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Nine and Fairfax partner for on-demand service

The rumours were right: Nine Entertainment Co. and Fairfax Media today confirmed they have formed a joint venture to launch a Subscription Video-on-Demand service.

Each will invest up to $50 million over an unspecified multi-year period, which includes spending on content, marketing and advertising.

Monikered StreamCo, branding to be revealed, the JV will operate independently of Nine’s and Fairfax’s existing media businesses.

Last year Nine appointed Mike Sneesby, former head of corporate strategy and development at ninemsn, as CEO of StreamCo.

No launch date has been announced- Nine will only say it will be during the current financial year- but IF understands it could be in November.

The JV board will include NEC CEO David Gyngell and his Fairfax counterpart Greg Hywood. NEC had told shareholders it would invest $50 million- $65 million in the platform and now has a partner to share that cost.

The partnership does not preclude other media groups from taking an equity position in the platform.  NEC is known to have had extensive discussions with Seven West Media as a potential investor. 

SWM CEO Tim Worner said today the company is having "accelerated discussions" with potential SVoD partners. "This is a space that we should be in," he said at the year-end financial results presentation.

"We are the biggest producer of Australian content and if you look at the sort of content that we make a lot of it lends itself to exploitation on demand and we are seeing that with Plus7 and Yahoo!7."

NEC has flagged the monthly fee for unlimited streaming of recently released movies, library films, TV content and documentaries, including original Australian content, will be about $10.

The arrival of StreamCo and the expected launch of Netflix in 2015 forced Foxtel to halve the monthly fee for its under-performing movies streaming service Presto this month.

Sneesby has said the platform will target the 1.4 million homes which do not subscribe to pay TV and are not big consumers of free-to-air TV.

NEC's recent purchase of HBO's 8% stake in Quickflix for about $1 million is unrelated to StreamCo and as the only holder of preference shares positions NEC to make a tidy profit if Quickflix is sold or broken up.

Gyngell said: “I am excited about working with one of Australia’s iconic media companies on this ground breaking opportunity. The combination of our two businesses will provide the joint venture with unprecedented distribution and awareness. I look forward to building one of Australia’s greatest new media businesses.”

Hywood said: “We’re delighted to join Nine in developing a compelling subscription video service. SVOD is a proven business model overseas, and we look forward to offering this service to our subscribers, and indeed all Australians. Fairfax will continue to seek innovative ways to engage and expand our audiences, and this is an opportunity to create value through participating in the next wave of media evolution.”