The uptake of subscription video on demand (SVOD) has services delivered over the Internet has skyrocketed in Australia with two million active subscriptions recorded at the end of June 2015, according to new research by technology analyst firm, Telsyte.
Its Australian SVOD/OTT Video Market Study 2015 study showed the massive growth has been driven by the arrival of new services such as Netflix and Stan, free trial periods, and promotions offered by the leading ISPs, mobile carriers and TV manufacturers.
It indicated the two million number is up from 315,000 subscriptions at the end of December 2014, and around 1.5 million of these subscriptions have been converted to fee paying (no longer on a trial), generating more than $17 million in revenues in the month of June.
SVOD services are delivered over broadband Internet connections rather than traditional broadcast television signals. Most service providers support set-top boxes like Apple TV, computers and post-PC devices (smartphones and tablets) for viewing. But most people use their TV as their main screen to watch SVOD services.
The study also found that the paid subscriber market leaders, in order, are Netflix, Stan, Presto and Quickflix. Telsyte managing director, Foad Fadaghi, said together, these top four represent around 90 per cent of all paid subscriptions but added there is a long tail of providers covering sports and special interest niches like AFL, NBA basketball, NRL and UFC matches.
“The SVOD market is highly competitive, seasonal, and unlikely to be a winner-takes-all marketplace. The early success of SVOD providers will encourage more film studios and content rights holders, including sporting codes, to consider direct streaming to consumers,” Fadaghi said.
Fadaghi also claimed SVOD and Catch-up TV services are expected to drive demand for high-speed broadband upgrades, particularly with the arrival of 4K (ultra high definition) content over the Internet. Telsyte research showed 22 per cent of broadband users intend to upgrade their fixed broadband due to streaming video. Furthermore, 53 per cent of respondents said their current fixed broadband might not be fast enough for streaming video services.
Fadaghi added that mobile carrier partnerships will be increasingly important to SVOD service providers as they help drive subscriptions that are also used over fixed-line broadband Internet connections.
Other findings from the study include:
- A complicated web of streaming content rights as well as the widespread availability of free trials has resulted in SVOD subscribers having an average of 1.6 services.
- Despite the increasing competition for eyeballs in the Australian online video market, streaming Catch-up TV, SVOD and traditional Pay TV will co-exist.
- At the end of June, almost 40 per cent of Australian households that had SVOD services also had traditional Pay TV.
- Despite the rise of SVOD, public broadcaster and advertising-supported streaming services remain the most popular online video services in Australia. Telsyte estimates seven million Australians 16 years and over, regularly (at least once a month) view Catch-up TV services.
- The lowering of prices by Foxtel in reaction to SVOD competition has seen an uplift in Pay TV subscriptions during the same period of rapid SVOD adoption. Pay TV subscriptions, including Foxtel, Fetch TV and others, was estimated to be 3.1 million at the end June.