Market Insight

Netflix arrives in Australia and New Zealand in March 2015

November 21, 2014  | Subscribers Only

David Scott David Scott Associate Director – Research and Analysis, Service Providers & Platforms

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Global online video service Netflix has announced that it is going to enter Australia and New Zealand in March 2015. Outside the USA, Netflix is already available in Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Latin America, Luxembourg, Netherlands, Sweden, Switzerland and the UK. The launch of the Netflix service in Australia and New Zealand marks the official entry of the service in the Asia-Pacific and brings the number of countries with the service to more than 50.  

The service will be available on a number of connected devices including smart TVs, tablets, smartphones, PC/MAC, game consoles and set-top boxes. Programming will include original series Marco Polo and BoJack Horseman as well as several titles for children. Netflix plans to announce further details about the catalogue and supported devices later. The company is also yet to disclose any pricing information for the service in either Australia or New Zealand.  In the USA the monthly subscription price is $8.99, so Australian and New Zealand subscribers may expect to pay a monthly fee of A$11.45 including GST (10%) and NZ$13.15 including GST (15%) respectively.  

Our analysis

Netflix continues its global expansion alongside the recently reported positive developments of its international division, which has seen subscriber and revenue growth. In Q3 2014, the number of paid international subscribers reached 14.39m with revenues reaching $346m.

The success of these services will depend on a number of factors including the efficiency of the marketing campaign, signing of movie rights deals and the forming of partnership with local telecom providers.

Australia and New Zealand provide a good opportunity for Netflix boasting 5.8m and 1.2m broadband households respectively. Improvements in infrastructure will also facilitate further growth, particularly the ongoing rollout of the National Broadband Network (NBN) in Australia. Although the SVoD segment is small in both countries, it promises growth.  IHS forecasts the combined Australian and New Zealand SVoD subscriber base to reach 3m by the end of 2014.

However, Netflix will face formidable competition upon entering both markets in early 2015.  In Australia, the main SVoD providers are the homegrown DVD and steaming content provider Quickflix as well as movie streaming service Presto, which is owned-and-operated by Foxtel, Australia’s pay TV leader.  Foxtel slashed its monthly subscription fee from A$19.99 to A$9.99 in August 2014 and is currently in talks with Seven West Media about a possible content sharing deal. Meanwhile StreamCo, a joint venture between Nine Entertainment and Fairfax Media plans to launch a SVoD service called Stan, in early 2015.

Competition is also intensifying in the SVoD segment In New Zealand. Quickflix has operated their streaming service in New Zealand since March 2012 whilst Spark (formerly Telecom New Zealand) launched its Lightbox SVoD service in August 2014. New Zealand pay TV leader Sky Network Television plans to launch its Internet television service, Neon, in December 2014.

The world’s leading Internet movie and TV subscription service is likely to be a major player in the Australian and New Zealand SVoD markets. However, despite its global dominance, the Netflix service will still require the right mix of price, content and usability to achieve success in these markets.  

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