Streaming video on-demand war will claim first victim ‘within 12 months’ claims Fetch CEO
Lorson
The head of over-the-top TV service Fetch TV believes the online streaming war between Presto, Stan, Quickflix and Netflix will claim its first victim “within 12 months”.
Scott Lorson told the Mumbrella360 conference yesterday he doesn’t believe all of the current players have the financial backing to survive for long, and that at least one will go within a year.
“There are five million homes in Australia who’ve had 20 years to get the ‘big Foxtel’, many of them have had it and turned off, and to be frank, that’s probably the market that we’re all going for.
“There’s a race on in that five million, and there’s going to be winners and losers within 12 months,” he said.
“This is going to play out very quickly, and anyone who thinks any of us have the wherewithal to sustain losses for two, three, maybe four years… that’s not my opinion.”
Other panel members, which included Presto director Shaun James, Quickflix CEO Stephen Langsford, and Stan CEO Mike Sneesby, disagreed, at least on the time frame.
“A lot of people are yet to discover streaming, especially out in the burbs,” said Quickflix’s Langsford.
“I probably don’t agree it’ll play out in the next 12 months, but I think it’ll be an interesting 12 months as it is an interesting month, week, day in this industry.”
Stan’s Sneesby said current players have the financial capital to back up their stake in the market, at least for the time being.
“I think it’s the beginning of what’s going to be a pretty long race,” he said.
“The need to invest over a long period of time is definite, but how this market shapes up, what happens with other international players, what this world looks like in two or three years, I think will be very different to what the world looks like today.
“I don’t think it’s going to be a 12-month sprint. The players who’re investing today are well funded to be able to invest and ensure they get to a point where their business can be successful.”
Presto’s director Shaun James reiterated this.
“We’ve got a long-term commitment from both shareholders [Foxtel and Seven West Media]…Our shareholders are in for the long haul,” he said.
L:R Presto’s Shaun James and Quickflix’s Stephen Langsford
Langsford also discussed his reasons for agreeing to become a reseller of rival Presto’s streaming content, blaming a “nuclear arms race” for content about the streaming video on demand (SVOD) services.
He made the comments in response to a question on whether as the Australian listed business was too small to compete against the might of Netflix, Presto and Stan saying: “I think when it comes to subscription streaming and the licensing arrangements and the minimum guarantees, it’s almost like a nuclear arms race.”
“And therefore it makes sense for us to leverage our strength of device distribution, existing customer base, to now essentially get to the strength when it comes to SVOD content.”
Langsford’s comments came in a session on the “State of Streaming” which included the bosses of Stan, Presto, Fetch TV and also Ten’s Tenplay catch up option.
Quickflix made the deal last month which means its streaming offering will now be Presto content, but it will maintain its own pay-per-view movie and TV offering, and DVD business.
The founder of Quickflix told the room the deal gave him a competitive streaming option and allowed him to focus on its existing DVD business.
“From Quickflix’s point of view, as most would know, we were first in the market when it came to subscription streaming,” he said. “And we’ve spent a lot of money over the years in getting our service out across a broad range of devices, from smart TVs, game consoles, et al, and then we’ve also introduced transactional streaming, and we have the streaming service complemented by DVD, and we’re still big believers in DVD.
“DVD was a billion dollar market last year. I think digital in all its forms accounted for something like $160 million, so ther’s still a massive DVD market to go for, and that’s certainly a focus for us.”
Presto boss Shaun James argued it was a win-win for both sides and would give the Foxtel/Seven joint venture a bigger subscriber base.
“The headline for the deal is that a good deal is one that works for both parties. We see that, said James, who is director of Presto and VOD. “What it allows us to do is access a customer base that’s been long term, early adopters of streaming. That’s really attractive.
“The second point that Steve (Langsford) made there – it accelerates our devices rollout. We’ve still got some work to do in terms of availability across devices, Quickflix has done a lot of the early heavy lifting of that. And that’s a positive for Presto.”
Langsford acknowledged the funding challenge facing the ASX listed business, which recently came out of a new $775,000 capital raising, when up against the bigger players.
“When it comes to SVOD, that’s a big game, it’s a game where you need a big balance sheet to acquire the content, and we think it’s great to be hitching our wagon to Presto, and to be able to integrate that into our service.
“Essentially, the subscription streaming part of our service will be Presto, complemented by our transactional streaming service and DVD rental.”
Sam Buckingham-Jones and Nic Christensen
ummmm isn’t Quickflix the first victim? no wait I digress……they’re the sacrificial lamb.
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It’s definitely an oversaturated market. Will be interesting to see how this unfolds.
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Firstly, SVOD = SUBSCRIPTION video on demand. But, wait there’s more. AVOD and TVOD. All streaming services. And yes, it is unlikely that our market is big enough for more than a couple of VOD players. 70% of households prefer to have ads than pay for Foxtel. That must tell us something.
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If Foxtel’s low penetration tells us anything, it’s that 70% of households are price sensitive when it comes to paying for TV. $10 per month is a long way from the $100+ Foxtel charges for its full range.
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Of course. Most likely Presto. But this is it, the VOD Platforms are taking over linear broadcast and that is what the future looks like. Good time to get hold of the latest zero setup fee VoD Platform from Muvi Studio and become the ace video streamers for tomorrow.
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I think the market is so much larger than just existing Foxtel customers. Firstly even though Foxtel’s most basic package is $25 a month. You have to factor in the extra cost if you want to watch it on another tv, the extra cost if you want it in hd and the fact that’s it’s all 90’s re-runs. I think netflix is something like $12 a month for two screens at the same time. So I split the cost with my brother. Final cost is $6 yes SIX DOLLARS compared to how much more it would have cost on Foxtel. I know so many of my friends who have switched within the first month to Netflix. Don’t know anyone who has Presto or Stan. Maybe because a lot of us are using a VPN.
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Cancelled Foxtel, hooked up to Netflix and Apple TV – never looked back.
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Australian three SVOD provders should merge together and fight against giant netflix to survive.
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