With the release of new and revamping of several established video streaming services being undertaken in the coming months, 2014 appears like it could be ‘The Year of Streaming’. However, Australia might not be as supportive a market as some companies hope. And the way to fix that is more than likely nothing to do with providing a quality service.
Australia is not a stranger to streaming. Most major free-to-air television stations have some form of streaming system, like ABC’s iView, SBS’s On Demand, Channel Ten’s TENplay, and Foxtel’s Presto. Globally, however, the last few years has seen the emergence and exponential rise in popularity of both subscription and pay-per-play services.
By far the most popular business model is a subscription based service, where customers pay a certain amount a month for unlimited access to a large library of content. Using this model, US based subscription streaming giant Netflix is able to boast that around 10 per cent of Americans subscribe to its service and three times that figure have used it.
However, whether a streaming service can achieve the same kind of widespread adoption in Australia as seen in other countries remains a mystery. Australia already has its own Netflix equivalent, the similarly titled Quickflix, but this service has remained relatively obscure due to a lack of quality content. There are several factors present in the Australian market that could hinder success, stopping any streaming service from becoming (at least in the near future) as big an entity as Netflix has been in the US.
Australian internet services are not designed around the downloading of high amounts of data. While in the US, internet data is mostly unlimited, with plans focusing on providing better download/upload speeds, Australian internet plans are based on data caps. Australian consumers are cautious about exceeding download limits and risking speed throttling or extra fees. This mindset goes against the subscription streaming model. The constant streaming of high quality video files that can be many gigabytes in size could turn out to be a very expensive venture for those without data to burn, or the careless who do not check their data allowance regularly, making streaming a potential risk and less appealing to the average Australian consumer.
Another factor relates to Australian culture. In a report for BRW, BBY analyst Mark McDonnell claims that, culturally, Australians do not have a history of paying for video content. Between 80 and 90 per cent of the US households have pay TV, according to various sources, and this expectation of paying for good content has benefited subscription based services.
By contrast, less than 30 per cent of Australian households have pay TV, apparently satisfied with the several free-to-air channels. Having to pay for content, especially as an aggregate in the form of a monthly bill, is culturally perpendicular to how we as a nation consume video content.
This reluctance to pay for subscription streaming services could also be exacerbated by the numerous free streaming sites already available from our free-to-air stations. Much like subscription streaming services, a user is able to access sites like ABC iView or SBS On Demand using any personal computer, most smartphones and tablets, and from relevant apps on Smart TVs. This means that the main competitors for any subscription service in the Australian market are not only already established, they are free.
A separate factor has to do with piracy. Australia is among the top countries for illegally downloading video, despite our small population, with one quarter of all Australians admitting to regular piracy. This year, the country was named the number one illegal downloader of hit TV series Game of Thrones and Breaking Bad.
For many users, piracy is the only way for to view their favourite content. In the case of Game of Thrones, which is not even made available on iTunes to purchase, there is no legal way to watch the show except on Foxtel’s premium Showcase channel.
Licensing restrictions signed by distributors and both free and pay broadcasters have resulted in severely limiting the quality and quantity of content on Australian streaming services, and this is a major cause for the low adoption of Quickflix.
There is an argument that the average person is willing to pay for content if they believe it is fairly priced and offers a wide variety and ease of access.
Chief content officer of Netflix, Ted Sarandos, said that quality video streaming is a silver bullet against pirates.
“When we launch in a territory the [pirating] drops as the Netflix traffic grows,” he said. “The best way to combat piracy isn’t legislatively or criminally but by giving good options. One of the side effects of growth of content is an expectation to have access to it. You can’t use the internet as a marketing vehicle and then not as a delivery vehicle.”
Though more methods are becoming available in Australia to stream video content almost anywhere, and more are on the horizon, there is still indication that a subscription based streaming service would not be as successful in Australia as it has been elsewhere.
As much as the nation’s blogs are crying out for a Netflix-style service, there is no guarantee it will be a panacea for content piracy in Australia. A 2013 survey of content consumption habits showed that 42 per cent of local pirates would continue to download content illicitly, even if it were made available immediately at a reasonable price.
This is not due to available services being inadequate, rather that both the ways we regulate internet access and our own culture are not favourable to the subscription based streaming model. Though this will likely change in the future — there is a chance that many of Australians do not fully understand how the streaming model works or its benefits — at current Australia will be a very harsh market to conquer for anyone wanting to claim the streaming crown.
