Australia’s TV networks need to create a unified BVOD service now
For all the chest thumping around the usage of broadcast video on demand (BVOD), Australia's free-to-air TV networks are engaged in a battle against a much larger, much more popular, much more capitalised and much more evolved monster. PwC's Ben Shepherd explains why, at the moment, they're fighting a losing battle.
There is no denying Australian TV networks have made some positive strides over the past two to three years around their on-demand products.
The commercial catch up services from Seven, Nine, 10 and SBS have improved in terms of usability and depth over this time, and the speed at which highly viewed programming has made its way to on-demand platforms has increased to the level that users arguably had expected for some time.
However for all the chest thumping around the usage of BVOD – it is engaged in a battle against a much larger, much more popular, much more capitalised and much more evolved monster.
Netflix
“Netflix is a verb. 7Plus is a noun”
There is no question all participants in the ad funded video ecosystem have understated the impact Netflix has created.
It drags viewers away from ad funded channels and allows people to consume high volumes of content with absolutely no advertising interruption.
It is not just a young persons phenomenon. Yes, it is driving already scarce under-35 eyeballs away from TV (and other media), but it’s a mainstream activity in the majority of houses, across the majority of demographics.
Netflix has become the go-to for key genre battlegrounds – namely drama, kids programming, comedy and documentaries. Leaving the FTA networks competing primarily in live sport (expensive) and reality (risky).
TV is becoming entirely dependant on the power of the programming – not the network. Arguably the brand power of a network is low – a “strong” network brand can’t prop up a poor show, but a powerhouse show can prop up (temporarily) a poor network.
My view is four individual BVOD channels cannot compete with Netflix in the long term. They are playing a game they will lose – across depth of content and portfolio, across sophistication of data, across economies of scale and across brand.
“Netflix and chill”, “sat and watched Netflix all weekend”, “can’t wait to crack open a wine sit in front of Netflix” have become legitimate things you hear. Netflix is a verb. 7Plus is a noun.
Netflix is where you go to be entertained. The BVOD services are where you go (currently) to watch a specific show. Look at VPM data – BVOD viewing is driven on the whole by a handful of key programs (MAFS, MKR, Brooklyn 99, Home and Away, The Good Doctor, Killing Eve, Handmaid’s Tail, Bachelor in Paradise, Bluey, Peppa Pig, The Bold and The Beautiful).
To compete truly against Netflix for attention (and let’s face it – the BVOD competitors, and the wider FTA industry’s main competitor IS Netflix) these services need to be deeper and transfer from a conduit to watch your favourite show to a platform for entertainment.
My opinion is the only way that this can be feasibly done is for the four commercial FTA BVODs to become one service – an all-you-can-eat, free, place to find a large volume of entertainment across all genres.
No need to have four apps on your phone.
No need for four logins.
No need for different user experiences.
Everything on the one platform – available across devices.
Click to enlarge
Based on Nielsen Answers data for non-connected TV usage of these catch-up platforms, combined they have an unduplicated reach of approximately 5m. The overlap between services is anywhere between 15-47%, with 9Now the largest in terms of users at 2.88m. (Remember these numbers are based on what Nielsen Answers can measure – panel only, ex. connected TV).
By pooling in this hypothetical – these services would broaden their overall reach to 5m people – for most a 50% increase. Collectively the catalogue available for the user would boost from 200 titles to likely over 1,000, if not more. This would immediately make this rolled-up platform the second largest OTT provider in the country.
By becoming one entity, the networks could save on resourcing and development, marketing and go to market. They could still sell their programming individually – or they could create a shared marketplace where revenue is distributed based on inventory placement.
I appreciate this thinking may seem radical, but the data and current usage would suggest that competing against Netflix is likely to be a battle that will be lost – and it is highly unlikely any individual BVOD can be anything but a niche player when compared to the enormity and ubiquity of current video platforms YouTube and Netflix, and platforms that should be considered video such as Facebook, Instagram and Snapchat.
Users have shown they want depth of content, breadth of catalogue and accessibility based on their wants, not the networks’. They have demonstrated they are willing to pay for this en masse across all demographics and most income bands. Free TV must adapt and needs to look at how it reimagines itself as a modern entertainment platform built to thrive in the future, not protect past legacies.
Ben Shepherd is a director at PwC. This post first appeared on LinkedIn, and has been reposted here with permission.
Completely agree with this.
The FTAs in the BVOD space are the bickering Stark’s and Lannister’s while the Netflix Night King marches ever south.
Or another parallel, the duplication here reminds me of exactly how the major magazine publishers bickered amongst themselves, duplicating capability while first the internet and then social hobbled them.
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https://www.freeview.com.au/
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How can this article be written without the mention of Stan (and its success) and why would Nine not build on that, rather than “pooling” with Seven et al?….. This applies much more to everyone OTHER than Nine?
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“Netflix is a verb. 7Plus is a noun.” Brilliant.
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This article is why you don’t go to accountants for media advice. Sorry Ben, I’m sure you’re a good bloke with the best of intentions.
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Ben is suggesting Freeview 2.0 which will have a single list of available programs and a behind-the-scenes interface to each of the Network program servers. Add your choice of shows to the viewing cart and hit “Play”. A SuperAggregator.
Expect the app to be released simultaneously with the AlColesWorth grocery purchasing app which will also have a single list of items with comparative pricing and free delivery if your purchases exceed $100.
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Am amazed there is no free Netflix BVOD option interrupted by advertising yet? Would it cannibalize itself that much to be a threat to it’s current paid subscription ad-free and on-screen branding free option? I fear not. The horse has bolted. What I like most about Netflix is they get the end viewer experience. Reminds me of how FTA used to be before it was taken over by marketing types peddling their cheap rubbish product placed so-called reality tripe. Netflix treats its audience as viewers instead of as marketing targets.
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Stan is in big trouble when Disney pulls its shows from them and runs its own service
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Agree Boomer. Its like asking Best Buy, Walmart and all other competing bricks & mortar stores to partner together against Amazon. While it may be in their best interest in the long run, in the immediate term they’re direct competitors.
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A few counter-thoughts:
1. Netlix is much less of a commercial danger than a stronger ABC
2. A unified BVOD solution is a much less of a commercial imperative that a unified trafficing/trading solution (10 years and counting)
3. Sharing a BVOD solution would mean having parity on the data. Data differentation is the gold that’s driving their TV businesses.
4. It would also mean the networks giving up control of the one platform that’s currently has revenue growth.
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Great and timely analogy!
Now if only Netflix had HBO….
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“Netlix is much less of a commercial danger than a stronger ABC” – how so?
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A combined FTA VOD offering would be a strong competitor to Netflix and anyone else who tried to enter the market. Everyone knows the importance of local content, so having one place to discover and view a lot of the local content available in Australia seems like a sensible idea.
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I find the single biggest issue with the ‘commercial’ TV network VOD services is not so much that they include ads, it’s that the ads very often actually make it impossible to consume the content. I was trying to watch Bachelor In Paradise (no judgement…) on 10 Play last week and it was so excruciatingly frustrating I simply gave up. Ads would start playing midway through content (not during the marked ad breaks), you’d get the same ad sometimes 4 times in a row, or content would keep playing underneath as an ad played over the top on repeat. So it makes the whole experience doubly irritating, because not only are ads annoying (but a necessary evil that you’re willing to accept), but they break the service and make it so it can’t even function. Until the networks can provide a stable service where the content gets priority over shonky ad serving you’re never going to retain or grow customers.
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It won’t happen. Networks are more focused on winning the zero sum game (i.e. stealing share from each other) than on the declining value of the game. There will be a point where it can no longer support all the players (cough, cough, TEN).
Strange that they won’t agree to aggregate BVOD, as that’s exactly what the terrestrial TV platform is….everything in one place with frictionless transitions from channel to channel.
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Hi @another agency … you flatter me in two ways. I’m not smart enough to be an accountant … and I dunno if I’m a good bloke. But thanks for the optimism.
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Ben is normally close to the mark but this one is a little odd. It’s presuming bvod is the end game rather than a transition or
companion tool. And also presuming event tv / must watch at time of broadcast is dead (Game of Thrones and MAFS suggest otherwise).
It’s not a coincidence 9 owns Stan or that 10 All Access has started. How long will it be before 7 have another crack? Probably within a year. Foxtel is finally transitioning with Kayo (albeit at it’s trademark glacial pace).
It’s foreseeable freemium and premium offerings will emerge as we move towards a time people wonder why the tv needs to be plugged into anything but the power.
FreeView will be the first casualty- as much from their own sloth as from their clumsy technology. It’s not a business model to have your industry org (Free Tv) lobbying to keep it 1980. Aggregators already exist to replace them eg Grace Notes on Telstra TV and Apple TV.
No mention of the abc. With over 23 million views of their show about a blue heeler alone, they seem to be doing just fine on bvod despite it (still!) only being SD.
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Great POV Ben. I agree to most points, however don’t be so quick to judge the success of Netflix. Netflix has taken the world by storm, no doubt about that. They licensed massive blockbusters and Disney to get subscribers on board and introduce ‘cheaper’ Netflix Originals to get viewers into the habit you speak of, to be entertained.
But that strategy is/was not sustainable, and I’ve noticed a distinct lack of blockbusters on Netflix as of late. It is noticeable that Netflix is reducing its licensing costs and I’m noticing my habit changing to watching Stan and BVOD. Netflix might be a verb but it hasn’t burned itself into the screen like Uber and Google… yet
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https://www.cnet.com/news/disney-plus-every-show-and-movie-that-will-or-may-be-available-to-stream/
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Both Netflix and the ABC soak up commercial audiences and put them into an adfree environment.
The ABC has around treble the penetration of Netflix in Australia. But most importantly, the ABC is measured, Netflix is not.
Therefore not only can the ABC can scale audiences much quicker, but this audience comes out directly from the quantified pool of inventory which media buyers trade all their TV money against.
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Surely the issue lies in the quality of programming – ABC (and some SBS) aside, the commercial stations on the whole have woeful programming that people only admit to liking as a secret pleasure (MAFS).
Isn’t the combined platform Freeview?
I don’t think an extra click of the remote is going to save them.
Broadcast TV will hang on till grim death for as long as it can.
The BVOD commercial platforms also still have ads. Most people no longer want to watch advertisements interrupting their TV. Until they also offer a paid ad- free option and are shocked at how few folks actually pay for it, they will keep pretending they’ve got it all.
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@Necessary Evil, I’d chalk that up to shonky internet connection, not ad serving. Ad pods are plotted where the traditional ad-breaks would normally be, and the content should pause and re-start after the ad-load is over.
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I agree with you – not suggesting bvod is the end but I do think a consolidated service for the fta networks would extend their existence more than their current actions. In 10-20 years I would say that it’s difficult to imagine the network aggregator of content broadcast model in Australia will be something that exists.
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Totally agree. I appreciate the lack of network watermarks and in-show ads popping up everywhere, and I can enjoy the credits without ads for other shows, if I do choose. Network TV and FOXTEL, for that matter, have no respect for their audiences. Sick to death of reality garbage, product placement, obtrusive advertisements and the pathetic old movies and TV shows the FTAs keep adding to their sub-channels.
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“Netflix is a verb. 7Plus is noun” has hit the nail on the head. BVOD is currently a prisoner’s dillema, yet the networks seem to think there is advantage to be gained through simply being in the space. Curiously, Nine claimed in a recent ASX update that they expect Stan to be profitable in 2019 (from memory).. Think there is still a lot to play out in this area before we see the actual BVOD market reveal itself.
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It’s not a shonky internet connection
It’s incorrect cue point insertion within fragments and not at the boundary, often manually input by a producer.
Comes also down to being able to effectively implement the right technology to make sure ads are seamlessly inserted into content
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Hulu is pretty similar
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Good insights, could not agree more. The negatives here don’t have their consumer goggles on.
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Netflix. Hulu. HBO Go, here in the USA.
No ads.
Ever.
Yeah!
Also sat radio. No ads.
Ding ding!
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Sample of 1 doesn’t make a case
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Hi everyone – I’ve tried to address many of the questions both above and communicated directly in this pt 2 piece. https://www.linkedin.com/pulse/part-2-questions-answered-australias-tv-networks-need-ben-shepherd/
[Editor’s note: The piece has also been republished here, with permission: https://mumbrella.com.au/how-australias-tv-networks-could-build-a-single-bvod-service-to-take-on-netflix-and-why-they-should-576078 ]
Good article and totally agree! The biggest challenge for FTA’s is their inability to actually make decent programmes. Please stop churning out crappy reality sh@te and actually make something of quality. BBC anyone? That is why people are flocking to Netflix. If you don’t watch reality TV or Sport, there really is no reason to tune in.
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The guardian did 20 years of SpongeBob. Let’s go there. I can buy a DVD of season 1 or any season online for about $10. I can’t rent on Stan pay per view, I’m forced into a monthly, and it only has seasons 7,8and 9. But all I wanted was SpongeBob season 1.
Until this model unifies into something more suitable it’s choosing between identical twins because this is the foxtel and Netflix model too: I can’t pay per view because you want to extract rent. Unified or not you have two problems here: lack of IPR consistency and only one payment model which suits you but not me.
I picked SpongeBob but it could have been art movie or BBC classics. Your industry sector is at war with itself over the long tail income IPR model and won’t give me what a DVD puchase will.
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Yes, Dave.
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All free to air’s could combine and call it something like… Freeviewplus.
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