Netflix Lands Down Under

Media 3/31/2015

It’s official! Netflix has switched on their service in Australia and New Zealand last week, a notable first move for the company’s entry into the Asia Pacific region. To date, Netflix has 57 million subscribers in 50 countries, and its latest touchdown into Australia and New Zealand is nothing short of a challenge as they enter into an already crowded market with several other players including Quickflix, Presto, EzyFlix and the most recently launched, Stan.

The Amazing Race

Without a doubt, the SVOD battle is underway between local and global streaming providers, in a bid to both acquire customers and more importantly retain customers. The battle will be fought on multiple fronts; from which service has the largest treasure trove of content, exclusive content deals that consumers want or demand to watch, freshness of content and pricing models. Speaking of pricing, customers are likely to be attracted to packages that are easy to understand. Free trials before sign-up, monthly low flat fees, no lock-in contracts, subsidised advertising or hybrids of free and paid are just some of the models being deployed so far. It is key that SVOD providers do not just compete on the content library alone but also innovative, flexible pricing models that customers can easily opt-in and out of.

How Not to Lose a Customer in 30 Days

Without any long term locked-in contractual commitments, customer churn will be an ongoing focus for all players to protect their monthly recurring revenues. Retention strategies will likely come from three fronts; content, technology and viewer experiences. Keeping content fresh by adding new releases that are promoted regularly to the subscriber base is crucial. Technology enhancements will also be key; UHD / 4K / 8K, advanced multi channel audio and diverse device and platform support. In terms of user experience, key consumer focused features such as great recommendations, personal watch lists and pre-curated playlists will all be expected.

The Differentiation Game - Content Content Content

Netflix maybe last to the party but unlikely will be the first to leave: their brand clout stands high with 32% of Australians being aware of Netflix, which is probably due to a high number of users who access Netflix through VPN services designed to mask IP addresses. Currently most estimate that 250,000 households in Australia use Netflix via a VPN service. But local players are not likely to make it easy for Netflix to carve out a chunk of the VOD pie. Stan’s exclusive content partnerships with US studios to bring highly anticipated dramas such as “Better Call Saul” and “Transparent” soon after they air in the US combined with unique local content such as “Gallipoli” is a winning differentiation strategy. It is evident that TV content is the main motive for customers to sign up for SVOD services, where 58% of users tend to subscribe for TV content compared to 30% for movies. Another move is Stan’s deal with major telcos like Vodafone and Telstra to subsidize broadband charges for telco customers to access Stan.

Who wins? [Besides the agencies spending all of the advertising dollars to break through the noise of this discussion and the media outlets getting those dollars?]

The Winner
But is the consumer the only winner to come out on top as the SVOD battle plays out? Sure, the consumer is in the driver seat, with multiple SVOD players to choose from and at low prices, consumers can afford to sign up with more than one SVOD service. Another winner will be streaming players’ respective advertising agencies as the services rollout ongoing competitive customer acquisition campaigns to overtake the other players in the market. But the ultimate winner will be the SVOD player/s with a loyal user base that has a high average customer lifecycle that outlives the rest. Let the games begin.