Streaming services to squeeze FTA and pay-TV

The upcoming launches of IPTV services will accelerate the decline in free-to-air viewing and revenues and curb the growth of pay-TV in the next five years.

That’s according to two reports from market researcher IBISWorld, which also predicts the arrival of Netflix will have a minimal effect on illegal downloads and streaming.

IBISWorld analyst Spencer Little said he expects many Australian viewers will continue to access Netflix’s US service as its Australian content will be comparatively limited. He estimates as many as 340,000 Australians are circumventing geo-blocking restrictions to get Netflix.

“The entry of Netflix will do little to stem the tide of illegal downloads and streaming,” Little said in a report issued before the federal government announced it will introduce legislation to enable copyright-holders to seek court orders to force ISPs to block overseas hosted piracy websites. The government also gave ISPs 120 days to devise a code of conduct to tackle piracy.

“Netflix is unlikely to be able to establish itself as a one-stop-shop in Australia, meaning viewers will continue to use a range of media in search of content,” Little said, which suggests there could be ample potential for  Seven West Media/Foxtel co-venture Presto Entertainment and Nine Entertainment/Fairfax Media's Stan, both of which are expected to lauch in January.

“Beyond the effects on viewers, the entry of Netflix and the rise of other IPTV providers will significantly affect the already-struggling free-to-air TV industry, and begin to squeeze the pay-TV industry."

The market researcher forecasts FTA broadcasters’ revenues will plunge from $5.6 billion in 2014-2105 to $5.3 billion in 2019-2020, an annual decline of 1.1%.

In that period pay-TV revenues are projected to grow by a slender 0.3% per annum, rising from $5.1 billion to $5.2 billion. IPTV revenues are expected to jump by 14.5% from $69.2 million to $135.9 million.

IBISWorld’s Pay Television in Australia December 2014 report published last week estimates the pay-TV industry will post $456.8 million in profits in 2014-2015, a margin of 8.9%.

The report calculates Foxtel has a 60% market share with $3 billion in revenues, and Telstra has 16.8% and revenues of $863 million.

Seeking to put a value on particular genres of programming, IBISWorld estimates general programming accounts to 41.2% of pay-TV revenues, with sports at 16.3%, children’s 12.8%, documentaries 12.1%, films 9% and news and other content 8.6%.