CHARTS: Here’s how far Netflix is ahead of its rivals in Australia

Netflix co-founder and CEO Reed Hastings. Photo: Ken Ishii/ Getty.

Netflix now reaches more than a quarter of all Australians aged over 14, just 12 months after launch, as the astonishing growth of the US-based streaming service continues to dominate the local market.

While Netflix keeps its own figures confidential, the latest data from Roy Morgan Research suggests that as of May 2016, 4.95 million Australians aged over 14 have access Netflix.

Roy Morgan says Netflix now has 1,878,000 subscribing homes including paid, free trials, and special offers. That’s a nearly four-fold increase on the May 2015 figure of 408,000 subscribers.

More importantly, the business is converting people to paid subscriptions after teaser offers with its launch come to an end.

Roy Morgan estimates 92% of Netflix subscriptions in the May quarter were paid, generating at least $15.5 million in monthly revenue from subscriptions costing between $8.99 and $14.99 a month.

Home-grown rival Stan, a joint venture between Nine Entertainment Co. and Fairfax Media, is in second place, but with a fraction of the market, with 332,000 subscriptions reaching 891,000 Australians. Foxtel’s SVOD offering Presto, is a distant third, reaching 353,000 people in 142,000 homes.

Source: Roy Morgan Single Source Australia, March – May 2016, sample n = 13,318 Australians 14+

But the problem for the local players is that they’re not converting viewers to cash as well as Netflix. Roy Morgan estimates that around 78% of Stan subscriptions are paid, meaning the $10 monthly fee is generating around $2.6 million a month.

Presto’s conversion rate is even lower, with only around 91,000 currently paying $10-15/month for the service, alongside a third on a free trial or subscribing for free through bundles such as Foxtel’s Platinum package. That means Presto is generating around $1 million in revenue a month.

Source: Roy Morgan Single Source Australia, March – May 2016, sample n = 13,318 Australians 14+.

Roy Morgan Research CEO Michele Levine says the figures show SVOD is now a major new media player in Australia. The company has begun to drill down into how the nation is using streaming services and will soon start to analyse exactly what people are watching. She says the challenge for SVOD providers has been to get into homes and despite lagging behind the $40 billion US juggernaut, Stan has performed well in the past 12 months.

“Stan in particular has been growing fast in 2016, with many Netflix subscribers now adding on a second SVOD service to meet their appetites for content. Around three quarters of homes with Stan also have Netflix,” she said.

“Part of SVOD’s appeal to consumers is that, unlike Pay TV, there is no lock-on contract.”

She said Roy Morgan will start to analyse churn and cancellations in the coming months as the three major players battle for market share with new programs.

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