Pay-TV penetration has been stuck below 30% of Australian homes for years- but PwC predicts a massive upswing in subscriptions.
The percentage of homes with some form of pay-TV will jump from 29.2% to 48.3% in 2018, according to PwC’s PwC Entertainment and Media Outlook 2014-2018. That would translate to the number of connected households vaulting from 3.5 million to 4.5 million.
Consumer spending on subscription TV is forecast to expand from $2.8 billion to $3.1 billion in that period.
Almost all of that growth will come from internet-protocol delivered services (IPTV) including Foxtel Presto and Foxtel Play, Nine Entertainment’s Stream Co. and foreign players such as Netflix, says PwC’s Megan Brownlow.
Netflix is believed to have 200,000 subscribers in Australia using a VPN (virtual private network), which bypasses the geo-block. But the US streaming giant faces challenges in Oz’s relatively slow internet speeds and because Foxtel and the free-to-air networks control much of the premium content, it says.
PwC suggests Netflix could decide to integrate its service with existing platforms such as Apple TV and Fetch TV for an additional monthly fee.
IPTV revenues are expected to balloon from $92 million to $414 million, with IPTV commanding 30% of subscription TV spending by 2018.
“The next five years with witness numerous changes to the internet-delivered subscription TV market, aided by factors such as the continuing roll-out of the National Broadband Network, new technologies and new entrants,” the report says.
Brownlow foresees a minimal increase in subs for Foxtel’s core service, at least while it’s so expensive. At an estimated $103 per month, Foxtel’s average revenue per subscriber is the highest in the world, she says.
The report notes, “It appears Foxtel has hit a ceiling in household penetration for its premium cable/satellite service, which is unlikely to change unless anti-siphoning laws are relaxed.”
Foxtel chief operating officer Rohan Lund tells PwC he does not believe Presto and Play will cannibalise premium subscribers but will “further fragment the 70% of the market not already using Foxtel by providing additional content options.”