Communications report 2011–12 series Report 1—Online video content services in Australia
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OVC market overviewUntil the arrival of catch-up television in 2008, content and service providers in Australia were limited to offering their video content via the FTA broadcast network, or using a pay-television model that reached a closed network of subscribers through cable technology.7 While these traditional delivery frameworks continue to operate, the high levels of internet usage in Australia—together with the increased availability of higher-speed internet services and the development of user-friendly consumer devices with embedded internet access—has facilitated the shift to developing online distribution channels for commercially-developed video content. Figure 2 shows a model of OVC delivery in Australia, with two primary provider options for receiving content: Consumer purchases managed OVC services, such as IPTV, through their ISP, usually as part of a bundle. This includes FOXTEL and Fetch TV (dotted arrows). Consumer actively seeks and accesses specific content directly (black arrows). This includes FTA catch-up services (such as iView and SBS On Demand), as well as OTT aggregated content (such as YouTube Movies and Quickflix). In addition, device manufacturers such as Sony and Panasonic are providing an online content service by an exclusive arrangement with purchasers of its products. For internet service providers, the provision of OVC services is targeted at customer retention and attraction in a highly competitive environment where revenues from traditional services such as voice are diminishing. Australia largest fixed-line telephone service provider, Telstra, has seen revenue from its Public Switch Telecommunications Network (PSTN) decline by $538 million and $480 million respectively over 2011–12 and 2010–11.8 For FTA broadcasters, OVC services provide an additional distribution channel to target audiences attracted to time-shifted viewing formats—that is, viewing content at a time and duration determined by the consumer either before or after a scheduled broadcast. For commercial FTA broadcasters, the opportunity for additional advertising revenue from the take-up of OVC services is also a major driver of the development of this market. By way of example, in the six months to June 2012, Australia’s FTA television broadcasters have seen advertising revenue decline by nearly three per cent while revenue from online advertising has increased by 30 per cent.9 General market observationsThe majority of communications companies participate in multiple areas of online video service provision. For example, although Telstra provides internet access to Australian consumers, it is also heavily involved in content access service provision, and content packaging and distribution through its interests in the television subscription service FOXTEL. By operating on a vertically-integrated basis, Australia’s service providers can offer consumers IPTV services solely or on a bundled basis, the latter often providing services at a reduced cost.10 The growing popularity of OTT services is reshaping the OVC market. Faster internet speeds have allowed OTT services to flourish, encouraging global players such as YouTube Movies and Apple TV to bypass ISP content distribution channels and establish direct relationships with viewers and subscribers.11 Australia’s FTA broadcasters have also taken advantage of these developments and offer catch-up programs on their websites direct to the viewer.
Revenue models in AustraliaThe four primary revenue models in the provision of online video services in Australia are: No charge (no advertising): The consumer can access the content for no charge and there is no advertising. No charge (advertising supported): The consumer can access the content for free. Advertising is part of that content and provides revenue for content providers. Subscription: The customer pays a monthly fee to have access to a range of content. Price-per-view (PPV): The consumer pays for each piece of content accessed individually.12 The following section focuses on the individual players across the OVC supply chain in Australia and the role of ISPs and broadcasters in driving this emerging market. Internet service providersInternet service providers were among the first to provide IPTV services in Australia, with increased telecommunications competition encouraging product diversification into professional content services as a means to attract and retain customers. Table 2 shows the participation of Australia’s ISPs in the OVC services market. Telstra remains the major player in this market, in terms of customer base and serving offerings. It has diversified its service offerings and has sought to accelerate the momentum of IPTV by forming partnerships with content and service providers alike. Telstra’s proprietary gateway device, the T-Box, provides access to both BigPond and FOXTEL content on a PPV or short-term subscription basis, while an arrangement with television manufacturers LG and Samsung has enabled consumers to access these services directly with an internet-enabled television. During the 2011–12 year, 193,000 T-Boxes were sold, bringing the total to 388,000 units at June 2012.13 Optus offered two forms of OVC service during the 2011–12 financial year: TVNow and MeTV. The Optus TVNow product was a cloud-based mobile video recording service suspended in April 2012 following a Federal Court ruling that such recordings presented an infringement of copyright law. The service was cancelled in September 2012 after an appeal to the high court was rejected.14 However, Optus’s MeTV service follows a pay TV model, offering Fetch TV’s IPTV service via a proprietary set-top box. The Fetch TV business model is outlined in the section ‘content aggregators’. Offered by eight ISPs15, Fetch TV services have been the centre of strong competition between service providers, resulting in downward price pressure and efforts by providers to differentiate their services. For example, in response to Optus’s launch of a Fetch TV service in October 2011, Internode announced a revision of its monthly IPTV rates, reducing the price of its Fetch TV full service by over 30 per cent.16 iiNet, now the owner of Internode17 and one of the most active ISPs in the market, has further differentiated its Fetch TV offerings by reducing contract periods and expanding its ‘freezone’ of cost-free content.18 Another initiative to create a competitive advantage has centred on eliminating metering charges for IPTV and catch-up video content. As shown in Table 3, Telstra and Optus offer unmetered IPTV service access as part of their broadband plans, while a number of smaller ISPs do not charge metering for catch-up television content, Fetch TV and TiVo. With catch-up television particularly popular among Australia’s internet users, the competitive advantage provided to smaller ISPs by this arrangement is likely to be substantial. Industry reports indicate that consumer take-up rates of subscription and on-demand IPTV services are comparatively low, especially among smaller providers. According to media reports, in August 2012, only 1.2 per cent of iiNet’s 824,000 broadband customers had subscribed to its Fetch TV service.19 Take-up rates have been higher among larger ISPs due to a larger customer base to whom can be sent marketing material and bundling offers.
Directory: media -> Research%20and%20Analysis -> Publication -> Comms%20Report%202011%2012 -> Word Word -> Communications report 2011–12 series Report 3—Smartphones and tablets Publication -> Report 3—The emerging mobile telecommunications service market in Australia Research%20and%20Analysis -> 5G and mobile network developments— Emerging issues Research%20and%20Analysis -> Chapter 1 Broadband services Research%20and%20Analysis -> Communications report 2013–14 series Report 2— The evolution of Voip in Australia June 2015 Canberra Research%20and%20Analysis -> Communications report 2011–12 series Report 3—Smartphones and tablets Download 0.5 Mb. Share with your friends:
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