Thursday, 10 May 2018 00:05

Pay TV, free-to-air TV under threat from video-on-demand: analyst

By
Phil Harpur, senior analyst with BuddeComm Phil Harpur, senior analyst with BuddeComm

Pay TV and free-to-air TV are under a growing threat from video-on-demand, according to a senior telecoms analyst who says global streaming is gathering pace, with the Internet now rivalling broadcast TV as a vehicle to deliver consumer content.

According to Phil Harpur, senior analyst with the BuddeComm group, there are two major categories of paid online video content — pay-per-view video-on-demand (PVOD) and subscription video-on-demand (SVOD) services — with SVOD now emerging as the major category of paid online content in Australia.

"The global streaming revolution is gathering pace. The Internet now rivals broadcast TV as a vehicle to deliver consumer content. Their shift in user behaviour continues to drive change in the TV and media industries, prompting a move away from old formats and business models and ushering in an era of high-quality, on-demand entertainment," says Harpur.

“Streaming is closing in on broadcast TV,” he notes.

And according to Harpur, a rapid increase in the rate of adoption of SVOD is occurring where high-quality broadband is already available. "The NBN is accelerating this trend and as the mass deployment of high quality broadband takes place via it there will be a significant decrease in the cost of SVOD," he says.

“Netflix has emerged as the SVOD dominant operator, but both Stan and Presto have built up a significant customer base, and both have the substantial financial resources of their backers at their disposal.

“With such a large number national and international players competing consolidation is starting to take place. Quickflix has been forced to exit the market, followed by Foxtel’s Presto service later on the same year.”

Harpur also says Foxtel during the last few years has struggled to increase pay TV penetration in Australia.

“Viewing habits have also been affected by the advent of catch-up TV services, which are available from the main broadcasters. In addition, subscription video services from VOD operators such as Stan and Netflix are further eroding live TV viewing as subscribers choose instead to watch programs at a time of their choosing.

“Also the distribution advantage held by Foxtel is slipping away as the NBN becomes built out over a greater number of premises, so expanding the reach of capable broadband infrastructure which enables subscribers to access OTT and IPTV content. These changing market conditions are impacting both the FTA and pay TV industries.”

According to Harpur, broadcasters have been late entering the market and their focus has been on protecting their traditional business which is under threat from declining revenues, rather than establishing a strong foothold in the SVOD market.

“Amongst the existing pay TV and free-to-air subscriptions there will be increased pressure on profitability as competition for content pushes up the cost of licensing,” Harpur added.

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Peter Dinham

Peter Dinham - retired and is a "volunteer" writer for iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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