Amid continuing rumours of Netflix coming to Australia, here comes another video streaming subscription service.
Nine and Fairfax Media are the latest to enter the fray, committing $50 million each to a joint venture called StreamCo planned to launch during the 2015 financial year.
“It will offer a broad range of local and international programming to subscribers for a fixed monthly subscription fee and no minimum terms commitment,” the companies said today.
“StreamCo is finalising its technical infrastructure for the service and has concluded a number of cornerstone content deals ahead of its launch.”
Content on the subscription video-on-demand (SVOD) service will include TV shows and films, and will be viewable through TV screens, PCs, tablets and other mobile devices, Nine and Fairfax said.
Nine and Fairfax have named Mike Sneesby as CEO of StreamCo. Sneesby previously served as head of corporate strategy and development for ninemsn.
“Having two of Australia’s pre-eminent media companies as StreamCo’s shareholders strengthens the base of our experience, whilst providing an amazing marketing and promotional platform for our new service,” said Sneesby.
StreamCo will be operated independently of Nine’s and Fairfax’s existing media businesses. It will be owned 50:50 by Nine and Fairfax, and each company’s CEO will sit on the board.
“SVOD is a proven business model overseas, and we look forward to offering this service to our subscribers, and indeed all Australians,” said Fairfax CEO Greg Haywood.
“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.
“The combination of our two businesses will provide the joint venture with unprecedented distribution and awareness,” said Nine CEO David Gyngell.
StreamCo will enter an increasingly crowded market for SVOD. Quickflix and Foxtel, through their service Presto, already offer $9.99 subscriptions for unlimited content. Presto does not currently offer TV shows.
Despite some speculation about Netflix coming to Australia, the company has not officially announced any plans to come to ANZ.
However, many Australians use the service anyway by circumventing its geo-blocking using a VPN. As a result, Netflix is the second most popular paid-content media company in Australia, representing 27 per cent of the subscription rental media service market in Australia, according to the August 2014 issue of Choice magazine.
SVOD services are also going up against pirates who download films and TV shows from torrents. Electronic Frontiers Australia has recently started listing movies pirates cannot obtain legally in this country, while content owners have created a website showing where they can.
The federal government has proposed major changes to copyright law to crack down on online piracy, including a process whereby rights holders can apply for court orders that would force ISPs to block access to websites.
IBRS analyst Guy Cranswick said the Nine-Fairfax joint venture “is as much about having a story for financial analysts as having a marketable product as their main businesses transition.”
“The quality of content is critical along with delivery, so the question is … how much potential is there in a small market for strong revenues?” the analyst said.
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