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Public opinion research company Roy Morgan published the results of a survey yesterday which suggested that US-based streaming video-on-demand service Netflix had, in the two months following its Australian launch, garnered over ten times the audience of its nearest SVOD rival.
The Australian video streaming market has exploded in 2015, with several high-profile launches and joint ventures competing for the content-hungry customer base. While Netflix commanded an envious amount of brand recognition and a grey-market subscriber base even before the official launch earlier this year, could it really outstrip its closest competitors by that much?
Officially, the Roy Morgan survey of 2,088 people aged 14 and above concluded that:
In April, 766,000 Australians in 296,000 homes were subscribed [to Netflix]. By May, this had grown to 1,039,000 in 408,000 households.
According to Roy Morgan’s May data set, Netflix’s nearest rival is Presto with around 97,000, followed by Stan at 91,000 and Quickflix at 43,000. Foxtel Play, the streaming version of the Foxtel TV service, brings up the rear at 40,000.
It’s worth noting Roy Morgan uses ‘subscribers’ to mean all viewers across subscribing households. So, even if accurate, Netflix is really operating on a revenue base of 408,000 households. But we’ll stick with the Roy Morgan use of subscribers from here to keep things simple.
Let’s quickly recap the major players for those just joining the story.
Presto, an offshoot of Foxtel, first launched on March 13, 2014 as a movie-only service. Its TV service, Presto TV, is a joint venture between Foxtel and Seven West Media and it started streaming on January 14 of this year.
Stan is another joint venture, this time between publisher Fairfax and the Nine Entertainment Group. It began operating on the auspicious date of January 26, 2015.
The Foxtel Play IPTV service offers both on-demand content and regularly scheduled programming. It launched on July 30, 2013 as a way of getting the Foxtel service into homes that were outside of an installation area.
Quickflix is the elder statesman of the Australian SVOD crew, having started life as a DVD rental-by-mail company before transitioning to streaming in 2011.
If accurate, to put the Roy Morgan figures in perspective, it would mean that while it has taken Presto 14 months to near the 100,000 subscriber mark, Netflix has reached 10 times that number in just 2, and Stan has nearly equalled it in 4. Quickflix on the other hand, has taken 4 years to reach its base for just over 40,000, with Foxtel Play nearing those figures in just under 24 months.
Soon after the report was published, Quickflix CEO Stephen Langsford expressed some doubts over the veracity of the figures.
@Mitch_Hell@nicchristensen you mean the Roy Morgan thing? A survey of 2000 people- I don’t think so.
— Stephen Langsford (@quickflixer) June 23, 2015
Rubbery figures?
Judging the accuracy of the report is difficult, as the streaming services themselves tend not to give specific figures for the Australian market, as well as the need to take into account the various business models they have. But there is some data available.
Quickflix, for example, offers a standard SVOD service and physical disc rental, but also has a number pay-per-view ‘premium’ streaming video titles. In April Quickflix announced that it had 123,000 paying customers across its business. Around 70 percent of that number use Quickflix for streaming rather than DVD rental which would seem to make for over 85,000 people paying the company for SVOD or pay-per-view services.
On May 6 of this year, in a presentation to the Macquarie Australia Conference — and later lodged as a commentary with the Australian Securities Exchange — Fairfax CEO Greg Hywood said that the “gross sign-ups” of Stan were “tracking to 200,000.” The streaming service has previously mentioned growth targets of 300,000 to 400,000 by December 2015.
To date, Foxtel has not released subscriber numbers for Presto or Foxtel Play.
Image by Claire Reilly/CNET
And Netflix? Netflix doesn’t release subscriber data for individual regions but does say it has 62 million subscribers with 20 million of those located outside the United States. In addition to Australia and New Zealand, that 20 million is spread across the United Kingdom, Canada, Brazil, France, Germany, The Netherlands, Switzerland, Austria, Ireland, Luxembourg, Belgium, Nordic countries and Hispanic America.
Where’s the disconnect?
Langsford questioned not only the sample size of the Roy Morgan survey, but also the age spread of the respondents.
“We have no doubt interest in streaming is growing, but to extrapolate a million plus subscribers to Netflix based on a survey of 2,000 doesn’t hold up,” he said. “Included in the respondents, evidently, are 14 year olds — note that you have to have a valid credit card and therefore be 18 years old to subscribe.”
The survey’s author, Shaun Ellis, explained that the survey respondents were asked if they “lived in a home with a subscription.” From those answers, the figure of 408,000 households was arrived at and then the one million plus people with access to a subscription extrapolated from that.
Noting that Roy Morgan would rarely publish data from single month sample, Ellis said that the report “highlighted the significance” of Netflix’s “standout figure.”
“At this stage it’s only a month — once we have more regular data we can look at this segment in more significant detail,” Ellis said. “But even if Stan might have a few thousand more subscribers and be closer to Presto, the fact remains that Netflix has 10 times that number.”
It’s important to remember, of course, that a subscription to one streaming company does not preclude having a sub to another. The low pricing of many SVOD services means that multiple subscriptions are quite common.
Tim Martin, GM of Media at Roy Morgan, said in the survey report that “up to half of all subscribers to Stan, Quickflix or Presto are also subscribed to Netflix.”
“As each has different content available, many Australian TV lovers may choose to subscribe to multiple SVOD providers, switching between ‘Orange is the New Black’ on Netflix, ‘Better Call Saul’ on Stan, the HBO back catalogue on Presto and a new release movie (or delayed ‘Game of Thrones’ marathon) on Quickflix,” Martin said.
Full facts and figures
Obviously, the only way we can be in a situation to compare apples with apples is if the streaming companies themselves provide accurate subscription figures and user data, but in such an intensely competitive landscape, who — other than Quickflix — will be the first to blink?
Certainly not Netflix. When contacted for comment a Netflix spokesperson confirmed that the company did not disclose regional subscriber figures, saying only “we’re very pleased with how things are going in Australia and New Zealand and the reception the service has received since the launch in March”.
Also not Presto or Foxtel Play who did “not have anything to offer this time around” and definitely not Stan who did not respond to a request for comment at the time of writing.
It’s very early days for when it comes to the mass adoption of SVOD in Australia and while the temptation may be to ring the bell and call Netflix the winner, the fact remains that the next six months will prove very interesting when it comes to the local streaming industry.
At the very least, it’s important to remember that even with such a meteoric uptake, Netflix still has some way to go before it matches the more traditional cable subscription market in Australia — around five million Australians currently live in a house with access to Foxtel.
