Stan is Nine’s $800m asset, and should partner with Disney on an ad-funded tier to transform media
Nine’s Stan should introduce an ad-funded tier in partnership with Disney, CHEP’S Ben Shepherd proposes, creating a product at a truly disruptive price point for consumers, allowing Nine to access the best partner in the world, and giving Disney a running start in the local market. Its a win/win/win, Shepherd argues, and could be one of the most transformative partnerships in Australian media.
Next Thursday, Nine will release its FY19 results to the market. In the rapid evolution of the domestic iteration of the ‘streaming wars’, Nine is perhaps the most interesting party in terms of its impact over the next two to three years.
Stan is the most intriguing asset right now. In its present form, it is basically a domestic version of Netflix, both in terms of pricing and monetisation. But things get really interesting when you consider what it could look like in 12-24 months, as a unit of Nine, as a stand alone business, as a joint venture entity or as a 100% M&A target for a global player.
Great article Ben!
Nine has an ad funded tier already with free-to-air and Nine catchup.
An ad funded ‘lite’ version would be unattractive.
But a Spotify style ad funded version would be genius. Premium content for free with soft-limits is the way to go here.
One thing – Apple TV+ plus launches in the US Fall (late Sept). This platform will offer once gain more choice and premium offerings to the market – with no ads. This will launch in Australia not long after the US. This will be another player and eat into someones revenue – but who can weather the storm the longest?
This guy is a genius.
Why would Disney need Stan?
The brand is only known in Oz. It’s a database of email addresses and output deals set to expire. It doesn’t own content. Stan is nice-to-have, not must-have.
Amazon and AT&T basically are using streaming as a sweetener, sometimes even as a free add-on, for much larger underlying businesses.
Breathtaking ignorance of the streaming market and wider market trends.
Someone should commission this guy to write about the video market. Oh hang on …
Sweet burn Mickey Mouse. Let’s see what eventuates eh.
An ad-funded tier? and then immediately need to renegotiate EVERY deal with every studio they have because Stan hasn’t purchased the rights to put the content out on an advertiser supported platform. Dreaming.
Why should that matter? It wouldn’t impact ARPU so the content owners would see benefits in volume and revenue. They’re seeking revenue first, where it eventuates is not a concern.
Thankfully this ‘insight’ was published for free and not an advisory note from a consultancy.
If it were the later, I’d want a refund on my fee.
As Mickey said, this lacks a basic recognition that Stan’s business is a database of uncontracted subscribers, marginal original content (and that is of questionable value to Disney) and content deals that would seem unlikely to be renewed.
The author need to only look the 20th Century Fox and Disney catalogue shifts away from Netflix to recognise this idea is a non-starter.
Interesting comment but I wouldn’t be as flippant to suggest Stan is a bunch of email addresses and I wouldn’t be the only one to share that view.
Look at Disney M&A activity over the past decade. They are happy to buy when it gives them leverage or speed. Stan would provide both.
Also, I do like how you couldn’t resist an insult to start off. Is this how you speak to everyone? Bravo.
It’s not an insult, it’s a terse critique on the quality and strength of the opinion – two on the same subject in a matter of days. I did’t find either piece a compelling assessment of the BVOD category nor the number crunching-heavy to support a strategic tie-up. You’ve based it around subscriber numbers and there’s a lot of detail around Stan subscribers that the market doesn’t know. Which brings me back to point around informed opinion vs just opinion and what you could expect from a consultancy vs free press.
Also, somewhat critical to your opportunity assessment, you missed the fact that Disney’s Iger is on the board of Apple, who’s upcoming TV service is expected to offer Disney+. That’s a significant oversight.
To my knowledge, all of Disney’s acquisitions had strong revenues and profits, none were loss makers.
Let’s see what eventuates. Unlike you I’m happy to put my name to it, so either way I can be held to it; your informed opinion is without attribution so I guess that’s the difference between us. Good luck with it all.
Iger on Apple board is not relevant whatsoever. Eric Schmidt was on the Apple board til 2009.
Re acquisitions – not quite true either what you say. Maker, playdom, tapulous, Hulu – all were not profitable and were VC funded.
But please keep going
Nine should set up a history entertainment platform to capitalise on the large number here and around the world who love history.
Of the 2,300 million FaceBook users, 270 million include history as among their interests. The enormously popular history channel has over 450 million viewers.
In Australia, of the 15 million FaceBook users, 3.5 million name history as among their interests.
A lot of thought has gone into this article, but the fundamental flaw is that streaming video space is likely to fragment rather than consolidate.
Users would not be willing to pay $5 for a streaming service if there are ads on it, not when they have many other options where they can pay the same amount and get uninterrupted viewing.
Stan will do alright in the short term, however, in the long term content creation will be king – this is why Netflix, Amazon and Disney have all spent a huge amount of money on original content.
To spin off Stan with an IPO would be reckless. It’d list at $2 and be worth $0.001 within a year.
Rather than fall into the trap of rapid ad funded growth needing to be topped year on year on year to appease shareholders. How about no ad funded model? Then project a consistent steady growth for long term success?