The Netflix pricing and services for the Australian market announced today are a declaration of intent from the global streaming giant. It’s here for a fight.
The basic Netflix package, which will feature House of Cards and Orange is the New Black as well as a huge catalogue of movies, will be a buck cheaper than any other streaming service in Australia at $8.99 a month.
That’s just for a basic service streaming to a single device, but you can buy a high-definition package for two devices for $A11.99, and a four-stream 4K ultra-high-def “family” plan for $A14.99 month.
This compares with the $9.99 per month for the Presto service from Foxtel, the new entrant Stan that launched in January, and the ailing Quickflix at $9.99.
Even 12 months ago the debate over the high levels of piracy evident in Australia was met by the consumer lobby with understandable retorts about high prices and lack of choice on offer in the market.
Consider that a standard Foxtel package with a few extras like Sport and Movies would cost around $120 a month. One of the big questions in the media industry had been not if, but when, Foxtel would drop its prices in order to ignite a new round of subscriber growth. The big shift was announced late last year and you can now get a basic Foxtel package for $25 a month.
With Presto, Netflix, and Stan now in play and offering a year’s worth of on-demand TV for the same price Foxtel used to charge for just a single month, the choice of streaming products and the price points are suddenly extremely competitive.
On top of their headline-grabbing content offerings (Better Call Saul on Stan, House of Cards on Netflix), each streaming service provides access to huge libraries of movies that would previously just have been ripped from the The Pirate Bay. (The exception is Presto, which charges an extra $5 for movies.)
In just six months the entire TV landscape for consumers has been transformed. The Australian TV industry built a reputation for intransigence in the face of the enormous changes in consumer needs for on-demand, high-quality content but can now fairly be judged to have done something about shedding it.
Seven West Media is partnering with Foxtel on Presto, and the Nine Network teamed up with Fairfax Media to deliver Stan. (The Ten Network, still looking for a buyer, is another story.)
The Netflix launch strategy of being the cheapest and carrying some big-hitting shows is a threat to Foxtel, which has most to lose with the inevitable fragmentation of the pay TV audience. One report today suggests that around 10% of Foxtel’s 2.5 million subscribers are considering switching to a streaming service. Venture Consulting estimates that each of these is worth between $80 and $100 in revenue.
Foxtel stole some of the American giant’s thunder today by unveiling its iQ3, a greatly-improved version of its home device. Foxtel’s unique offering for news and sports nuts – and there are millions in Australia – will remain undiminished because of the platforms ability to secure the rights for high-quality sports events and deliver them to the living room. (The iQ3 also adds some smart technology including showing users what other Foxtel users are watching, a terabyte of storage, and recommendations from Foxtel’s huge content library based on previous viewing.)
So beyond the natural strengths of Foxtel’s platform for sport, the negligible price differences mean convincing Australian consumers to buy a streaming product or upgrade their existing service will come down to quality and depth of content to service the on-demand-hungry, binge-watching habits of the modern Australian TV consumer.
At these prices, it’s not just conceivable but likely that homes will end up with multiple pay TV services. In a house of sports fans, that’s likely to be Foxtel plus one other service. Presto has The Wire, Dexter, The Sopranos, Boardwalk Empire and Big Love. Stan is carrying CSI, The Good Wife, archive Star Trek shows and South Park, plus Better Call Saul. Netflix has at least House of Cards and Orange is the New Black, and some other Netflix originals including Bloodline and Marco Polo.
(Note Netflix has studiously avoided doing anything that might cannibalise its existing Australian customers who are accessing Netflix through a VPN service that makes their IP address look like it’s in the US. So Australian consumers retain that choice too.)
We get the full content line-up for Netflix Australia tomorrow. Then the picture will be complete. But consumers are already the winners.