Stan, a local competitor to the US streaming media giant Netflix, is on track to make a profit.
Greg Hywood, CEO of Fairfax Media which has half the subscription video on demand (SVOD) business with the Nine network, says Stan is expected to reach cash flow break even during the 2018 financial year.
Hywood will tell a Macquarie bank investor conference this afternoon that Stan this month will exceed 1 million gross signups and have 500,000 active subscribers.
“When Stan launched 15 months ago there was no established SVOD category,” Hywood says.
“Now SVOD is in more than 1 million Australian homes, many of which have shown willingness to subscribe to more than one SVOD service.”
The move by Netflix into the Australia market in March last year saw heightened consumer interest in streaming services but has claimed two victims so far.
Quicklfix, a Perth-based business started in 2003, went into administration last month and EzyFlix, an on-demand service, closed in August last year.
Stan has, much like Netflix, moved into creating its own exclusive content including the Logie-nominated No Activity and highly-anticipated thriller Wolf Creek.
“Stan has created meaningful value, exceeding its business plan and on a clear path to profitability,” Hywood says.
“In 2016, Stan has demonstrated sustained and accelerating net subscriber growth.
“Recent weekly sign-up run rates have doubled versus the same time last year, and we continue to see both an improvement in conversion and an exponential reduction in churn after conversion from trial to paying subscriber.”
Netflix is estimated to have 1 million using its service in Australia. However, Netflix says its international subscriber numbers aren’t growing as expected and blames this partly on Australia.
Part of the local problem is rights to content.
Local players, including Stan and Presto, have been signing up content, effectively blocking Netflix from showing in Australia certain television series and movies it has in the US.
For example, Stan in January signed a long-term, exclusive licensing agreement with Showtime, the maker of Billions. Other shows which come with the deal include House of Lies, The Affair, Weeds, Penny Dreadful, Ray Donovan, Dexter and Californication.
(Disclosure: Business Insider is published by Allure Media which is 100% owned by Fairfax Media.)
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