The launch of SVOD continues to make headlines with recent data declaring Netflix the clear winner. Unless there is a dramatic change in the market, it looks like the other players are fighting for a distant second place, given that Netflix is likely to accelerate its Australian investment as a consequence of its success. So what does this mean for the TV / video ecosystem and how do the incumbents respond?
Event – Netflix 10x second place (>1m customers?)
Recent data suggests that Netflix has taken a large lead over its SVOD competitors (barely three months into its launch). A Roy Morgan survey published last week estimates over 1m Netflix ‘customers’ (and 400k households) against ~100k for Presto and Stan respectively. This follows data from Experian Hitwise, iiNet, Pocketbook and Authentic Entertainment which all suggest a comfortable lead for Netflix. While broadly consistent with our own survey (see link to our report on page two), this data suggests the gap has grown significantly.
While our industry discussions suggest the trend is correct, we caution the exact subscriber numbers as it remains unclear whether the data refers to paid versus trial subscribers (although this won’t necessarily help Stan and Presto sleep easy given Netflix’s 90% conversion rate to paid). The other nuance to be aware of is whether the data refers to accounts (subscribers) versus viewers versus devices or even households. Remember Netflix pricing options differ per devices connected (where Stan and Presto subscription include 3-4 devices) which may have the effect of widening the gap further if viewers or devices is the reported currency. In this respect, under the Roy Morgan data of 1m customers and 400k households, the actual number of subscribers is likely to be somewhere in between these two numbers given there will be households which contain multiple subscribers as Netflix’s pricing is scaled per number of devices.