The bad news for commercial free-to-air (FTA) broadcasters and Foxtel is that consumer spending on Netflix, Amazon Prime Video, Stan and other streaming services will soar over the next five years.
The good news is that while the networks’ linear revenues are predicted to decline, their advertiser-funded (AVOD) platforms will grow significantly from a low base, while Foxtel, Fetch and other pay services can expect marginal improvement.
That’s according to PwC’s 17th annual Australian Entertainment & Media Outlook, which analyses trends and consumer and advertising spend across 12 segments.
Megan Brownlow, PwC Australia’s entertainment & media industry leader, expects further disruption in the market as Disney and NBC Universal withdraw their content from SVOD aggregators and go direct to consumers.
She also predicts sporting codes and niche players will launch direct-to-consumer services and that voice-activated devices such as Amazon’s Alexis and Google Home will make it easier for people to access and record movies, TV shows and music.
The report notes Netflix cemented its market leadership position last year, reaching 3.6 million subscribers, ahead of Stan’s 960,000 (now past 1 million) and Foxtel Now’s 920,000.
Consumer spending on SVOD services is projected to rise at a compound annual growth rate (CAGR) of 30.1 per cent, from $1.35 billion this year to $3.16 billion in 2022.
The FTA networks’ linear revenues are expected to fall by 4.7 per cent in that period, from $3.54 billion to $2.87 billion. However that will be partly offset by a 20.3 per cent CAGR increase in their AVOD revenues, from $100 million to $196 million.
The premium box-delivered category (Foxtel excluding Foxtel Now, Fetch TV) is forecast to edge up by 1.2 per cent from $2.67 billion to $2.78 billion, much of which may be driven by Fetch.
“Fetch continues to grow at a rapid clip, the business is profitable, revenues in FY18 will exceed $150 million and viewing hours are now north of 1 billion per annum,” CEO Scott Lorson tells IF.
“As an aggregator, Fetch growth expands the pie with corresponding revenue growth in markets for broadband, filmed entertainment, pay TV, SVOD, AVOD and a host of transactional services.”
The report states: “In the next five years, investment in the enhancement and monetisation of catch-up services (AVOD) will be key to finding growth for free-to- air broadcasters.
“Faced with increased competition from global video providers, FTA broadcasters also need to continue investing in quality Australian content and take risks in delivering content in new ways to reinforce their point of difference – for viewers and advertisers – as curators of Australian stories.”
Endemol Shine Australia co-CEO Carl Fennessy told PwC: “Broadcasters must produce brilliant content first and foremost, continue to innovate and take risks in the way that they deliver it to their audiences. They have to continue to be creatively disruptive.”
ThinkTV’s Kim Portrate sought to put a positive spin on the trend lines, stating, “TV isn’t dying, TV is having babies. If you look at the rich range of BVOD (broadcaster video-on-demand) and SVOD services and live-streaming, TV is healthier from a content and audience point of view than ever. It is enabling its content to be consumed by Australians across multiple devices at any time of day for the length that they choose.’