TV Content War Set To Break Out In 2015

The bloodbath that has already seen Foxtel drop prices 50%
has also seen Fairfax cut a deal with Nine Entertainment to take a $100M
position in the Nine Entertainment streaming Company Stream Co.

The winner will be owners of display screens from tablets
and smartphones to TV’s and PC’s.

The big fear is that Netflix a US Company that has 50
million customers of which 33milllion are in the USA will land in Australia in
February as tipped stripping customers away from the overpriced Foxtel who have
been enjoyed a monopoly for more than 20 years.

Fetch TV chief executive Scott Lorson has already said that
he is prepared to bundle his service with the Netflix offering while TV
Companies Samsung, Sony, LG and Panasonic are chaffing at the bit to get
Netflix bundled onto their TV’s.

Sitting on the sidelines looking to have a role in the
content battle of the decade is Google and Apple with both Companies looking to
bundle content via new streaming devices.

Foxtel who are set to screw their existing customers by not immediately
dropping the price of their subscription is banking on their 50% discount deal
attracting new customers who for the past decade have shunned the Telstra News
Corporation own network primarily because of price and a lack of quality
programs.

The big winner for Foxtel has been sport which is set to be
bundled into the discounted packages at an additional price.

Existing customers who want a discount are going to have to
call Foxtel with existing services such as premium movies, children’s shows being
stripped out of their existing package.

Some question whether the Netflix service will work in
Australia, Scott Lorson said “Whilst few deny the consumer appeal of a
Netflix-style proposition, the viability of the business model in Australia is
far less clear,” Mr Lorson said.

“With a buy-in of circa-$100 million, strong
competition, and a model characterised by low ARPUs [average revenue per user]
and high churn, there are likely to be few spots on the winner podium. Overseas
experience suggests that seas of red ink lie ahead.”

SmartHouse understands that Netflix is currently looking at
producing content in Australia a move that has been highly successful for them
overseas with their House Of Cards series.

Morgan Stanley analyst Andrew McLeod told Fairfax Media that
the Australian online video-streaming market could be worth between $850
million and $1.1 billion.

Netflix, tipped to launch in Australia in 2015, has a good
chance of capturing the dominant share of the local market due to its global
scale advantage in programming, marketing and technology, Mr McLeod said.

Credit Suisse analyst Fraser McLeish said established TV
players had to act now to minimise the impact Netflix could have on their
revenues. “Existing players here need to try to make it as hard as
possible for them to come in and make it look as hard a market as possible for
them, in terms of getting hold of content or the strength of the existing
offerings,” he said.

“Free-to-air is still going to be the destination for
live sport, news, big reality shows and first-run drama, but then
binge-watching of slightly older series, or your more niche programming –
that’s where streaming will come in.

“It’s probably the biggest threat to multi-channels
rather than to what the free-to-airs are showing in prime time.”