tag:theconversation.com,2011:/ca/topics/subscription-video-on-demand-25988/articlessubscription video on demand – The Conversation2021-08-17T05:49:55Ztag:theconversation.com,2011:article/1660902021-08-17T05:49:55Z2021-08-17T05:49:55ZThe more video streaming services we get, the more we’ll turn to piracy<figure><img src="https://images.theconversation.com/files/416433/original/file-20210817-22-evwrgm.jpg?ixlib=rb-1.1.0&rect=0%2C81%2C6016%2C3044&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>With the launch of the <a href="https://www.paramountplus.com/">Paramount+</a>, Australian consumers of video streaming are arguably drowning in choice. </p>
<p>We now have more than a dozen “<a href="https://www.canstarblue.com.au/streaming/australia-streaming-services/">subscription video on demand</a>” services to choose from, with many dozens more options available <a href="https://flixed.io/complete-list-streaming-services-2021/">worldwide</a> to anyone with a VPN to get around geoblocks. </p>
<p>But all this competition isn’t actually making things easier. It’s likely all this “choice” will see more of us turning to piracy to watch our favourite films and televisions shows.</p>
<p>The problem is that services are competing (at least in part) through offering exclusive content and original programming. </p>
<p>Paramount+, for example, is offering content from Paramount Pictures and other entertainment companies owned by entertainment conglomerate ViaComCBS. These include Showtime, Nickelodeon and Comedy Central. Its catalogue ranges from the Indiana Jones and Harry Potter movies to popular TV shows Dexter, NCIS and The Big Bang Theory. </p>
<p>This content may have been available on your preferred services. But <a href="https://www.abc.net.au/news/2021-08-11/guide-to-paramount-plus-shows-price/100367094">the end goal</a> — as with Disney+ and others — is for all ViaComCBS-owned content to be exclusive to Paramount+.</p>
<p>Here the problem for the consumer becomes evident. How many subscription services do you want to join? Subscribing to the six most popular video streaming services — Netflix, Stan, Disney+, Amazon Prime Video, Binge, and Apple TV+ — will cost you about $60 a month. How much more are you willing to pay for a new service to watch a favourites film or TV show now only that service?</p>
<p>The temptation to turn to piracy is clear.</p>
<h2>Losing aggregation</h2>
<p>The emergence of video streaming services such as Netflix <a href="https://doi.org/10.1287/mksc.2020.1256">was heralded</a> as an effective way to curb illegal downloads. But how Netflix did this at first was in aggregating content. It provided a convenient, cost-effective and legal way to access a large catalogue of TV shows and movies; and consumers <a href="https://www.bbc.com/news/technology-24911187">embraced</a> it.</p>
<p>But as the streaming market has developed, the loss of content aggregation appears to be leading back to piracy. </p>
<p>As an example, according to analytics company Sandvine, the file-sharing tool BitTorrent accounted for 31% of all uploads in 2018; in 2019 it was <a href="https://www.sandvine.com/hubfs/Sandvine_Redesign_2019/Downloads/Internet%20Phenomena/Internet%20Phenomena%20Report%20Q32019%2020190910.pdf">45%</a>. As Sandvine explained:</p>
<blockquote>
<p>When Netflix aggregated video, we saw a decline in file sharing worldwide, especially in the US, where Netflix’s library was large and comprehensive. As
new original content has become more exclusive to other streaming services, consumers are turning to file sharing to get access to those exclusives since
they can’t or won’t pay money just for a few shows. </p>
</blockquote>
<p>This trend has been amplified by COVID-19 lockdowns, with traffic to illegal TV and movie sites reportedly <a href="https://www.wsj.com/articles/coronavirus-lockdowns-lead-to-surge-in-digital-piracy-11587634202">surging in 2020</a>. A survey for the Australian Government found <a href="https://www.communications.gov.au/documents/2020-consumer-copyright-infringement-survey">34% of respondents</a> consumed some form of illegal content in 2020. </p>
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<h2>Lessons from music</h2>
<p>Why should this be happening more for TV shows and movies and not for music?</p>
<p>There’s an important difference. Services such as Spotify, Apple Music and Tidal offer you just about all the music there is. You don’t need to sign up to one to listen to The Beatles and another to hear Taylor Swift. You need only sign up to one.</p>
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<img alt="Music streaming services have the benefit of being a one-stop shop." src="https://images.theconversation.com/files/416459/original/file-20210817-23-1p4vqhj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/416459/original/file-20210817-23-1p4vqhj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/416459/original/file-20210817-23-1p4vqhj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/416459/original/file-20210817-23-1p4vqhj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/416459/original/file-20210817-23-1p4vqhj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/416459/original/file-20210817-23-1p4vqhj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/416459/original/file-20210817-23-1p4vqhj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Music streaming services have the benefit of being a one-stop shop.</span>
<span class="attribution"><span class="source">Ymgerman/Shutterstock</span></span>
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<p><a href="https://doi.org/10.1086/425103">Research</a> has shown that a consumer’s willingness to pay is often anchored around the initial information they are exposed to. Viewers accustomed to paying for one streaming service might be reluctant to pay for as many as six.</p>
<p>In a survey of about 3,000 US TV watchers in February, <a href="https://www.fastcompany.com/90637380/56-of-connected-device-users-are-overwhelmed-by-the-number-of-streaming-services-to-choose-from">56% said they felt overwhelmed </a> by the number of streaming services on offer. </p>
<p>Deloitte’s <a href="https://www2.deloitte.com/content/dam/Deloitte/au/Documents/technology-media-telecommunications/au-deloitte-tel-media-consumer-survey-2019-report.pdf">Australian Media Consumer Survey 2019</a> found that almost half of streaming video on demand subscribers said it was hard to know what content is available on what service. Three-quarters said they wanted the content in one place, rather than having to hunt through multiple services.</p>
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<h2>Seeking a one-stop shop</h2>
<p>Although it is not yet clear how many video streaming services the Australian market can support, high-profile failures both <a href="https://www.cnet.com/tech/services-and-software/goodbye-presto-foxtel-seven-west-media-streaming-service-to-shut-down/">at home</a> and <a href="https://www.fool.com/investing/2020/11/18/reasons-why-quibi-failed-other-streaming-services/">overseas</a> should serve as a warning. </p>
<p>But in the absence of a legal one-stop-shop for TV and movies, people will take matters into their own hands. </p>
<p>Illegal streaming platforms that aggregate content from multiple video streaming services into a single interface are becoming more widespread. Such services typically use an open-source media player, coupled with cheap <a href="https://www.firesticktricks.com/jailbreak-fire-stick.html">jailbroken hardware</a> and a VPN to access a plethora of illegal entertainment. </p>
<p>Until the industry offers a legal alternative to such platforms, the popularity of such services is only likely to grow.</p><img src="https://counter.theconversation.com/content/166090/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>All this ‘choice’ in streaming video on demand is undermining the market benefits of aggregation.Paul Crosby, Lecturer, Department of Economics, Macquarie UniversityJordi McKenzie, Associate Professor, Department of Economics, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1254692019-10-21T12:50:48Z2019-10-21T12:50:48ZBBC licence fee: culture minister hints at a future in competition with Netflix for UK public broadcaster<p>Nicky Morgan, the culture secretary, has announced to the Digital, Culture, Media and Sport Select Committee that she is open to replacing the BBC license fee with a <a href="https://www.theguardian.com/media/2019/oct/16/nicky-morgan-open-minded-about-bbc-licence-fee-future">Netflix-style subscription</a> charge. This is a significant change from previous ministers who have protected the license fee for many years and ruled out scrapping it. </p>
<p>Back in 2009 an <a href="https://www.telegraph.co.uk/news/uknews/1411467/TV-licence-should-be-scrapped-says-poll.html">opinion poll</a> in the Daily Telegraph reported that 58% of respondents said the licence fee should be scrapped. Even then it was becoming clear that, in a multi-channel world, demand for the pubic broadcaster was on the decline. Today, streaming has changed the landscape even further. </p>
<p>In an age of time-shifting and box set binge watching, does the BBC license fee still have a place in how we consume television today? Gordon Brown, as chancellor of the exchequer, introduced and funded free licence fees for the over-75s in 1999, but in 2015, the Cameron government <a href="https://metro.co.uk/2019/06/15/why-the-bbc-is-not-to-blame-for-the-tv-licence-fee-cuts-9956545/">reversed this decision</a> – making the BBC responsible for funding licence fees for 1.7m elderly people. In June 2019, the BBC announced it could <a href="https://metro.co.uk/2019/06/10/free-tv-licences-scrapped-3-7-million-pensioners-9896286/">no longer fund this</a>, saying government funding cuts meant it would otherwise have to close down channels, such as BBC Four or BBC Radio 5 Live.</p>
<p>The licence fee currently <a href="https://www.ofcom.org.uk/__data/assets/pdf_file/0019/160714/media-nations-2019-uk-report.pdf">generates £3.83 billion</a> for the BBC – about 75% of its total revenue. To move to a subscription model service would require mass engagement and fast. Netflix has just <a href="https://www.moneywise.co.uk/news/2019-02-04%E2%80%8C%E2%80%8C/tv-licence-fee-set-rise-number-viewers-cancelling-increases-over-860000">just under 10m subscribers in the UK.</a> paying £72 per annum – so a back-of-the-envelope calculation would estimate its UK revenue at about £700m, which gives you an indication of quite how big a task this could be.</p>
<p>And what does the BBC licence fee buy you these days? If you look at BBC’s daytime schedule for example, a mix of repeats and Bargain Hunter-style programming you have to ask whether this offering represents value for money? The number of peak-time repeats on BBC1 <a href="https://www.telegraph.co.uk/news/2018/07/14/number-peak-time-repeats-bbcs-flagship-channel-has-risen-65/">rose by 65% in 2018</a> according to Ofcom, despite a pledge from the then chairman Michael Grade prime-time that viewing hours on BBC One and BBC Two could be “<a href="http://news.bbc.co.uk/1/hi/entertainment/4695229.stm">repeat-free zones</a>” within ten years. </p>
<p>Next to the sheer volume of blue-chip documentaries and dramas on offer from Netflix, is the BBC value for money these days?</p>
<h2>‘Treasure’ being buried</h2>
<p>The BBC has long been heralded as a “national treasure” and a bastion of excellence in the highest standards and programme making. But its value has been <a href="https://www.theguardian.com/media/2018/jun/20/bbc-vows-to-increase-diversity-of-senior-management-by-2020">called into question over recent years</a> after regular reporting of a lack of staffing diversity on and off-screen, as well as substantial gender pay gaps and ratings slumps.</p>
<p>The corporation says that the licence fee allows it to run a wide range of popular public service broadcasting for everyone – free of adverts, shareholders and political interests. But it was reported by The Sun newspaper in 2017 that over a four-year period nearly 3.5m Britons had stopped paying the licence fee, as they consider the BBC to be “<a href="https://www.thesun.co.uk/news/5176188/bbc-tv-licence-stopped-brits-paying/">out of date</a>” in a world of Netflix and Amazon Prime.</p>
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<p>According to the BBC’s 2019 Annual Report, the biggest drop has come in audiences aged between 16-34 who watch BBC television TV weekly which has fallen from 60% to 56%. The same age group is also watching for a shorter period of time, down from an average of nearly three hours a week to two hours and 32 minutes. Audiences aged 55 and over are BBC television’s most loyal consumers – with a staggering <a href="https://www.bbc.co.uk/news/entertainment-arts-48840138">92% reach</a> in that age group.</p>
<p>The author of a report on the licence fee from the Institute of Economic Affairs, Philip Booth, believes that the BBC should <a href="https://iea.org.uk/media/replace-bbc-licence-fee-with-opt-in-subscriptions/">adopt an opt-in system</a>: “The BBC funding model needs to be pulled into the 21st century,” he wrote. “The UK has a long history of successful mutuals and co-operatives that are popular with their members.”</p>
<p>But adopting a subscription model like that used by Netflix would mean people having to opt in to watch programmes on BBC channels and listen to its radio stations. It’s debatable how the BBC’s ageing audience will react to this sort of model.</p>
<h2>Last year’s model</h2>
<p>The licence fee model was introduced in 1946 when the world of television was completely different and the BBC had little competition for people’s attention. Now it needs to compete and a remodelled BBC could perhaps better leverage its brand internationally for better commercial success – its back catalogue, for example, must be the envy of many of its competitors. It has been a <a href="https://www.bbc.co.uk/news/entertainment-arts-48840138">bumper year for iPlayer</a> with 3.6 billion programme requests, the most popular being Bodyguard. Killing Eve’s first series had 42.5m overall requests.</p>
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<p>But is the streaming model under pressure? Netflix an early mover in the high-quality streaming industry, with a formidable business worth in the region of US$125 billion, will <a href="https://www.bbc.co.uk/news/technology-50077673">soon be competing</a> with Disney+, HBO Max and Apple+ for domination of the television streaming market. <a href="https://www.bbc.com/news/business-50077154">Netflix recently wrote to investors</a> to tell them that competition would be a good thing as the bigger the market the more it would be likely to tempt people away from “linear TV”, as Netflix’s describes it.</p>
<p>So the BBC has some big decisions to make. Can it continue to justify the license fee? If it moves to another business model – streaming being most likely in my opinion – the question will be whether it attract enough subscribers quickly enough to compete with the big players. These debates have long raged, but now that the culture minister has signalled that she is open to a change in the public broadcaster’s model, the landscape of British broadcasting may be about to change dramatically.</p><img src="https://counter.theconversation.com/content/125469/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Lyndsay Duthie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Nicky Morgan recently hinted at changes to the BBC’s funding model. But can the UK’s public broadcaster compete with the likes of Netflix?Lyndsay Duthie, Professor & Head of School for Film, Media & Performing Arts, University for the Creative ArtsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1182572019-06-06T05:33:00Z2019-06-06T05:33:00ZThe end is nigh for Apple’s iTunes as the tech giant targets separate audio and video markets<figure><img src="https://images.theconversation.com/files/278235/original/file-20190606-40723-ye8nlv.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6006%2C4016&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">iTunes is being replaced by three separate applications on the new iOS operating systenm</span> <span class="attribution"><span class="source">Shutterstock/PixieMe</span></span></figcaption></figure><p>Apple says it’s <a href="https://www.apple.com/newsroom/2019/06/apple-previews-macos-catalina/">replacing iTunes</a> with three dedicated entertainment applications as part of its new Mac operating system, Catalina, for desktop and laptop computers.</p>
<p>A key reason for the change is based around the way we now watch, listen to, download and stream media. </p>
<p>Recent years have seen immense shifts in consumer behaviour, plus new players, new media formats and an abundance of fresh content uploaded every day. </p>
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<p>Young media services have quickly established themselves as market leaders, solely focused on a single media format, such as video for Netflix and audio for Spotify.</p>
<p>For Apple, separating music, TV and podcasts allows it to refine each app in a distinct way. The user interface, library and personalised recommendations can all be tailored to each of the particular media formats in the future.</p>
<h2>A lot has changed in 18 years</h2>
<p>The original iTunes is now clearly outdated. </p>
<p>iTunes was first launched 18 years ago by then Apple CEO and cofounder Steve Jobs. Jobs noted that other tech companies already had media platforms available to users, but they were too complicated. </p>
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<figcaption><span class="caption">Steve Jobs introduces iTunes at MacWorld on January 10, 2001.</span></figcaption>
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<p>Jobs said Apple was “late to this party and we are about to do a leapfrog” with a simpler system in iTunes for playing audio and video. Later that same year, Apple announced the missing piece to this puzzle, Apple’s own MP3 player, <a href="https://www.lifewire.com/history-ipod-classic-original-2000732">the iPod</a>.</p>
<p>What Apple is doing now is another potential “leapfrog” in replacing iTunes with three dedicated applications. </p>
<p>This decision follows the company’s strategy for its portable devices, which already have individual applications for music, TV and podcasts.</p>
<h2>Apple’s podcast platform</h2>
<p>Podcasts are not a new media format, but the latest Reuters Institute <a href="http://media.digitalnewsreport.org/wp-content/uploads/2018/06/digital-news-report-2018.pdf">Digital News Report</a> says they have become more popular in recent years due to “better content and easier distribution”.</p>
<p>The report’s survey of how people get their news shows:</p>
<blockquote>
<p>[…] podcasts tend to perform best in countries like the US (33%) and Australia (33%) where people spend a lot of time in their cars.</p>
</blockquote>
<p>In addition, people under 35 listen to twice as many podcasts people over 45. The report says this is due to the younger demographic embracing smart phones and streaming services.</p>
<p>Anchor is a free service that helps people create and distribute podcasts. It <a href="https://medium.com/anchor/how-people-listen-to-podcasts-ba0c57a5f952">named Apple Podcast</a> as the most used application for listening to podcasts on its platform, at more than 50%. Second was Spotify at 19%, and other platforms less than 5%.</p>
<p>This indicates Apple’s dominance in the podcast space. In 2018, <a href="https://9to5mac.com/2018/04/29/apple-podcasts-statistics/">a report shows</a> there were more than 525,000 active shows and more than 18.5 million episodes available on Apple’s podcast platform. That same year Apple had reached 50 billion all-time episode downloads and streams, more than a threefold increase on the total downloads as of 2017, 13.7 billion.</p>
<p>But despite Apple being the <a href="https://medium.com/anchor/how-people-listen-to-podcasts-ba0c57a5f952">most used</a> platform for podcast listening, it faces strong competition in the mobile market from companies using rival operating systems such as Android. </p>
<p>Last year Apple <a href="https://www.forbes.com/sites/jeanbaptiste/2018/11/02/huawei-fortifies-2-spot-in-global-smartphone-market-beating-apple-again/#20942fa01305">dropped</a> to third for smart phone market share globally. Samsung remained the leader, with Huawei gaining a large increase in 2018 to overtake Apple.</p>
<h2>The future for video</h2>
<p>A major part of Apple’s recent decision to split iTunes is associated with the significant changes in the video-on-demand market, including an influx of new services. There are still more changes to come, and Apple clearly intends to be ready. Apple has announced it will launch its <a href="https://www.apple.com/au/tv/">Apple TV+</a> streaming service later this year in the United States. </p>
<p>Apple will have to compete with streaming giant Netflix, which has <a href="https://www.cnbc.com/2019/05/01/hulu-gained-twice-as-many-subscribers-as-netflix-in-us.html">60 million subscribers</a> in the US alone. But it will also be competing with Hulu, which has 28 million US subscribers.</p>
<p>Other <a href="https://www.emarketer.com/content/us-subscription-video-landscape-2019">new services in the US</a> will also be launched in the near future, including <a href="https://preview.disneyplus.com/au/">Disney+</a>, NBC Universal, and AT&T’s WarnerMedia.</p>
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<p>In Australia, we have seen a distinct change in video viewing behaviour since the <a href="https://theconversation.com/netflix-arrival-will-be-a-tipping-point-for-tv-in-australia-38386">launch of Netflix</a> in 2015. Shifts in consumer preferences and the industry itself had immense impact on the Australian media landscape. You can expect this to continue as some of the services launching in the US this year expand to Australia.</p>
<p>It’s not known yet when the Apple TV+ service will launch in Australia, but Apple’s TV app is available to Australians. Through this, it seems clear the company plans to aggregate video content from a range of services, including broadcaster video-on-demand (BVoD) services such as ABC iView and TenPlay.</p>
<p>So Apple is now fighting on several fronts across TV, music and podcasts to sustain or achieve market leadership. By marketing the three media applications separately it can invest in the individual media areas as required, or remove itself entirely.</p><img src="https://counter.theconversation.com/content/118257/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc C-Scott is a board member of C31 Melbourne (Community Television Station).</span></em></p>Apple’s decision to end iTunes for its new desktop operating system is an attempt to retain and regain market share from rival media platforms.Marc C-Scott, Senior lecturer in Screen Media, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1013342018-08-24T10:15:47Z2018-08-24T10:15:47ZBritish film has a golden opportunity in Chinese video on demand<figure><img src="https://images.theconversation.com/files/233432/original/file-20180824-149481-otc2t0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Home theatre.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-illustration/laptop-cinema-home-entertainment-view-video-152078999?src=dI9ZJWp7fnVJ1X6ux16XDQ-4-9">BPTU/Shutterstock</a></span></figcaption></figure><p>Video on demand (VOD) services are big business across the world. At present, Netflix alone boasts an <a href="https://www.statista.com/chart/10311/netflix-subscriptions-usa-international/">international audience of 130m</a>. By 2022, it and other regional and international subscription VOD services alone are expected to net an <a href="https://www.rapidtvnews.com/2018030251121/paying-streaming-households-to-reach-450mn-mark-by-2022.html?utm_campaign=paying-streaming-households-to-reach-450mn-mark-by-2022&utm_medium=email&utm_source=newsletter_1656#axzz58tqdIwPq">audience of 450m worldwide</a>.</p>
<p>Given their popularity, one might expect China – which has the highest population in the world – to contribute the highest number of VOD consumers to the global industry. However, trading with China is never straightforward due to the people’s republic’s various rules aimed at restricting foreign investment. As a result, although China has the highest number of VOD users (<a href="https://www.scmp.com/tech/tech-leaders-and-founders/article/2148331/chinese-equivalent-netflix-no-we-want-be-chinas">estimated to reach</a> 527m by the end of 2018) they mainly consume through the country’s <a href="https://www.filmdoo.com/blog/2016/04/09/feature-the-chinese-vod-industry-and-breaking-down-the-great-wall/">own rapidly developing industry</a> – the current top three providers being <a href="https://www.iqiyi.com/">iQiyi</a>, <a href="https://www.youku.com/">Youku</a> and <a href="https://v.qq.com/">Tencent</a> respectively – rather than platforms such as Netflix or Amazon Prime.</p>
<p>International companies have tried to penetrate the Chinese market but with little success so far. Netflix <a href="https://money.cnn.com/2016/10/18/technology/netflix-china/">has been working on China</a> since 2016, but for now has settled for <a href="https://media.netflix.com/en/press-releases/iqiyi-and-netflix-sign-licensing-agreement">licensing some of its most popular content</a>, such as Stranger Things and Black Mirror, to iQiyi. Other companies, including arthouse cinema service MUBI have also made attempts, but <a href="https://techcrunch.com/2016/06/20/netflix-alternative-mubi-cancels-plan-to-launch-localized-service-in-china/">likewise have faced difficulties</a>.</p>
<p>This is not intended to put any foreign exporters off the Chinese market – because, in fact, VOD in China presents a golden opportunity for the UK film industry.</p>
<h2>Cultural attitudes</h2>
<p>Exporting film content to the Chinese VOD market is not only important economically, but also as a form of modern cultural diplomacy. While it is still unlikely that foreign digital platforms will be able to enter the Chinese market – at least in the near future – one immediate strategy could be to export film content, as Netflix has done. There is already an appetite for British TV content in China and <a href="https://www.bbc.co.uk/mediacentre/worldwide/2018/migu-china">the BBC is a top exporter</a>. Programmes such as Planet Earth, Blue Planet and Sherlock have proved very popular.</p>
<p>Understandably, many British companies may be put off by the <a href="http://chinafilminsider.com/foreign-films-in-china-how-does-it-work/">import quota</a> that regulates the amount of foreign films entering China each year. This number has increased in recent years – 89 foreign films were <a href="https://zhuanlan.zhihu.com/p/33282593">imported for theatrical release</a> in 2017 – but given the amount of non-Chinese films released each year, it is still a very competitive market with <a href="http://www.chinadaily.com.cn/a/201712/22/WS5a3c5beca31008cf16da2c9e_1.html">mostly Hollywood blockbusters getting through</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/233433/original/file-20180824-149466-b3xvty.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/233433/original/file-20180824-149466-b3xvty.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/233433/original/file-20180824-149466-b3xvty.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/233433/original/file-20180824-149466-b3xvty.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/233433/original/file-20180824-149466-b3xvty.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/233433/original/file-20180824-149466-b3xvty.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/233433/original/file-20180824-149466-b3xvty.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Choices, choices.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/wroclaw-poland-february-02th-2018-man-1040788477?src=dI9ZJWp7fnVJ1X6ux16XDQ-1-44">Daniel Krason/Shutterstock</a></span>
</figcaption>
</figure>
<p>However, looking at Tencent’s VOD service alone, more than 100 of the 500 films added to the service in 2017 were foreign – well over the total import figure for theatrical release during the same year. Evidently, VOD platforms can be more flexible when it comes to foreign content. </p>
<p>At the moment, Hong Kong, the US, Europe, Korea and Japan are the most popular regions/categories for imported content. Due to the small amount of British films available on Chinese VOD sites, the UK is currently grouped under “Europe”. Although this may seem a small practical disadvantage, British Council in China as well as the Department for International Trade could potentially intervene to make British films more visible.</p>
<h2>Chinese ratings</h2>
<p>The lack of a ratings system in China is another unique advantage that could be exploited by UK film makers. China continues to adapt a very vague ethos in its exhibition regulation: as long as the films are suitable for all ages, remain respectful toward Chinese culture and the government, they are quite likely to pass the check. </p>
<p>Given this, most British films currently classified as 15 or below are ideal for exporting. To the Chinese audience, most British films are less ideologically aggressive than their Hollywood counterparts and are actually thought of as more educational in many aspects. </p>
<p>In addition, due to the ongoing US-China trade war, <a href="https://www.hollywoodreporter.com/news/will-hollywood-get-caught-trumps-china-trade-war-crossfire-1126182">Hollywood’s exports to China</a> are expected to fall. By taking advantage of these relatively relaxed rules, British production companies could lease exclusive film rights to Chinese VOD providers – as seen recently in a deal between <a href="http://chinafilminsider.com/iqiyi-to-include-filmnation-content-in-its-lineup/">US company FilmNation and iQiyi</a>. </p>
<p>But British film companies must be careful with their strategy. The BFI attempted to export its <a href="https://www.bfi.org.uk/news-opinion/news-bfi/announcements/bfi-pioneers-unique-partnership-iqiyi-chinas-leading-vod-service">film festival content</a> in 2016, but this deal signed with iQiyi has not necessarily made the movies popular on the platform. This may be partially down to the fact that the BFI did not invest in its own marketing and promotion of the content in China – something which prospective partners must take into account.</p>
<p>China’s various VOD platforms are constantly looking for new content in order to compete with each other, so there is a clear opportunity here. But whatever British production companies decide to do, clearly more transparent market intelligence and policy research are crucial to support their negotiations. While the UK’s VOD industry requires improvement <a href="https://theconversation.com/video-on-demand-and-the-myth-of-endless-choice-100116">in many areas</a>, taking up a new global challenge may potentially contribute to the British film industry’s internal reform, its opening up and continuous diversification at the same time.</p><img src="https://counter.theconversation.com/content/101334/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hiu Man Chan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Netflix and the like are already big business, but here’s why British film should focus more on Chinese subscription servicesHiu Man Chan, PhD Researcher, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1001162018-08-16T10:38:33Z2018-08-16T10:38:33ZVideo-on-demand and the myth of ‘endless choice’<figure><img src="https://images.theconversation.com/files/231903/original/file-20180814-2906-z0lf9f.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock.</span></span></figcaption></figure><p>If you like independent, art-house films or other specialised movies, you may have heard of the Romanian comedy-drama <a href="https://www.imdb.com/title/tt4466490/">Sieranevada</a>, which was released in 2016. The film was formally premiered as part of the main competition programme of the prestigious <a href="https://www.festival-cannes.com/en/">Cannes Film Festival</a> and was subsequently shown at other international film festivals, including <a href="https://www.tiff.net/tiff/">Toronto</a>, <a href="https://www.filmlinc.org/nyff2017/">New York</a> and <a href="https://whatson.bfi.org.uk/lff/Online/default.asp">London</a>.</p>
<p>Due to its success on the festival circuit, Sieranevada was reviewed by <a href="https://www.rottentomatoes.com/m/sieranevada">48 international film critics</a>, and received a positive rating from 92% of them. Among these were UK-based trade journals, such as <a href="https://www.bfi.org.uk/news-opinion/sight-sound-magazine">Sight and Sound</a> and <a href="https://www.screendaily.com/">Screen International</a> as well as mainstream newspapers <a href="https://www.theguardian.com/international">The Guardian</a> and <a href="https://www.telegraph.co.uk/">The Telegraph</a>. But while this publicity generated audience interest in the film, it has yet to secure distribution that would allow UK audiences to actually watch the film – it’s not in cinemas, on DVD/Blu-ray, nor on online video-on-demand platforms (VOD).</p>
<p>The development of VOD has provided new opportunities for films to reach audiences. In particular, <a href="https://www.bfi.org.uk/sites/bfi.org.uk/files/downloads/bfi-definition-of-specialised-film-bfi-neighbourhood-cinema.pdf">specialised films</a> with traditionally limited distribution opportunities have taken advantage of this development. But are online audiences presented with an endless choice? Not really. So why is this?</p>
<h2>The digital film revolution</h2>
<p>In the mid-2000s, <a href="https://www.sfgate.com/business/article/DIGITAL-UTOPIA-A-new-breed-of-technologists-2547704.php">digital utopians</a> such as <a href="https://www.penguin.co.uk/books/1049733/the-long-tail/">Chris Anderson</a> were already arguing that an endless choice of specialised and niche content would become available to online audiences. </p>
<p>And more than a decade later, it’s true that distribution opportunities have increased for such content in the online market. Film audiences are able to browse through catalogues on <a href="https://filmlifestyle.com/vod/">transactional VOD platforms</a> such as <a href="https://www.amazon.com/Amazon-Video/b">Amazon Video</a>, <a href="https://www.microsoft.com/en-gb/movies-and-tv">Microsoft</a> and <a href="https://www.apple.com/itunes/charts/movies/">iTunes</a> where they can find tens of thousands of films. </p>
<p>But there is still a significant proportion of films that remain inaccessible for audiences, even if – like Sieranevada – they have been selected for prestigious international film festivals.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/228035/original/file-20180717-44073-1geiyum.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/228035/original/file-20180717-44073-1geiyum.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=344&fit=crop&dpr=1 600w, https://images.theconversation.com/files/228035/original/file-20180717-44073-1geiyum.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=344&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/228035/original/file-20180717-44073-1geiyum.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=344&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/228035/original/file-20180717-44073-1geiyum.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=432&fit=crop&dpr=1 754w, https://images.theconversation.com/files/228035/original/file-20180717-44073-1geiyum.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=432&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/228035/original/file-20180717-44073-1geiyum.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=432&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Example of Amazon’s transactional VOD platform as of July 6, 2018 (Amazon’s catalogue includes 50,000 films).</span>
<span class="attribution"><span class="source">Amazon.co.uk</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>What is available?</h2>
<p>In an effort to identify the proportion of well-regarded specialised films that reach audiences in the UK market, I analysed a sample of 119 such films shown at prestigious European and US film festivals in 2016. My analysis in the graphic below confirms that the online market creates <a href="https://www.wsj.com/articles/video-on-demand-gives-low-budget-films-wider-audience-1493605333">distribution opportunities</a> for a greater number of films than the theatrical cinema and DVD/Blu-ray markets:</p>
<ul>
<li>88 specialised films (74%) were given an online release on Amazon, Microsoft or iTunes</li>
<li>71 specialised films (60%) were given a DVD/Blu-ray release</li>
<li>61 specialised films (51%) were given a theatrical cinema release</li>
</ul>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/228033/original/file-20180717-44103-uwj4us.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/228033/original/file-20180717-44103-uwj4us.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=311&fit=crop&dpr=1 600w, https://images.theconversation.com/files/228033/original/file-20180717-44103-uwj4us.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=311&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/228033/original/file-20180717-44103-uwj4us.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=311&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/228033/original/file-20180717-44103-uwj4us.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=390&fit=crop&dpr=1 754w, https://images.theconversation.com/files/228033/original/file-20180717-44103-uwj4us.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=390&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/228033/original/file-20180717-44103-uwj4us.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=390&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Number of specialised films released in the UK market.</span>
<span class="attribution"><span class="source">BFI weekend box office figures, Amazon, Microsoft, iTunes</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>But while access to specialised films has increased, 26% of specialised films remain inaccessible for audiences on any format. That is a remarkably high percentage – given that it is relatively easy to secure online access for films. </p>
<p>My analysis includes a sample of specialised films selected for some of the most prestigious festival programmes, but it is likely that online availability is more limited among specialised films selected for less prestigious competitions. So why can’t online audiences see any film they want? It’s to do with the way the industry works.</p>
<h2>Why can’t we get everything?</h2>
<p>In the film business, <a href="https://www.theguerrillarep.com/blog/whats-the-difference-between-a-sales-agent-and-a-distributor">sales companies</a> have an important role to play in the process of enabling access for films because they negotiate distribution deals with <a href="https://www.theguerrillarep.com/blog/whats-the-difference-between-a-sales-agent-and-a-distributor">a range of distributors</a> in international markets. But if sales companies are unable to sell distribution rights, they retain control over the distribution and release of those films.</p>
<p>The development of the online market, in this respect, has opened up opportunities for them to work directly with VOD platforms or with <a href="https://nofilmschool.com/2016/02/whats-aggregator-and-why-do-you-need-one-release-your-film-online">content aggregators</a>, who work as intermediaries between rights holders and VOD platforms. Examples of such content aggregators include <a href="https://www.themoviepartnership.com/">The Movie Partnership</a>, <a href="http://juiceworldwide.com/distribution/">Juice Worldwide</a> and <a href="https://gunpowdersky.com/">Gunpowder & Sky</a>.</p>
<p>For instance, the comedy-drama <a href="https://www.imdb.com/title/tt4562728/">Dreamland</a> (2016), directed by Robert Schwartzman, premiered in the US Narrative Competition of the <a href="https://www.tribecafilm.com/">Tribeca Film Festival</a>. The US sales company FilmBuff (now named Gunpowder & Sky) acquired worldwide distribution rights. In the UK market, the film was not released in cinemas or on DVD or Blu-ray, but FilmBuff made it available in the online market through direct connections with Microsoft and iTunes rather than via a UK distributor.</p>
<p>Despite such opportunities, sales companies do not always work with content aggregators or directly with VOD platforms to make specialised films available if they are not picked up by distributors. Making films available online requires organisational effort and a low-cost investment in digital formatting, but returns on investment can be very modest. That explains why some films remain inaccessible to audiences – as demonstrated for the UK market in the table below. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/228032/original/file-20180717-44082-107i1yr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/228032/original/file-20180717-44082-107i1yr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=244&fit=crop&dpr=1 600w, https://images.theconversation.com/files/228032/original/file-20180717-44082-107i1yr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=244&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/228032/original/file-20180717-44082-107i1yr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=244&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/228032/original/file-20180717-44082-107i1yr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=307&fit=crop&dpr=1 754w, https://images.theconversation.com/files/228032/original/file-20180717-44082-107i1yr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=307&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/228032/original/file-20180717-44082-107i1yr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=307&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A selection of films released by distributors in the UK market.</span>
<span class="attribution"><span class="source">BFI weekend box office figures, IMDb, Amazon, Microsoft, iTunes</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<h2>Endless choice</h2>
<p>The <a href="http://rodriqueslaw.com/blog/film-distribution-strategies-use-when-financing-your-movie">politics</a> behind the process of providing access to specialised films ultimately affects producers and audiences. In the <a href="https://mitpress.mit.edu/books/marketplace-attention">new digital economy of attention</a>, producers demand wider distribution for their films, while audiences demand endless choice.</p>
<p>This issue needs to be resolved. First, it needs to be addressed in film industry discussions between film producers and sales companies. In particular, sales companies should make a stronger commitment to making films available on transactional VOD platforms.</p>
<p>Second, policymakers can intervene in the process of making specialised films available online. Public funding agencies, such as the British Film Institute (BFI) in the UK, provide substantial financial support for the production of specialised films. They can provide more <a href="https://www.bfi.org.uk/supporting-uk-film/distribution-exhibition-funding">distribution incentives</a> to support cultural diversity in the online market for films in the UK. This would help to support greater cultural diversity, democratisation of access to films and enhancement of consumer choice. </p>
<p>While cinema goers have always had limited options when it comes to the number of screens they can see their favourite art house movie on, the internet era was supposed to bring with it an endless choice. But what is becoming clear is that this utopian dream is still far from being realised.</p><img src="https://counter.theconversation.com/content/100116/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Roderik Smits is a project member of the AHRC-funded research project Beyond the Multiplex: Audiences for Specialised Film in English Regions'. More info: <a href="http://www.beyondthemultiplex.net">www.beyondthemultiplex.net</a>
</span></em></p>More than a quarter of art house movies are never made available in the UK.Roderik Smits, Research Associate, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/748852017-04-05T01:08:43Z2017-04-05T01:08:43ZThe unique strategy Netflix deployed to reach 90 million worldwide subscribers<figure><img src="https://images.theconversation.com/files/163689/original/image-20170403-21966-rr9unl.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1280%2C657&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The areas in red indicate where Netflix has cultivated subscribers.</span> <span class="attribution"><a class="source" href="https://upload.wikimedia.org/wikipedia/commons/thumb/0/09/Netflix_area.svg/863px-Netflix_area.svg.png">NordNordWest/Wikimedia Commons</a></span></figcaption></figure><p>In just a decade, Netflix <a href="http://www.usatoday.com/story/tech/news/2017/01/18/netflix-shares-up-q4-subscriber-additions/96710172/">has grown</a> from a video service with seven million U.S. subscribers to one that reaches 93 million people worldwide. </p>
<p><a href="https://theconversation.com/poised-to-make-its-next-big-move-netflix-isnt-in-the-business-you-think-its-in-58119">Its growth and ability to break into</a> well-established industries – first video rental, now television and film – is a rare accomplishment. In my book “<a href="http://www.amandalotz.com/portals-a-treatise-on-internetdistributed-television/">Portals: A Treatise on Internet-Distributed Television</a>,” I explore how Netflix and other internet-distributed video services forced the existing television industry to radically change its practices. </p>
<p>At the same time, many have struggled to understand Netflix’s strategy. With other services entering the video on-demand market, how has Netflix continued to evolve and build its subscriber base? </p>
<h2>The seeds of niche TV</h2>
<p>When Netflix first launched in the late 1990s, it distributed DVDs – mainly films – by mail. The convenience of the service disrupted the existing film rental industry and eventually <a href="http://money.usnews.com/money/blogs/flowchart/2010/09/23/how-netflix-and-blockbuster-killed-blockbuster">led to its demise</a>.</p>
<p>Television, meanwhile, was experiencing a renaissance. Cable channels began running series with <a href="https://theconversation.com/why-has-tv-storytelling-become-so-complex-37442">complex storylines</a> – such as “The Sopranos” and “The Shield” – that were targeted at <a href="https://theconversation.com/fresh-off-the-boat-and-the-rise-of-niche-tv-37451">niche audiences</a>. Because many of these channels earned revenue from both subscribers and advertisers, they could be successful even if these programs didn’t reach a mass audience.</p>
<p>Then, during the early 2000s, advances in <a href="https://en.wikipedia.org/wiki/Data_compression">compression technology</a> – coupled with more homes gaining access to high-speed internet services – allowed large video files to be easily streamed over the internet. </p>
<p>These developments set the technological stage for Netflix to evolve its business from DVDs by mail to a national video streaming service, which it launched in 2007.</p>
<p>Soon, television series became an integral part of its business model. By the summer of 2016, television accounted for <a href="http://www.hollywoodreporter.com/video/watch-thr-s-full-tv-918281">70 percent</a> of the service’s streaming.</p>
<h2>Different model, different strategy</h2>
<p>For years, television was distributed by <a href="http://electronics.howstuffworks.com/tv12.htm">broadcast wave</a> – a revolutionary technology that sends a wireless signal over huge swaths of the country. But broadcasting technology can send only one message at a time to everyone in its range. </p>
<p>Because video streaming services such as Netflix (what I call “portals”) deliver programming “on demand” via the internet, viewers can choose what and when to watch instead of watching “what’s on.” So where a traditional channel’s task is to develop a schedule, the key task of a portal is cultivating a library of programs. </p>
<p>This leads to different business strategies that, in turn, lead to different programs.</p>
<p>Broadcast networks and cable channels make money by selling audiences to advertisers. Netflix (and many other portals, including Amazon Video and SeeSo) are subscriber-funded: Viewers pay a monthly fee for access to the library of content. Of course, HBO has also long relied on subscribers, which explains the distinctiveness of many HBO programs, despite its distribution by cable. (<a href="https://www.usatoday.com/story/tech/2015/04/07/hbo-now-launches/25406599/">HBO launched the portal HBO Now in 2015</a> to better match its subscriber-funded revenue model with a technology that makes its library of programs available on demand.)</p>
<p>To succeed, subscriber-funded services must offer enough programming that viewers find the service worthy of their monthly fee. Each show doesn’t need a mass audience – which is the measure of success for advertiser-funded television – but the service does need to provide enough value that subscribers continue to pay.</p>
<p>Many portals provide this value by offering a very specific type of programming. For example, to justify its monthly fee, <a href="http://variety.com/2014/digital/news/wwe-network-to-launch-in-february-as-streaming-service-1201036864/">WWE Network</a> offers subscribers more access to wrestling matches and wrestling-related content than fans can watch anywhere else. Similarly, <a href="https://techcrunch.com/2015/02/25/nickelodeon-unveils-noggin-a-mobile-subscription-service-for-preschoolers-arriving-in-march/">Noggin</a>, a portal with programs for preschoolers, makes ad-free programming available for young children. </p>
<h2>Netflix’s nooks and crannies</h2>
<p>Yet Netflix doesn’t try to offer content geared to a single audience with a specific interest. Nor does it aim for a mass audience. So how does Netflix – with its 93 million subscribers – pull it off? </p>
<p>Netflix has adopted what I call a “conglomerated niche” strategy: It develops programs for a handful of – maybe a dozen – different audience interests. These include complicated serial dramas (“House of Cards”), action series (“Daredevil”), horror series (“Hemlock Grove”) and exclusive films starring a popular actor (<a href="http://www.theverge.com/2017/3/24/15052466/adam-sandler-netflix-new-movies">Adam Sandler</a>). </p>
<p>This is possible only because internet distribution allows Netflix to serve those different audiences simultaneously and separately. Most Netflix subscribers might not even realize how many programs Netflix offers, since its subscribers usually aren’t exposed to programs that they probably won’t be interested in. </p>
<p>Netflix can also do this because internet distribution enables it to gather <a href="http://www.smartdatacollective.com/bernardmarr/312146/big-data-how-netflix-uses-it-drive-business-success">extensive data</a> about its subscribers’ behavior, which it then uses to cultivate its library and provide users with likely desired content. Netflix is notoriously tight-lipped about what data it collects, but its ability to gather viewing <a href="https://www.wired.com/2016/03/netflixs-grand-maybe-crazy-plan-conquer-world/">data from a global audience</a> has enabled the service to recognize micro-genres and then patterns of viewer interest.</p>
<p>If you were to ask different Netflix subscribers about the service’s brand, you’d likely get different responses. There is no one Netflix; rather, think of it as an expansive library with many small nooks and rooms. Most subscribers never wander floor to floor. Instead, they stay in the corner that matches their tastes. </p>
<p>Some other portals, such as Amazon Video, follow a similar strategy. But television and film streaming are a small part of the company’s overall enterprise. Hulu is both similar and different. Since Hulu is a joint venture of the companies that own Disney, NBC and Fox, its library is mostly filled with shows owned by these companies.</p>
<h2>A quest for global domination</h2>
<p>Some in the U.S. have doubted whether Netflix can maintain its market dominance based on a seeming lack of innovation and <a href="http://exstreamist.com/the-numer-of-titles-in-the-netflix-library-is-down-50-over-the-past-four-years/">erosion of its U.S. library</a> in recent years. </p>
<p>But Netflix hasn’t grown complacent. <a href="http://www.usatoday.com/story/tech/news/2017/01/18/netflix-shares-up-q4-subscriber-additions/96710172/">With 49 million American subscribers</a> – which makes it available in 43 percent of U.S. households – the U.S. market has less opportunity for growth. For this reason, Netflix has aggressively pivoted to stake claim as the first global television network. </p>
<p>This doesn’t mean Netflix is the same everywhere. Right now its library varies considerably because the norms of international television trade – built before internet distribution – required that distributors license shows to individual countries or regions. Netflix increasingly seeks global rights to the series it develops, which will make future additions to its library available to subscribers around the world.</p>
<p>Here, too, Netflix isn’t simply distributing shows produced for U.S. audiences. It also develops original series for subscribers in non-U.S. markets that are also available to U.S. subscribers – for example, “Marseille,” a French political drama; or “Hibana,” a Japanese drama about the country’s competitive comedy scene. As the number of subscribers from other countries has grown, so, too, has Netflix’s library of original content.</p>
<p>No television distributor has ever been able to reach a truly global audience. Netflix’s experiment as a global, subscriber-funded television portal may be the next chapter of television history.</p><img src="https://counter.theconversation.com/content/74885/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amanda Lotz does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Netflix has seamlessly adapted to new technologies and disrupted existing business models. But unlike traditional media enterprises, Netflix has never tried to attract a mass audience.Amanda Lotz, Fellow, Peabody Media Center; Professor of Media Studies, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/666832016-10-11T05:14:16Z2016-10-11T05:14:16ZBuyouts mean the future of Australian video-on-demand is hard to picture<figure><img src="https://images.theconversation.com/files/141174/original/image-20161011-3903-1y6nqdd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The hugely popular Game of Thrones could be a crucial drawcard for Foxtel Play's new viewers.</span> <span class="attribution"><span class="source">AAP Image/Village Roadshow Production</span></span></figcaption></figure><p>The dust is showing no sign of settling on Australia’s video-on-demand (VoD) media landscape. The past week has seen two seismic shifts which will have a flow-on effect on almost anyone who watches subscription-based television.</p>
<p>First came the news of <a href="http://www.abc.net.au/news/2016-10-04/presto-to-disappear-as-seven-sells-stake-to-foxtel/7900778">Foxtel’s takeover of Presto</a>, with the latter’s customers being transferred to Foxtel Play when Presto shuts down next year.</p>
<p>Then the ailing VoD service <a href="https://www.quickflix.com.au/">Quickflix</a> gained a surprise stay of execution, being <a href="http://www.smh.com.au/business/media-and-marketing/quickflix-snapped-up-for-13m-by-us-entrepreneur-20161004-gruqoq.html">saved by a US buyer</a> after going into <a href="https://theconversation.com/a-shake-up-in-australias-busy-tv-industry-as-quickflix-calls-in-the-administrators-58487">voluntary receivership</a> earlier this year.</p>
<p>The shakeup has left viewers wondering where their subscription fees are going to end up, and what content they will be able to access once the merry-go-round stops.</p>
<h2>Quickflix’s future?</h2>
<p>Quickflix’s problems began in 2014, when former stakeholder HBO sold its shares to Nine Entertainment. The following year the shares were transferred to Stan, Nine’s new joint VoD venture with Fairfax Media. </p>
<p>When Quickflix went into voluntary receivership, it stated Stan’s unwillingness to bargain with potential buyers as a key reason for its <a href="https://theconversation.com/a-shake-up-in-australias-busy-tv-industry-as-quickflix-calls-in-the-administrators-58487">demise</a>.</p>
<p>Quickflix has now been saved, although it is not clear what it will become or what its focus will be. US media entrepreneur Erik Pence has paid A$1.3 million, and the holding for the purchase, Karma Media, plans to retain 24 employees and pay entitlements to former employees. </p>
<p>There will <a href="http://www.smh.com.au/business/media-and-marketing/quickflix-snapped-up-for-13m-by-us-entrepreneur-20161004-gruqoq.html">reportedly</a> be more investment in marketing and a shift towards more niche content. This latter strategy has been a globally successful tactic for other VoD and online platforms such as <a href="http://netflix.com">Netflix</a>, <a href="http://youtube.com">YouTube</a> and <a href="https://www.fullscreen.com">Fullscreen</a>. </p>
<p>But it is unclear whether Quickflix’s new service will support the production of Australian content in any way – or even whether it will primarily offer movies, television series, or both. This makes it difficult to analyse the impact its re-emergence will have on the Australian VoD landscape.</p>
<h2>Hey Presto</h2>
<p>In contrast, the future of Presto has been made very clear indeed. Foxtel has acquired Seven West Media’s interests in the service and confirmed that it will cease on January 31, 2017. </p>
<p>This arguably makes Presto the first real casualty of the battle that has sprung up in Australia’s crowded VoD landscape.</p>
<p>Presto has been constantly reported as struggling for subscribers against competition from Netflix and Stan. A recent Roy Morgan <a href="http://www.roymorgan.com/findings/6839-netflix-stan-presto-subscription-video-on-demand-may-2016-201606141025">report</a> from this year showed how far Presto was behind its competition. </p>
<p>Presto had 142,000 subscriptions, less than half of the 332,000 signed up to its local competitor Stan. Even combined, these numbers are far short of international giant Netflix, which has <a href="http://www.roymorgan.com/findings/6839-netflix-stan-presto-subscription-video-on-demand-may-2016-201606141025">1,878,000 Australian subscriptions</a>.</p>
<p>Foxtel plans to move Presto’s subscribers over to its internet-delivered service Foxtel Play by the end of this year. In a <a href="https://www.foxtel.com.au/about/media-centre/press-releases/2016/foxtel-revamps-its-streaming-video-service.html">media release</a> Foxtel promised that “Presto customers will get access to more premium first run television programs and more recent movies than ever before” – raising the question of whether they were holding back on content before the takeover.</p>
<p>The Foxtel Play service also may not be what current Presto customers are expecting, nor is there a guarantee that it will end up costing the same.</p>
<h2>Does Foxtel really want to compete?</h2>
<p>It is clear that Foxtel is trying to compete with current VoD services, as underlined by its <a href="https://www.foxtel.com.au/about/media-centre/press-releases/2016/foxtel-revamps-its-streaming-video-service.html">recent announcement</a> that Foxtel Play entry prices will be cut to A$10 from the current A$25. But Foxtel Play’s <a href="https://www.foxtel.com.au/content/dam/foxtel/foxtelplay/support/pp-change/foxtel-play-pp-changes.pdf">subscription pricing structure</a> is much more complicated than other VoD services. </p>
<p>Unlike <a href="https://www.netflix.com/au/">Netflix</a> or <a href="https://www.stan.com.au">Stan</a>, which charge a flat fee for all content (although Netflix charges extra fees for more screens and HD qaulity), Foxtel Play has different prices for different content packages, much like Foxtel’s pay TV pricing structure. The content on Foxtel Play is not HD, although will <a href="http://decidertv.com/page/2016/10/7/foxtel-play-foxtel-go-will-make-the-switch-to-high-definition-foxtel">reportedly</a> be upgraded in 2017. </p>
<p>Foxtel Play’s <a href="https://www.foxtel.com.au/about/media-centre/press-releases/2016/foxtel-revamps-its-streaming-video-service.html">packages</a> include a basic offering of Documentary, Lifestyle or Kids programming at A$10 each per month, plus Premium Drama and Premium Entertainment options at A$15 each per month. Customers can also add Sport (A$25 per month) or Movies (A$20 per month) on top of these. So it seems likely that many customers end up paying more than those subscribing to other VoD services.</p>
<p>At first glance, Foxtel shutting down Presto could appear to be a way in which it can gain new Foxtel Play subscribers while dissuading viewers from defecting to Stan or Netflix. But the actual numbers may be small, according to Roy Morgan’s recent <a href="http://www.roymorgan.com/findings/6990-most-presto-subscribers-already-have-netflix-stan-or-foxtel-too-august-2016-201610050930">research</a>. </p>
<p>Of the 143,000 Australian homes with Presto, 77% already have an alternative VoD or pay TV service, which could include Netflix, Stan and Foxtel. Of Presto households, 55% also use Netflix and 27% have signed up to Stan. </p>
<p>Meanwhile, almost half of Presto subscribers already have Foxtel, mainly through its traditional set-top box service. Foxtel itself has <a href="https://mumbrella.com.au/foxtel-admits-subscriber-figures-include-presto-users-but-claims-cable-still-biggest-growth-driver-311968">admitted</a> to using Presto subscription numbers to bump up its own quoted subscriber growth numbers for 2015. </p>
<p>But Foxtel has two key advantages over Netflix and Stan. The first is HBO content, most notably the wildly popular series Game of Thrones. Next year Foxtel will <a href="https://www.foxtel.com.au/about/media-centre/press-releases/2016/foxtel-revamps-its-streaming-video-service.html">significantly increase</a> the amount of HBO content it offers.</p>
<p>The second advantage is sport, which fittingly is where the fiercest competition is set to play out among rival platforms.</p>
<h2>Into the sporting arena</h2>
<p>Sport streaming is poised as the next battleground in Australian video streaming, VoD and video subscriptions. If planned changes to <a href="http://www.acma.gov.au/Industry/Broadcast/Television/TV-content-regulation/sport-anti-siphoning-tv-content-regulation-acma">anti-siphoning rules</a> are made, the battle will become even more intense.</p>
<p>Foxtel Play’s pricing will allow access to Foxtel’s sports package for A$35 a month, A$15 cheaper than its pay TV sports package. But is it cheap enough?</p>
<p>Telcos themselves have now become sports broadcasters, with both <a href="https://www.telstra.com.au/tv-movies-music/sport">Telstra</a> and <a href="http://www.optus.com.au/shop/entertainment/sport">Optus</a> heavily invested in sports streaming – the latter after <a href="https://theconversation.com/optus-the-new-player-in-australias-sports-media-rights-battle-50069">sensationally pinching</a> the rights to the Premier League from Foxtel. </p>
<p>Seven’s recent broadcast of the Rio 2016 Olympics also <a href="https://theconversation.com/the-rio-olympics-are-a-test-case-for-the-future-of-sports-broadcasting-63589">raised many questions</a> about future sports broadcasting and media rights. With Seven no longer involved with Presto, it could set its sights on sport and furthering its partnership with Telstra.</p>
<p>If Telstra were to <a href="https://theconversation.com/bed-fellows-no-more-its-foxtel-versus-telstra-in-battle-for-online-subscribers-56672">sell its stake</a> in Foxtel, it may decide to invest more money in becoming a direct competitor to Foxtel Play.</p>
<p>This will open opportunities for streaming not only for major international competitions, but leagues that currently enjoy less funding and publicity. The Women’s AFL could be a perfect place to start – offering a homegrown product to homegrown viewers.</p><img src="https://counter.theconversation.com/content/66683/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc C-Scott is a board member of C31 Melbourne (Community Television Station).</span></em></p>With Quickflix saved but Presto on the way out, it’s hard to predict who will emerge as the winners as battle for video-on-demand viewers intensifies.Marc C-Scott, Lecturer in Screen Media, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/584872016-04-27T20:12:33Z2016-04-27T20:12:33ZA shake-up in Australia’s busy TV industry as Quickflix calls in the administrators<figure><img src="https://images.theconversation.com/files/120291/original/image-20160427-30967-15w9mcp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Quickflix was the first to offer video on demand in Australia and it could be the first to fold.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/gallery-495346p1.html?cr=00&pl=edit-00">Shutterstock/ibreakstock</a></span></figcaption></figure><p>Australia’s first video-on-demand (VoD) service, <a href="https://www.quickflix.com.au/">Quickflix</a>, issued a <a href="http://www.asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=QFX&timeframe=D&period=M6">statement to the Australian Securities Exchange</a> on Tuesday this week saying it has appointed voluntary administrators.</p>
<p>Administrator Ferrier Hodgson is <a href="http://www.smh.com.au/business/media-and-marketing/quickflix-appoints-voluntary-administrator-ferrier-hodgson-20160426-goezr9.html">reported as saying</a> it was carrying out an “urgent analysis of the company’s position” which included a possible sale or restructure.</p>
<p>For now, Quickflix says its business will continue as usual with no disruption to customers.</p>
<p>But could Quickflix be the first VoD service to fold amid growing competition in Australia’s television industry?</p>
<p>The company has made an <a href="http://www.smh.com.au/business/media-and-marketing/quickflix-cuts-staff-as-netflix-hits-hard-20160405-gnyjpw.html">attempt</a> to save A$1 million by cutting staff by 15%, closing offices in Sydney and Auckland and taking customer support in house.</p>
<h2>Strategic play by Stan in Quickflix’s demise</h2>
<p>An interesting point related to Quickflix’s potential demise is associated with another Australian VoD service, <a href="https://www.stan.com.au/">Stan</a>, jointly owned by Nine Entertainment and Fairfax Media.</p>
<p>In 2014, Nine Entertainment paid A$1 million for an 8% stake in Quickflix from HBO, which it had held <a href="http://www.theaustralian.com.au/business/business-spectator/nine-picks-up-hbos-quickflix-stake/news-story/fed0ba9055287888236d0d8a387646a9">since 2012</a>. Its shares have since been transferred to Stan. </p>
<p>Further, Stan has <a href="http://www.skynews.com.au/business/business/company/2016/04/26/quickflix-in-administration--blames-stan.html#sthash.Y9yQ6Enm.dpuf">told Quickflix</a> it wants either A$4 million in cash or A$1.25 million plus all of Quickflix’s streaming customers.</p>
<p>This is a strategic move that may see Stan remove a potential competitor from its attempt to succeed in the Australian VoD market. </p>
<p>But Quickflix is the least of Stan’s worries. The Australian VoD market has changed considerably in the past 12 months and there could yet be further international competition that local providers, Stan and <a href="https://www.presto.com.au/">Presto</a> will need to compete with.</p>
<h2>More international players in the local VoD market</h2>
<p>Currently, Australia has local services Stan, Presto and Quickflix, along with international services, <a href="https://www.netflix.com/au/">Netflix</a> and <a href="https://www.hayu.com/">Hayu</a>.</p>
<p>But there could be other services that will look at following Netflix’s international expansion, motivated by the company’s success in Australia.</p>
<p>During this month’s National Association of Broadcasters (<a href="http://www.nab.org/">NAB</a>) show in the US, Amazon <a href="http://www.streamingmedia.com/Articles/Editorial/Featured-Articles/NAB-2016-Amazon-Wants-to-Be-a-One-Stop-VOD-Shop-110528.aspx">declared</a> that it wanted to be the go-to for VoD. Michael Paull, VP of digital video at Amazon, said:</p>
<blockquote>
<p>We would like to have every digital video service and channel on our platform. </p>
</blockquote>
<p>Amazon is about data, of which it has a large amount from existing customers. This data goes far beyond what video a customer has previously watched. It includes purchases of books, music, technology, clothing and <a href="http://www.amazon.com/gp/site-directory/ref=nav_shopall_btn">much more</a>. </p>
<p>This will give VoD providers the potential to deliver their media content to those who have already showed interest in particular topics via previous Amazon purchases. </p>
<p>Paull <a href="http://www.streamingmedia.com/Articles/Editorial/Featured-Articles/NAB-2016-Amazon-Wants-to-Be-a-One-Stop-VOD-Shop-110528.aspx">argued</a> at the NAB show that he believed:</p>
<blockquote>
<p>[…] once you have the consumer, even if the intent is ‘I’m going to binge watch this show and exit,’ if you use the data to present other shows that they want to watch, they’ll stay.</p>
</blockquote>
<p>Amazon also allows for greater integration of shopping and video in a second screen experience, which I’ve <a href="https://theconversation.com/double-vision-why-netflix-wants-you-to-watch-an-extra-screen-55936">written about before</a>. </p>
<p>A move like this by Amazon could see it compete not only with Netflix but also YouTube.</p>
<h2>Others could enter the VoD market</h2>
<p>Alongside these well-known brands, there are other players in the VoD market, which many may have not heard of, but will in the future.</p>
<p><a href="https://www.fullscreen.com">Fullscreen</a> <a href="http://www.tubefilter.com/2016/04/26/fullscreen-svod-launch/">recently launched in the US</a> and has the backing of The Chernin Group’s investment dollars and of the US telecommunications company AT&T in a deal <a href="http://recode.net/2014/09/22/att-chernin-buy-fullscreen-the-big-youtube-video-network/">estimated</a> to be worth between US$200 million and US$300 million.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/a9ajjpeASrY?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Fullscreen: You’re In, April 26.</span></figcaption>
</figure>
<p>The service aims to be different to other VoD services. Chernin Group CEO Peter Chernin said the Fullscreen subscription service would be uniquely positioned in the marketplace, with a “signature personality and strong product features designed specifically for a millennial audience”. </p>
<p>The service will <a href="http://www.tubefilter.com/2016/03/30/fullscreen-ad-free-svod-service-launch-slate/">target</a> an audience of 13- to 30-year-olds, “from gossipers and geeks to rebels and revolutionaries”.</p>
<p>Original content along, with <a href="http://deadline.com/2016/03/fullscreen-announce-plan-streaming-svod-service-teens-young-adults-1201728434/">licensed series</a> such as <a href="http://www.imdb.com/title/tt0118300/">Dawson’s Creek</a>, <a href="http://www.imdb.com/title/tt0096694/">Saved By The Bell</a> and <a href="http://www.imdb.com/title/tt1587678/">Happy Endings</a>, will be available.</p>
<p>Some of the talent seen on Fullscreen started on YouTube, including <a href="https://www.youtube.com/user/MyHarto">Hannah Hart</a> and <a href="https://www.youtube.com/user/graciehinabox">Grace Helbig</a> who are part of <a href="http://www.legendary.com/digital/electra-woman-dyna-girl/">Electra Woman and Dyna Girl</a>.</p>
<p>What is interesting is the <a href="http://mashable.com/2016/03/30/fullscreen-svod-service-april/#Wk5AdnYQsuqF">comment by Fullscreen’s CEO George Strompolos</a> who said the company had been looking at other third-party platforms:</p>
<blockquote>
<p>[…] and we didn’t see what we wanted — so we decided to build that ourselves.</p>
</blockquote>
<p>This could be due to the interactivity and social networking elements added in the service. The program lengths will vary from minutes to a few seconds, reflective of <a href="https://vine.co/">Vines</a> (a video social media service).</p>
<p>In addition, Fullscreen will allow subscribers to edit clips of the programs they have viewed and share them with friends who are also subscribed to the service.</p>
<p>What is clear is the niche content that Netflix, YouTube and now Fullscreen provide can be successful in establishing a mass niche audience, differing to the mass audience pursued by commercial broadcasters. </p>
<p>So will we see a change by Australian free-to-air channels in the programming they broadcast, particularly now each have multiple channels? Or will the traditional television broadcasters continue to see a <a href="https://theconversation.com/the-battle-for-audiences-as-free-tv-viewing-continues-its-decline-58051">declining audience</a> and the rise of even more competition among VoD services?</p>
<p>If Quickflix does fold or get absorbed by another local service, how many local services will survive? We may also see global VoD services taking over the local services.</p><img src="https://counter.theconversation.com/content/58487/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc C-Scott is a board member of C31 Melbourne (Community Television Station).</span></em></p>Australia’s first video-on-demand service, Quickflix, has appointed voluntary administrators which could see it fold, sold or absobed by the conmpetition.Marc C-Scott, Lecturer in Screen Media, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/580512016-04-22T06:16:10Z2016-04-22T06:16:10ZThe battle for audiences as free-TV viewing continues its decline<figure><img src="https://images.theconversation.com/files/119740/original/image-20160422-27004-1ghcqib.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Online vs the traditional broadcaster for watching television.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/gallery-250930p1.html?cr=00&pl=edit-00">Michal Ludwiczak / Shutterstock.com</a></span></figcaption></figure><p>It’s not been a good year so far for Australia’s traditional television industry with reports that <a href="http://www.smh.com.au/business/media-and-marketing/tv-audiences-tumble-as-netflix-effect-kicks-in-20160413-go5jev.html">prime-time audiences are down almost 5%</a> amid competition from internet streaming services. </p>
<p>But the decline in the number of Australians watching traditional television has not just occurred since the introduction last year of online streaming services such as Netflix. The trend has been evident for some time now in <a href="http://www.oztam.com.au/documents/Other/Australian%20Multi%20Screen%20Report%20Q411_FINAL.pdf">reports</a> from the audience monitoring company Oztam.</p>
<p>The key reason for the change in television viewing habits is the internet, which has led to a large uptake of new screen media devices such as computers (desktop and portable), smart phones and tablets. </p>
<h2>New media</h2>
<p>YouTube is more than <a href="http://www.businessinsider.com.au/key-turning-points-history-of-youtube-2013-2#chad-hurley-registers-the-trademark-logo-and-domain-of-youtube-on-valentines-day-2005-1">ten years old</a> but for a media organisation, this is extremely young.</p>
<p>It’s only in recent years that YouTube has become part of the mass media landscape. Larger media organisations have not seen it as an immediate threat to the traditional television model, and some still may not.</p>
<p>But YouTube’s own figures <a href="https://www.youtube.com/yt/press/statistics.html">show</a> that it reaches more 18-to-34 and 18-to-49 year olds than any cable network in the US.</p>
<p>Recent <a href="http://www.tubefilter.com/2016/04/15/youtube-estimated-revenues-27-billion-2020/">analysis by UBS</a> shows YouTube is only going to get stronger and continue to grow at 21% for the next four years. By 2020, the site will have generated US$27.4 billion in revenues.</p>
<p>YouTube is not the only new media company that is having an impact on traditional television’s business model. By 2019, Netflix will arguably be the largest US video network.</p>
<p>Netflix has <a href="http://www.bloomberg.com/news/articles/2016-03-02/media-companies-try-to-spend-their-way-out-of-cable-tv-crunch">budgeted</a> spending US$5 billion on content this year, 50% more than last year.</p>
<p>ARK Investment Management believes that Netflix’s spend on content will <a href="http://ark-invest.com/webx0/netflix-largest-us-tv-network">increase</a> by 22% per year over the next five years.</p>
<p>Analysts hope that expenditure on content will increase subscribers’ viewing time, which could see Netflix “deliver 83 billion hours of video a year” more than any American multichannel TV network.</p>
<p>If these two media organisations are such a threat to the American television industry, what does this mean for the Australian free-to-air (FTA) industry?</p>
<h2>Trouble down-under</h2>
<p>YouTube and Netflix’s growing audience is far different to that of Australian FTA stations, which are seeing their prime-time <a href="http://www.smh.com.au/business/media-and-marketing/tv-audiences-tumble-as-netflix-effect-kicks-in-20160413-go5jev.html">audiences decline</a>.</p>
<p>Richard Finlayson, director of television at the ABC, is not surprised by this decline in television viewing. He too <a href="http://www.smh.com.au/business/media-and-marketing/tv-audiences-tumble-as-netflix-effect-kicks-in-20160413-go5jev.html">notes</a> that this is “not a new trend”; the ABC was the first network to launch a video-on-demand service, iView, back in 2008.</p>
<p>Seven’s director of programming, Angus Ross, <a href="http://www.smh.com.au/business/media-and-marketing/tv-audiences-tumble-as-netflix-effect-kicks-in-20160413-go5jev.html">argues</a> that “broadcast television continues to dominate a changing market”. Ross also <a href="http://www.smh.com.au/business/media-and-marketing/tv-audiences-tumble-as-netflix-effect-kicks-in-20160413-go5jev.html">believes</a> that television “is the only effective platform for the delivery of large and engaged audiences to advertisers”. </p>
<p>But this argument is rejected by YouTube. At this month’s Advertising Week Europe festival, <a href="http://www.theguardian.com/media/2016/apr/20/google-youtube-ads-tv">the company plans to release an analysis</a> of ad campaigns across eight countries that shows in 80% of cases, YouTube ads were far more effective than TV ads in driving sales.</p>
<h2>More than just cat videos</h2>
<p>But this is not an argument based solely on the platform, nor the devices you can access the media from. It’s about content. </p>
<p>Content is still king, but both Netflix and YouTube have done something that we haven’t seen from commercial broadcasters: they provide niche content to a mass (global) audience.</p>
<p>Yes, there are more than <a href="https://www.youtube.com/watch?v=cbP2N1BQdYc">cat videos on YouTube</a>. Some of the more popular YouTube video-bloggers include <a href="https://www.youtube.com/user/caseyneistat">Casey</a> with 2,780,000 subscribers and <a href="https://www.youtube.com/user/PewDiePie">PewDiePie</a> with 43,000,000 subscribers. Their videos regularly garner millions of views.</p>
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<figcaption><span class="caption">Casey Neistat - NEVER fly a Drone in a NYC Alley.</span></figcaption>
</figure>
<p>There are also some Australian YouTube producers getting hefty views on their videos that local commercial broadcasters would kill for. </p>
<p>Jamie and Nikki, a Melbourne-based couple, have a reality style Vlog that is uploaded twice a week. Their <a href="https://www.youtube.com/user/Reslim">channel</a> has more than 630,000 subscribers. Within a few days of release, their videos have more than 400,000 views and that number continues to grow. </p>
<p>Charlis Crafy Kitchen is another Australian YouTube <a href="https://www.youtube.com/user/CharlisCraftyKitchen">channel</a> with great success. It has almost 600,000 subscribers and videos that have millions of views.</p>
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<figcaption><span class="caption">Charlis Crafty Kitchen - MICKEY & MINNIE MARSHMALLOW POPS.</span></figcaption>
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<p>While Netflix has its own high-profile programs, such as House of Cards and Orange is the New Black, it also has a different approach to niche content than commercial FTA broadcasters.</p>
<p>Due to the user information that Netflix can acquire, it “can afford to buy content that doesn’t have broad popularity” as it can target its content to <a href="http://www.fool.com/investing/general/2015/09/30/how-netflix-inc-really-creates-value.aspx">particular</a> subscribers.</p>
<p>The approach by commercial television broadcasters to satisfy a mass audience is no longer ideal. Now, it appears that personalised viewing is the desired model for consumers.</p>
<h2>What audiences want</h2>
<p>So why are these YouTube creators successful? Their programs differ from what is on commercial FTA stations. Many have a shorter format and, more importantly, presenters who engage with viewers as if they were speaking directly to them.</p>
<p>The content on both YouTube and Netflix could, for the most part, be described as niche, an area commercial broadcasters don’t engage with. Television broadcasters need to present popular (broad) programming to get as many people as possible viewing at the same time. This is fundamental to a business model based on advertising, which is gauged by viewers.</p>
<p>New online media distributors have shown you can still gain a large audience for niche content, when it is presented globally.</p>
<p>Engagement with YouTube and Netflix will only continue to grow as smart televisions fill living rooms. By 2020, more than 75% of television sets are <a href="http://advanced-television.com/2016/04/18/140m-4k-uhd-tv-sales-by-2020/">expected to</a> feature smart connectivity.</p>
<p>This will open up further possibilities and ease of access to these services across all age groups.</p><img src="https://counter.theconversation.com/content/58051/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc C-Scott is a board member of C31 Melbourne (Community Television Station).</span></em></p>Prime-time TV audiences continue to drop as people switch over to watch online content.Marc C-Scott, Lecturer in Screen Media, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/566722016-03-22T23:41:43Z2016-03-22T23:41:43ZBed fellows no more? It’s Foxtel versus Telstra in battle for online subscribers<p>Foxtel has previously been coy about confirming <a href="http://www.news.com.au/technology/home-entertainment/tv/speculation-grows-that-foxtel-will-release-competitor-to-apple-tv-and-telstra-tv/news-story/0dd99f4c3bd9bdb363894694b225f3e0">speculation</a> it is planning to launch a service that will compete with Telstra TV and Apple TV.</p>
<p>But new chief executive Peter Tonagh has now told <a href="http://www.dailymail.co.uk/news/article-3502494/Could-Foxtel-Netflix-join-forces-Pay-TV-company-wants-offer-rival-streaming-service-s-content-win-customers.html">reporters</a> that it would ‘maximise’ all its distribution platforms, leading to speculation it would launch against part-owner Telstra’s own device.</p>
<p>His comments come amid reports Telstra is considering a A$4.5 billion initial public offering or sale of its 50% Foxtel stake. </p>
<p>Tonagh, who in a surprise move recently replaced Richard Freudenstein after four-and-a-half years at the helm, must usher Foxtel through a fast-changing media landscape which continues to be disrupted by subscription video-on-demand (SVoD) operators such as Netflix. </p>
<h2>The SVoD phenomenon</h2>
<p>Last year saw a massive change in the way in which Australians access and view video media. SVoD services launched included Stan, Presto (of which Foxtel is a joint partner with Seven West Media) and Netflix, along with Telstra <a href="http://www.smh.com.au/digital-life/computers/gadgets-on-the-go/hands-on-telstra-tv-streaming-media-player-20151025-gki7sd.html">introducing</a> its Telstra TV service. </p>
<p>This came at a time when the <a href="http://www.oztam.com.au/documents/Other/Australian%20Multi%20Screen%20Report%20Q4%202015%20FINAL.pdf">Australian Multi-screen report</a> continued to show a declining trend in the hours Australians spend watching live broadcast television, along side a rise in online video viewing hours.</p>
<p>Media analysts have forecast that last year’s decline would continue throughout 2016. UBS noted that there would be <a href="http://www.afr.com/business/media-and-marketing/ubs-cuts-valuations-for-seven-nine-as-netflix-steals-eyeballs-20150722-gihrtk">no growth</a> by the Australian television networks in 2016. Commonwealth Bank analysts also <a href="http://www.smh.com.au/business/media-and-marketing/telstra-ponders-foxtels-future-20151106-gkshq9.html">valued</a> Foxtel’s equity at A$3.6 billion, or 7.5 times the broker’s 2016 forecast for earnings, which <a href="http://www.abc.net.au/news/2016-03-18/telstra-may-sell-foxtel-stake-as-pay-tv-giant-struggles/7259506">fuelled rumours</a> that Telstra may look to sell off its 50% stake.</p>
<p>While the SVoD market is still in its infancy within Australia, uptake has been immense, with Netflix the main beneficiary. Foxtel’s venture, Presto, has struggled to <a href="http://www.adnews.com.au/news/netflix-reaches-2-2m-australians-but-growth-is-slowing-down">reach</a> a 1% uptake in Australian homes, far from the currently <a href="http://www.roymorgan.com/findings/6633-netflix-growth-slows-by-end-of-year-december-2015-201601182300">reported</a> 11% uptake of Netflix. </p>
<p>In the last few days another SVoD, Hayu, has launched in Australia, with a special focus on reality TV. It is offering a number of programs that are currently available on Foxtel.</p>
<p>The continuing changes will place further pressure on Foxtel’s desire to maintain its current 30% subscription rate in Australia, particularly with the very limited success of Presto.</p>
<h2>Foxtel TV?</h2>
<p>The recent speculation is that Foxtel will release a service similar to Telstra TV. The <a href="https://theconversation.com/up-next-video-on-demand-shakes-up-the-television-industry-45434">Telstra TV</a> service gives you <a href="https://www.telstra.com.au/tv-movies-music/products/telstra-tv">access</a> to all free-to-air catch-up services, three SVoD services, Netflix, Presto and Stan (although does not include subscription fees) and the Roku App Store. </p>
<p>While Telstra has a stake in Foxtel, its Telstra TV service does not include access to Foxtel content, despite T-Box, the service replaced by Telstra TV, which did have access to Foxtel channels.</p>
<p>A Foxtel TV service would directly compete with Telstra TV, and could add to speculation that Telstra wishes to distance itself from Foxtel. </p>
<p>It has been reported that Foxtel is considering including Netflix as part of its streaming service. In addition, Foxtel has made attempts to secure <a href="http://www.news.com.au/technology/home-entertainment/tv/foxtel-reportedly-considering-including-netflix-in-its-own-on-demand-streaming-service/news-story/79a1f8b3ea51273df635889fce43f473">rights deals</a> with the BBC, Viacom and Discovery.</p>
<p>This could see Foxtel become more of a media aggregator, but there still needs to be a differing factor for a Foxtel TV service to succeed. That could lie within the one key area that Foxtel prides itself on - sport.</p>
<h2>Lured back by sports</h2>
<p>Foxtel has secured the <a href="https://theconversation.com/when-the-afl-gets-richer-who-gets-richer-with-it-46321">media rights</a> to many Australian sports, including the AFL and NRL.</p>
<p>Foxtel has also set its sights on Wimbledon, the US Open and The Masters golf tournament, although these are currently restricted and on the legislated anti-siphoning list. This is a list that Foxtel is arguing should be <a href="https://au.news.yahoo.com/a/31152462/foxtel-wants-more-overseas-sports-rights/">abolished</a> with the media ownership laws currently under debate. </p>
<p>Focusing on its dominance in sport and integrating other services like Netflix, could be enough to help Foxtel entice new subscribers or win Australians back to the service.</p>
<p>Netflix has stated previously it is <a href="https://theconversation.com/ten-and-foxtel-in-box-seat-for-next-wave-of-sport-broadcasting-45656">not interested in sport</a>. With the company <a href="https://theconversation.com/netflix-is-everywhere-almost-so-what-does-this-mean-for-local-media-52857">launching globally</a> it would appear its focus for this year will be on building its global market and with this “Netflix Original Content”.</p>
<p>Telstra group managing director for media and marketing, Joe Pollard, stated late last year that “bandwidth is the <a href="http://mumbrella.com.au/why-telstra-tv-will-eat-foxtel-325006">new oxygen</a>”. While Telstra is a key in this supply. Foxtel now is supplying this oxygen to Australia with its new broadband packages, further establishing it as a major competitor to Telstra in more ways that just Telstra TV.</p>
<p>We could see Foxtel supply Australians with an internet service that includes Netflix and the possibility of streaming sport. Foxtel could also use its 13.84% stake in Ten Network as a way to get it involved in the SVoD. Ten the last of the three commercial FTA stations to be involved in a VoD service.</p>
<p>What is very evident by Foxtel’s recent moves, is that sport is the key to obtaining and growing subscriptions. For this reason Foxtel must use its strength in sport to differentiate itself in an Australian SVoD market that is already beginning to feel a little flooded for a population of 24 million.</p><img src="https://counter.theconversation.com/content/56672/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marc C-Scott is a board member of C31 Melbourne (Community Television Station).</span></em></p>Foxtel has previously been coy about confirming speculation it is planning to launch a service that will compete with Telstra TV and Apple TV. But new chief executive Peter Tonagh has now told reporters…Marc C-Scott, Lecturer in Screen Media, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.