Australian SVoD Poised to Break Billion-Dollar AU$ Barrier

Video Insights Market Analysis and Commentary

Australia’s TV and video market is on track to achieve a second consecutive year of growth in 2019, with consumer spend set to grow by 4%, according to a new Video Insights report from Futuresource Consulting.

“The Australian market is delivering a solid overall performance, but despite the continuing upsurge, its key components are experiencing wildly varying fortunes,” says David Sidebottom, Principal Analyst at Futuresource Consulting. “SVoD is the country’s shining star, with our forecasts indicating a net subscriber increase of over 2 million expected in 2019 and consumer spend poised to break the AU$1 billion barrier for the first time. Netflix is expected to further increase its investments in Australia, as it seeks to maintain growth and increase ARPU. What’s more, by 2023, the number of Australia households with at least one SVoD service is set to reach 80%. That’s one of the highest levels on the planet.”

In the transactional video sector, Australian consumers continue to show a preference for entertainment ownership, with electronic sell-through of movies to own (EST) continuing to outperform transactional VoD movies. Physical media also continues to play a role and will still account for nearly two-thirds of transactional home video spend in 2019. However, the Australian home video market is moving towards a digitised majority, and transactional digital consumer spend will exceed that of physical by 2021.

“Google Play has emerged as a key player in the digital transactional home video market,” says Sidebottom. “It is now an important driver behind both EST and VoD growth. This, combined with better set-top box functionality for the Pay-TV VoD providers of Telstra and the rise of Fetch TV, is culminating in a strong year for transactional digital video. The increased visibility of movie purchasing on YouTube has also helped maintain healthy levels of EST movie growth, capitalising on the significant YouTube audience. Our forecasts indicate consumer spend on transactional digital video will grow by 12% this year, the strongest year of growth since 2015, when the market was considerably more embryonic.”

Premium rights availability is also becoming a key focus, with even more emphasis than many other Western markets. Disney’s first pay-window movie rights with Stan are set to expire with Disney re-claiming these rights to coincide with launching its Disney+ service in November.

However, in contrast to SVoD’s ascendance, the traditional Pay-TV sector is in a challenging period. Leading player, Foxtel, has restructured its services, investing in OTT services as traditional revenue streams struggle. In addition, against the backdrop of widespread SVoD service adoption, there could also be a new battleground for premium sports rights, with Amazon, Stan or Netflix potentially moving to the next level of OTT content provision, although Foxtel is countering this with the launch of Kayo.

Moving forwards, total video entertainment spend will continue to climb, from AU$5.2 billion last year to AU$6.1 billion by 2023, driven primarily by the rise of SVoD.

The Australia video insights report from Futuresource reviews the overall video entertainment market in Australia and assesses the impactors and drivers. Key areas covered include online video, Pay-TV VoD, DVD and Blu-ray sell-through and rental, subscription Pay-TV and box office, with detailed market data provided from 2016 out to 2023.

About the author

David Sidebottom

David is a Principal Analyst – Media and Entertainment. David has over 20 years’ experience in a research and consultancy environment and is closely involved in researching, analysing and consulting on key content industry and consumer technology developments worldwide, with a particular focus on the evolution of digital business models in the TV, video and music industry. David works with a wide variety of high profile Futuresource clients across the content ecosystem including studios, broadcasters, technology companies, hardware vendors, service providers and industry associations. He also directs Futuresource’s long-running global consumer panel ‘Living with Digital’.