The Netflix Spark: Why the arrival of the SVOD platform heralds a more even distribution of the future for everyone

netflix-reed-hastings

Netflix CEO Reed Hastings

so yesterday as I was meandering along the freeway in Melbourne I heard the most startling comment on the radio. a contributor to the city’s 3AW station was talking through the highlights of the evenings TV schedule – and suggested that because TV was ‘out of ratings season’ there wouldn’t be much to watch that evening … she gave a special shout-out to Nine who “bless them, were treating us to a new episode of Person of Interest”.

that broadcast TV networks take their foot off the pedal whilst out of season in order to hold new content back for the weeks when ratings is once again tracked is one thing – but for it to be such a consumer-facing matter of fact took me by more than a little surprise. this after all isn’t an industry conversation or debate, but a public radio station – openly discussing the fact that a TV network was “treating” the audience by actually offering them something new to watch.

this rather startling starting point underlines the extent of the firestorm now fully smoldering in the Australian TV market – the spark for which came courtesy of Netflix. on November 19th, after months of rumours and speculation, Netflix finally announced (with timing naughtily designed to crash Nine’s AGM) that it would launch in Australia in March 2015. the response from local Aussie players had been in development for some time. in short:

  • Foxtel, who arguably have most immediate disruption to face, have revisited their pricing strategy across the board and in particular halved the price tag of Presto (their SVOD or Streaming Video On Demand service) to $9.99. in addition they’ve partnered with Seven West Media who will contribute programming to the service from next year.
  • Nine and Fairfax’s joint forces have combined to create the $100m SVOD service StreamCo – with the consumer-facing platform brand Stan. Stan has subsequently announced deals with CBS, BBC Worldwide, MGM and SBS (who will bring their world movies to the party).

all of which leaves us with a three horse race between Netflix, Presto and Stan right?

wrong.

in fact it’s barely the beginning.

there’s Quickflix, Fetch TV, the individual channel catch-up services, Ten have yet to pick a dance partner, the ABC’s iView and of course YouTube – which in July accounted for over 1.5m content streams, reaching almost 11.5m people (source).

taken together there’s increasing volumes of views being delivered to the 50% of Aussies who watch online content. the numbers are already big … according to Nielsen in July there were 2.7bn streams (and that was down on June), and time spent streaming is increasing – up to around 8hrs per person per month generating 6.5bn minutes of streamed content.

and Netflix is still three months away.

the impacts of all this will be significant; in the immediate term there is undoubtedly going to be a firestorm for views and scale – brace for plenty of press releases in the first quarter of 2015 about content deals, views and reach. in the medium term this will play out in a battle for content – with many shows already locked away in local deals, there will be fierce competition between the platforms as distribution rights cycle into play.

the long-term implications will be two-fold. firstly, with increasingly fragmented and diverse platforms and viewing services, advertisers and their agencies will increasingly rely on programmatic solutions to build reach quickly. in addition many advertisers and ad agencies will finally be forced to break out of the ‘advert’ model – using instead platform-neutral content strategies that can adapt to content and context more quickly – generating more relevance for brands’ comms. think native content in video form.

the second long-term implication will be the long-overdue radical shift in viewer expectations. more choice, more freedom to choose what we watch and where, how and when we watch it. this future has been a long-time coming, and has been with some for much longer than others  … as William Gibson so magnificently put it, the future is already here – its just not evenly distributed.

strap in people … because what’s coming is a radically more even distribution of the future – a future in which the idea of being “treated” to a new episode of Person Of Interest by a network, may by as incredulous as the very idea of tuning in to a broadcast network in the first place.

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