One doesn’t envy the difficult task that partners Nine Entertainment Co and Fairfax Media have ahead of them in launching ‘StreamCo’.
Nine are the first Australian broadcast TV network to move into the Subscription Video On Demand (SVOD) space. In doing so, they need to deal with a market that suffers extreme technological limitation, oppressive data allowance restrictions, and the need to prevent cannibalisation of their existing broadcast TV service. It’s quite a difficult task. But if they’re successful, the payoff will be bountiful.
The number of challenges ahead of StreamCo are many, but there are 5 core challenges the streaming service will need to face in order to deliver a valued offering in Australia:
WHICH MODEL TO EMBRACE: SAME DAY RELEASE OR SEASON CHUNKS?
The approach to content offered by StreamCo on day one will define the service moving forward as they attempt to establish a beachhead in the Australian SVOD space. Undoubtedly subscribers will find full seasons of older TV shows available to stream, but what will be StreamCo’s approach to series currently on the air. Should they sign a deal with Warner Bros, for example, subscribers will no doubt be able to stream every episode of, again as an example, The Big Bang Theory. But will that also include episodes from the current season?
StreamCo have two choices here. They either adopt the model used by Netflix which is to purchase the rights to seasons that have already been broadcast in full. It’s only once the series have aired on TV that they’re then available for download. There is also the Netflix Original Series like Orange Is The New Black which are produced for Netflix and thus the entire season is available on day of launch. Netflix subscribers are used to being able to consume a series in bulk once they see that show available in the catalogue. The other option is to approach it the way that Hulu offer which is to make the shows available the day after they air.
Hulu are very much a subscription catch-up service that offers additional content, whereas the Netflix model is not dissimilar to purchasing box sets from a retail store. There are also mixed models like Amazon who are still experimenting with original series and whether to release them in full season chunks, to parse them out individually weekly, or release series in small bundles on a regular basis. Amazon are increasingly leaning more toward the Netflix full-season dump model.
The Australian market has been badly served by free to air broadcasters for decades with shows aired months, if not years after their original debut internationally. Australia’s very high piracy rate can be attributed to this viewer frustration. StreamCo can make a massive splash in the local market by offering US and UK series on the same day as their initial airings. Online, there’s no ratings benefit from delaying a program to meet time-slot or general scheduling requirements.
Of course to do so means that this is ultimately creating additional competition for Channel Nine. Are Channel Nine prepared to burn down the forrest to save the village? Embracing an SVOD catch-up model like Hulu would be a great way to attract immediate attention to the service, but a Netflix model makes more sense to maintain the integrity of Channel Nine as viable.
HOW TO DELIVER STREAMCO TO TELEVISION SETS
This is the greatest challenge that StreamCo will face. There are very few means by which Australian’s are able to watch streaming services on their actual TV sets. The number of local services available through the Apple TV is pitiful. Users need to either have a video game console like a PS3/4 or an X-Box 360/One, or they can use a Chromecast, or there is using supported services through their Smart TV’s. The user interfaces on Smart TV’s are generally awful and it’ll be a difficult task convincing many people to buy an expensive gaming console just to watch TV through. The Chromecast is a good alternative, but in what’s still an early phase of adoption, many users will want the experience of browsing viewing options on their actual TV.
If StreamCo wants to build significant penetration locally they’re really going to need to partner up for a hardware solution. It’s unlikely Apple will offer StreamCo through their platform (they certainly don’t currently offer the catch-up services of any of our local broadcasters, including SBS On Demand which is on almost every device imaginable), but could Google’s Android TV platform be a possibility? If StreamCo can partner with a hardware company to deliver local streaming boxes with Android TV as its operating system and pre-loaded with StreamCo, that would go a long way to getting over this significant hurdle. Furthermore, they have Channel Nine and the Fairfax papers/websites as a excellent promotional tools to get the word out.
Legitimate streaming services will open up a significant market in Australia, but more will have to be done to actually get the content onto the audiences TV’s than just sitting back and hoping a hardware platform gets adopted widely. In a market as small as Australia, StreamCo is going to need to be proactive on this front.
Of course, it’s possible StreamCo has already solved this problem.
A StreamCo-branded Roku?
THE 200,000 NETFLIX SUBSCRIBER DILLEMMA
It has been said that there are 200,000+ subscribers to Netflix in Australia. A figure like that immediately proves that Australia is a market hungering for an SVOD service of that scale. But, the problem for StreamCo is in how they will budge those 200,000 subscribers from the service.
It’s not just a matter of convincing these Netflix users to subscribe to an additional service to try it out. For many Australian Netflix subscribers, their hardware needs to be reconfigured to access an Australian service. While some devices will allow you to add content providers from different regions (PS4, for example), many require you to establish which country you’re in when setting up the device. Not only do StreamCo need to convince these pre-existing Netflix subscribers to trial the service, but they’ll also need to get them to go through the hassle of reconfiguring their hardware to do so.
These pre-existing Netflix subscribers will be important to get on board. These are the early adopters, the technologically savvy, and the evangelical users who will promote streaming services to friends and family.
For StreamCo to be successful in the Australian market it will require more than just the technologically savvy or the media consumption progressives to sign up to the service. Our population is just too small to sustain a local service like this if they want to be able to compete with the likes of global competition like Netflix. The 55+ aged TV viewers are those who watch the most TV, yet are likely the least inclined to want to pay for a large data allowance. It would be prudent for StreamCo to align themselves with ISP’s to offer StreamCo as a bundle deal to prevent the service from contributing to subscribers data allowances. One would presume StreamCo is going to be a product more sought-after than Fetch TV.
Netflix is well known for using algorithms to recommend content to subscribers and to push relevant content to the front page of the service. The age of scouring an entire video store for hours looking for a DVD to rent on a Saturday night has passed long ago. If subscribers are to get value out of StreamCo (and continue to subscribe), they need to be using it regularly throughout the week. This means users need to be able to find content they want to watch quickly with minimum fuss. A recommendation engine is a must.
One of the failings of Netflix is that they don’t back up their algorithm-based recommendation engine with any further suggestions. I’m sure viewers can readily deal with occasional pre-roll promotions of other shows of interest on the service as long as the ads played are targeted towards the interests of the viewer. It would be a great way to increase engagement with the content on the service.