IPTV set to drive digital consumption downunder

The battle to win the Australian IPTV viewer will be fought on the fronts of content and price over the next few years, which will see a peak of activity in the sector according to PwC’s latest Australian Entertainment & Media Outlook 2014-2018.

 Australian entertainment and media spending grew to $33.7 billion last year, up by 4.5%, the PwC report states. Globally spend was up by 5.2% and regionally the Asia Pacific grew by 7.1% bolstered by the China and India markets.

PwC claims that new and existing entrants in the IPTV market will have to contend with the dominant force of Foxtel over the next four years which continues to hold a near monopoly on the Australian subscription TV market. Addressing the IPTV and OTT threat, Foxtel also recently introduced the Presto and Play internet only packages.

The report states that IPTV is the new battleground in Australian TV and Foxtel has already captured significant territory. However, new entrants such as Netflix will bring in dramatically cheaper offerings and competitive content which will scramble the market. Google’s Chromecast platform, supported by streaming movie service EzyFlix and Apple TV are noted as disruptive competitors to watch.

PwC forecasts that by 2018, IPTV penetration will hold 52.1% of subscription TV households vs. 48.3% of subscription TV penetration. However, the IPTV footprint is poised to outstrip revenue growth which is forecast to grow from 9% in 2014 to 13% in 2018 when the market is tipped to reach $3.1 billion. This disparity is based on the much lower price points that IPTV competitors are and will be offering the market. Australia’s established Netflix precursor, Quicklix, currently has around 120,000 paying customers offering a very competitive $10 per month subscription fee, which is half of Foxtel’s Presto and significantly cheaper than Fetch TV or T-Box.

Telstra’s T-Box, which streams Foxtel content in addition to its on sports and other digital content, has now shifted 687,000 units while rival Fetch has reached 100,000 subscribers.

Video-on-demand services like JB Hi Fi Video Now are also forecast to grow revenues to $255 million by 2018, the PwC report predicts while consumer spending on overall entertainment and media products are forecast to grow to $25.4 billion by 2018.

Content will clearly be the differentiator as platform variety and high speed internet access accelerates. The report cites this issues of geoblocking, piracy and the dominance of premium content rights being held by Foxtel and FTA broadcasters as key markers as the battle escalates.