David Kennedy - Ovum - Outlook for OTT Media in Australia

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© Copyright Ovum 2014. All rights reserved.

Outlook for OTT media in Australia

Australian OTT Summit, 18-19 November 2015

David Kennedy, Research Director

[email protected]

mailto:[email protected]

2© Copyright Ovum 2015. All rights reserved.

Agenda

A snapshot to end 2014

How is listening and viewing changing?

How will the market change over the next five years?

What will not change?


2014 baseline


Australian usage pattern (2014)

Source: Ovum. 996 respondents

TV and music are essential/important to over 80%


Australian spending pattern (per month)

$4

$4 $10

$10, up to $20

$20


Pay is OK, if it generates value

OTT


Current TV services (end 2014)

Free TV still dominates the market



OTT video provider (end 2014)

7%

5%

2%

1%

2%

83%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

BigPond Movies

Quickflix

Ezyflix.tv

Presto

Other

None

The OTT video mass market is barely a year old



Historic video subscriptions

Source: Ovum

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2010 2011 2012 2013 2014

Pay TV subscribers IPTV subscribers OTT SVOD subscribers

Total TV households FTA-dominant households


Australia historic music sales, 2008-2014

371.4 366.9

279.5242.2

213.8

159.4130.1

54.2 79.2

104.6140.5 184.3

192.3

187.7

0

100

200

300

400

500

2008 2009 2010 2011 2012 2013 2014

Rev

en

ue (

A$m

)

Digital

Physical

Growth in digital music has not kept pace with physical decline

Source: Ovum


How is viewing changing?


Consumer trends

On demand, anytime

Strong interest in content choice

Strong interest in watching at time of consumer’s choosing (33% nominate this)

Bingeing behaviour

Consumers will pay, if it generates value

The key value is convenience

Bandwidth is key, and increasingly expected as a right in younger

demographics

ACMA reports that 55% of SVOD and VOD users report technical issues.

Discovery

Top methods quoted in 2014 were friends (20%), or program guides (print/digital,

18%), or TV ads (16%)

A big opportunity for social media integration

Source: Screen Australia, “Online and On-demand, 2014”

Source: ACMA, “Subscription video on demand in Australia 2015”


SVOD is an unsustainable business model for movie industry, but highly

suitable for premium TV consumption – SVOD was built for the “binge viewing”

of TV series!

EST, on the other hand, is perfectly suited to take over disc market.

However, home video has already contracted significantly and some ex-disc

consumers have switched to other platforms including pay-TV.

TVOD is therefore likely to be best platform for premium movie content,

complementing TV content and older movies consumed as part of SVOD

platforms.

Other areas of interest:

Huge increase in consumption of video on mobile devices

4K?

Impact of new screen tech on consumption of media?

Technology trends


ACMA SVOD survey, June 2015

ACMA-commissioned survey Sample size

Total sample 1,505

Watched video content via an online subscription

service such as Netflix, Stan or Presto TV (SVOD) in

the last six months—referred to as ‘SVOD users’

250 (17%,

14% Netflix)

Watched video content via an online subscription

service such as Netflix, Stan or Presto TV (SVOD) in

the last seven days—referred to as ‘recent SVOD

users’

175 (12%)

Source: ACMA

Where did the 5% go?


Age is the strongest demographic factor

17%

33%

11%

0% 5% 10% 15% 20% 25% 30% 35%

Total

18-34

35+

8

9.9

5.2

0 2 4 6 8 10 12

Total

18-34

35+

Users out of general

population (%)

Usage by age, out of

all SVOD users (hrs)

Age is a major factor in SVOD usage

Source: ACMA

14% is Netflix


SVOD weekly usage

Top 20% of users account for roughly 50% of usage

Source: ACMA

Usage distribution for

recent SVOD users

(last 7 days)

3%

9%

9%

22%57%

>25 hrs 15.5 to 25 hrs 10.5 to 15 hrs

5.5 to 10 hrs Up to 5 hrs


Benefits of SVOD (the value proposition)

49%

44%

21%

0% 10% 20% 30% 40% 50% 60%

Watch when I want

Choice of content

Cost/no contract

Cost matters, but content and convenience dominate the value equation


Demographics associated with SVOD adoption

IF SVOD were advertising supported, this would be gold!


Forecast definitions

EST refers to electronic sell-through, or digital retail, buy-to-own, such as

Apple iTunes

TVOD refers to digital rental, paid temporary access to on-demand content,

such as Apple iTunes

SVOD refers to subscription on-demand, or digital subscription, such as

Netflix, Hulu Plus, Amazon Instant Prime Video.

IPTV refers to fully managed IP networks only, nothing OTT.


The next five years


The big picture for Australia subscription video (000s)

Stability for traditional services, big growth in SVOD

SVOD subs

170270

1,566

2,304

3,214

4,074

4,707

0

2,000

4,000

6,000

8,000

10,000

12,000

2013 2014 2015 2016 2017 2018 2019

Pay TV subscribers IPTV subscribers OTT SVOD subscribers

Total TV households FTA-dominant households


Netflix will maintain its SVOD dominance

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

2011 2012 2013 2014 2015 2016 2017 2018 2019

Australia SVOD subscriptions

Other Netflix

Most SVOD growth driven by Netflix


OTT video revenue growth

0

100

200

300

400

500

600

700

800

900

2011 2012 2013 2014 2015 2016 2017 2018 2019

OTT video revenue (AUDm)

EST TVOD SVOD

Most revenue growth driven by SVOD


Where does pay TV fit in?

0

500

1000

1500

2000

2500

3000

3500

2012 2013 2014 2015 2016 2017 2018 2019

Video revenue (AUD m)

Pay TV EST TVOD SVOD

Pay TV will still dominate the revenue line in 2019


Music sales will decline, stabilise around 2019

0

100

200

300

400

500

600

700

800

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Recorded-music retail sales (AUD m)

Other digital

Advertising

Subscriptions

Albums

Single tracks

Physical

One-off purchase being displaced by subscription/streaming


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David Kennedy - Ovum - Outlook for OTT Media in Australia

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