Stan’s Future Looks Uncertain As Nine Entertainment Look For Options
After a quick rise to fame, the Nine Entertainment operation Stan is facing new challenges as they struggle to hold onto content such as Disney that delivered the quick growth that is set to evaporate as new players emerge.
Analysts are tipping that Stan subscription growth and revenues will be hit as overseas owners of content realign their relationships in Australia with Disney a big traffic generator for Stan set to launch their own service in Australia later this year.
Stan was launched built on the back of shareholder loans totalling $254m from Nine and Fairfax.
Since launching on Australia Day 2015, it is estimated to have racked up operating losses of $214m and carries $140m of capitalised programming costs.
The Australian newspaper claims, that management at Stan have been trying to find an equity or content partner for the business in a bid to see it through what is shaping as a period of dramatic change in the market that could include some consolidation of the local players.
There is speculation that Stan may have to pivot to a deal with another of the Disney properties, Hulu, to find content. Archrival Netflix is estimated by AMPD Research to already have 5.3 million paying customers in Australia against 1.4 million for Stan.
Too small to fund a big roster of original content and facing the expiry of sweetheart content deals from its start-up days that are unlikely to be repeated, Stan faces an uncertain future, analysts say.
Stan has not denied, that they have already been told that they have lost access to Disney after we broke the news earlier this month.
While they are yet to publicly acknowledge the expected loss of their licencing deal with Disney at the end of this year, management of Stan and Nine have been publicly touting their suitability as a partner for the US filmed entertainment giant as it rolls out its streaming business across the world from next year despite having no ongoing contract with Disney.
Also looking for an ongoing relationship with Disney is Stan archrival Foxtel whose new interface for Foxtel’s IQ3 and IQ4 set-top boxes, could include a tile for any of the Disney offerings, just as it plans to do for Netflix (and as Sky did in Britain last year).
At a briefing in April, Disney executives outlined plans to roll out not just Disney+, but extend its Hulu and ESPN+ streamers to an international audience from the September quarter of 2020.
Most of its content deals with third parties expire in the next four years and Disney said its Disney+ launch plans would “prioritise markets for which key content is available” and in which consumers had already shown they were willing to pay for streaming services.
But it qualified the timetable by saying that, in markets where it would “most likely need to launch with distribution partners,” Disney would allow extra time to integrate with their platforms.
“If you are Stan, you are going to have to accept Disney+ is going to launch against you,” says one industry executive.
CCZ Statton analyst Roger Colman thinks that the Disney and Netflix brands are best positioned to prosper in the upheaval, but that consumers are still likely to want a local aggregator to provide the best of the rest of television shows and movies, as well as sport and news.
And with the Telstra and News Corp-owned pay-TV and streaming business Foxtel generating $3.1bn in revenue from 2.4 million subscribers it may be best placed to pay that role.
Foxtel also generates revenue per user of $78.56 a month — about 7.5 times that of Stan — and has news and sports offerings, including its fast-growing Kayo Sports, that rivals lack.