Last updated: 6 Jun 2016 Update History
Report Status: Archived
Report Pages: 101
Lead Analyst: Phil Harpur
Contributing Analyst: Paul Budde, Kylie Wansink
The digital TV and video streaming industry continues to evolve and growing strongly as it moves towards 2017. Consumer habits are shifting from broadcast TV to on-demand content – especially video streaming. Traditional TV viewing is increasingly facing competition from other viewing platforms such as smart phones, tablets, and smart TVs and from the rise of video streaming specialists such as Netflix.
This report offers a wealth of information on the Video Streaming market including:-
Researchers:- Paul Budde, Henry Lancaster, Phil Harpur, Kylie Wansink
Current publication date:- June 2016 (2nd Edition)
Broadcasting and Pay TV
The digital TV and video streaming industry has changed beyond recognition and it continues to evolve in 2016. Consumer habits are shifting from broadcast TV to on-demand content – especially streaming. Traditional TV viewing is increasingly facing competition from other viewing platforms such as smart phones, tablets, and Smart TVs.
Choice is the key. Broadcasters are no longer in charge of the global viewing habits of consumers, who have the choice of, and the ability to access, an enormous amount of movie and TV series content through internet broadband. Pay TV across the various platforms – including cable TV, IPTV, and satellite TV – continues to rise in popularity, and this trend is reflected in the market’s increasing service revenues. IPTV is the fastest-growing pay TV platform from a global perspective.
Within the Australian market, although there has been steady growth in subscription TV services into 2016, in coming years customer viewing on the platform will have been greatly changed following the launch of services by OTT providers such as Presto, Stan and Netflix as well as SVoD options being marketed by FTA broadcasters.
Although FOXTEL has seen steady revenue growth during the last few years the company has struggled to increase pay TV penetration in Australia. These offer competitively priced basic packages, commonly below A$10 per month, play to consumers’ desire to view content at a time of their choosing. Although linear TV in early 2015 was still adopted by about 88% of Australian households, the figure is falling gradually, and the advent of OTT viewing as well as IPTV offers from Telstra and other major ISPs will see a more rapid shift from liner to time-shifted TV in coming years.
The FTA broadcasters as well as marketers and advertisers who need a return on investments are watching the available content options. The distribution advantage held by FOXTEL is slipping away as the NBN becomes built out over a greater number of premises, so expanding the reach of capable broadband infrastructure which enables subscribers to access OTT and IPTV content
Following the end of analogue broadcasting, Australians have been able to access many more Free-to-Air TV channels as digital broadcasts. Although there are more channels available, the number of viewing hours has remained relatively stable for a number of years, and as a result individual channels, and particularly specific shows, have seen declining viewer numbers. Viewing habits have also been affected by the advent of catch-up TV services, which have been made available from the main broadcasters for two to three years.
Video applications over broadband are being used by many different industries for advertising, marketing, demonstration, entertainment and communication purposes. Video streaming already makes up the largest component of internet traffic, and is set to continue growing faster than other digital formats.
Driven by the successful US-based Netflix video streaming service, several Australian companies have launched new video streaming services or updated their services. As the demise of local operator Quickflix in 2016 has shown, there is insufficient room for all of the video streaming players. Netflix has emerged as the dominant operator, but both Stan and Presto have built up a significant customer base, and both have the substantial financial resources of their backers at their disposal. This should enable both players to continue investing in content in a bid to keep up with Netflix’s international buying power
The traditional IPTV model is making something of a comeback, with new video streaming services launched over higher-speed broadband networks and the introduction of competitively priced triple-play models. However, digital rights constraints are making it impossible for the services to take a larger share of the entertainment content market. It is therefore free catch-up TV series rather than movies and sport that are driving the current developments.
Movie content available – under the basic IPTV subscription – is mostly B- or C-rated; A rated material and new releases are only available at extra charges. BuddeComm remains pessimistic about the current commercial video streaming business models of most of the players. We predict that consolidation will have to happen. In addition, legislative changes will go far to protecting content providers rather than consumers, leading to a more controlled media landscape.
By far the largest growth in video entertainment comes from user-generated content services such as YouTube, Facebook and a whole new range of services of short, and even super-short, videos. Catch-up TV would be the second largest category. BuddeComm estimates that downloading and streaming of video now constitutes well over 50% of all regular online video usage, and that this will only increase over time.
There is a correlation between the availability of high-speed broadband and video streaming usage and it is envisaged that further increases in high-speed broadband penetration will drive new video streaming developments. The rapid growth of smartphones and tablets is also giving this market a boost, as well as new business models such as pay-per-view. New video streaming services are already being streamed over these devices as well as over gaming devices.
Mobile Video Streaming
Mobile video streaming, also known as mobile TV, has been promoted by mobile network operators as a prime benefit of capable infrastructure which has resulted from networks being upgraded LTE technologies. These upgrades enable subscribers to view streaming content on the go, with content less subject to outages and failed connections. However, until recently the platform had not caught the public’s attention, despite the introduction of unmetered access and generous data caps. MNOs initially failed to develop the right business models to deliver the type of content suitable for mobile streaming (such as sports oriented content, and short clips).
Video streaming over mobile networks is forecast to grow strongly, although not quite as dramatically as initially expected. Due to poor data allowance and steep prices, users tend to watch mobile video over WiFi more than over a cellular network.
It was also uncertain whether customers would want to pay for content at all, given the small size of screens when mobile streaming was initially promoted. However, in recent months the popularity of phablets, or devices with screens larger than 5.5 inches, has helped address some of the concerns that mobile streaming was unsuitable for the small screen. In addition, the development of new technologies such as LTE-Broadcast will make the delivery of mobile streaming more efficient on a technical level, while the ability of people to view content from Netflix and other OTT services via mobile devices has made the format more attractive. The platform is also being made more popular by the reliance on Wi-Fi for backhaul, thus addressing concerns of high data consumption on mobile plans.
Digital radio operates in the five mainland state capitals of Adelaide, Brisbane, Melbourne, Perth and Sydney. Trial broadcasts services are available in Canberra and Darwin, while repeaters have been switched on in certain outlying areas of Sydney, Brisbane and Perth. Digital radio availability in the rest of regional and remote Australia is still being negotiated with the Federal Government. There are also considerations relating to funding the cost of setting up additional infrastructure, as well as decisions to be made regarding the frequency band most efficient to use.
Digital radio has failed to live up to its potential. A key factor is that streaming of radio over smartphones, tablets and computers has become increasingly popular with similar quality of sound to digital radio. Also alternative streaming services such as Spotify and Pandora have also increasingly popular and operate as an indirect substitute to digital radio.
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