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www.ovum.com
© Copyright Ovum 2014. All rights reserved.
Outlook for OTT media in Australia
Australian OTT Summit, 18-19 November 2015
David Kennedy, Research Director
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?
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2014 baseline
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Australian usage pattern (2014)
Source: Ovum. 996 respondents
TV and music are essential/important to over 80%
5© Copyright Ovum 2015. All rights reserved.
Australian spending pattern (per month)
$4
$4 $10
$10, up to $20
$20
Source: Ovum. 996 respondents
Pay is OK, if it generates value
OTT
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Current TV services (end 2014)
Free TV still dominates the market
Source: Ovum. 996 respondents
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OTT video provider (end 2014)
7%
5%
2%
1%
2%
83%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
BigPond Movies
Quickflix
Ezyflix.tv
Presto
Other
None
The OTT video mass market is barely a year old
Source: Ovum. 996 respondents
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Historic video subscriptions
Source: Ovum
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2010 2011 2012 2013 2014
Pay TV subscribers IPTV subscribers OTT SVOD subscribers
Total TV households FTA-dominant households
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Australia historic music sales, 2008-2014
371.4 366.9
279.5242.2
213.8
159.4130.1
54.2 79.2
104.6140.5 184.3
192.3
187.7
0
100
200
300
400
500
2008 2009 2010 2011 2012 2013 2014
Rev
en
ue (
A$m
)
Digital
Physical
Growth in digital music has not kept pace with physical decline
Source: Ovum
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How is viewing changing?
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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”
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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
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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?
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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
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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
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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
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Demographics associated with SVOD adoption
IF SVOD were advertising supported, this would be gold!
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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.
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The next five years
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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
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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
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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
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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
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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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Thank You
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