Online streaming giant Netflix will make its highly anticipated debut in the Australian and New Zealand markets tomorrow (Tuesday, 24 March) in a move that will change the entertainment landscape as we know it.
It has been estimated that some 200,000 Australians will subscribe to the streaming service which will offer both classic movies and TV shows on demand. The service's push into the local market will also be aggressive given that it is undercutting the prices charged by locally established rivals, Stan and Presto.
Netflix will offer three plans:
- The entry-level plan will cost $8.99 per month and allow streamed content on one screen in Standard Definition (SD).
- The second plan will cost $11.99 per month and allow streamed content on two screens in High Definition (HD).
- The third plan will cost $14.99 per month and allow streamed content on four screens in either HD or 4K (Ultra HD).
By comparison, Stan, which is owned by Fairfax Media Limited (ASX: FXJ) and Nine Entertainment Co Holdings Ltd (ASX: NEC), charges $10 per month while Presto, owned by Foxtel and Seven West Media Ltd (ASX: SWM), charges $9.99 (although its content is only delivered in SD.
Foxtel is owned by Telstra Corporation Ltd (ASX:TLS) and Rupert Murdoch's News Corp (ASX: NWS).
Packing a hard punch
While Netflix's entry into Australia and New Zealand will create plenty of fantastic entertainment, not everyone will be smiling. As reported by the Fairfax press, a report by Venture Consulting showed that nearly 10% of Foxtel's customers are considering cancelling or downgrading their current subscriptions in favour of online streaming services.
In order to combat this, Foxtel partnered with Seven West Media to create Presto which it hopes will be able to compete with the likes of Netflix. Although strategic, the creation of Presto could also cannibalise its core revenue base which is believed to create between $80 and $100 per customer – compared to the $10 charged by Presto. Meanwhile, Foxtel will also launch its third-generation set-top box and digital recorder, the iQ3, today which could help lure customers away from the temptation of Netflix.
The rise of online streaming services will also have an enormous impact on Australia's commercial broadcasters including Seven, Nine and Ten Network Holdings Limited (ASX: TEN). While they are already struggling with lower advertising revenues, the arrival of Netflix could create a world of pain for them and their shareholders.
