will ultimately drive greater competition in the already fragmented Australian media landscape. It should also mean less illegal downloading as great content becomes more accessible and at a reasonable price. It means that we have truly arrived at age of what you want, when you want and how you want. What we have also learnt from the US is that there is a 40% overlap between streaming services meaning that it is not one or another but more than likely a combination of two services to access your preferred content. We also know it will be hero content such as Game of Thrones, House of Cards or Better Call Saul that will drive adoption and which one you sign up with.  

What does this mean for advertisers? Very little at this stage other than lots of eyeballs reading and observing how many eyeballs that the streaming services will deliver. In the end it will come down to the economics; Netflix in the US, has up until this stage maintained an ad-free subscription based model, that said Australia does not have the luxury of a 317 million population to drive subscription revenue. Although currently none of the current services supports a commercial model, I expect this to change as the market learns and matures.   Who will win the streaming war? I doubt that the Australian market can support three or more players and won't be surprised to see some form of consolidation as the Australian market is not big enough to support multiple offerings where content is king and content is expensive. The likely scenario is Netflix, a consolidation major player then probably a third major player which may or may not exist in its current form. But for now, the revolution has begun. This is not about being first; this is about the long game and getting the consumer experience right, greater commercial success will then I am sure, follow. Now what to watch tonight?

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