Report: Difficult barriers for OTT newcomers in Australia, NZ
June 23, 2022
Dataxis hosted the first edition of Next Series Australia & New Zealand this year. The event was an opportunity for players across the OTT landscape to discuss the state of the competition within the SVoD, AVoD and OTT pay-TV markets in Australia and New Zealand, which have faced significant transformations over the last few years.
The most salient feature is the multiplication of OTT services observed until 2020, followed by a first wave of consolidations until the end of last year.
Dataxis reports that New Zealand in particular witnessed several major consolidations in the OTT landscape: the acquisition of Lightbox by Sky NZ’s Neon, creating the biggest local SVoD service, ranking third after Netflix and Disney+ in terms of subscribers. But the biggest spoils of war was probably the acquisition of Mediaworks, its television channels Three and Bravo and its streaming services ThreeNow, Three+1, Bravo+1, The Edge TV and The Breeze TV by Discovery at the end of 2020.
Traditional TV assets in the region have become increasingly attractive for international observers and investors, due to their successful strategies, especially in AVoD. Despite the decline of traditional broadcasting, which remains significant compared to Europe or North America, broadcasters capitalised on their strong content offers from their FTA programming, in addition to the creation of their own virtual channels, replicating the successful FAST model of US services such as Pluto TV.
The context of the pandemic also helped OTT platforms to accelerate the monetisation strategies of their ad-supported streaming services, especially on smart TVs as explained during the Nextv Series event. While usage progressed in video, gaming and audio, engagement increased alongside on TV apps, especially for sports content.
These changes in consumer behaviour led brands to realign their advertising strategies toward connected TVs. As described during the conference: ” CTV represents the best of both worlds – providing the scale and attention of traditional TV, with the addition of a more attuned audience, addressable & interactive advertising opportunities.” However, despite being central and very flexible, connected TVs are still facing issues when it comes to measurement capabilities, especially reach quantification which is limiting advertisers and OTT services.
The war for attention in the wake of the increased competition also led content providers to focus on non-exclusive deals, especially in the sports segment. Exclusive agreements have become less sustainable, while non-exclusive agreements have allowed content providers to share the costs and diversify their distribution channels, in a region where audiences remain small and fragmented. Besides, local platforms and operators massively invested in local productions and significantly improved the UX on their services, by lowering latency and improving their recommendation engines.
Regarding content delivery issues, 5G is expected to be a complementary asset, especially in Australia due to the low penetration of fibre, and the recent lack of investments in the NBN, the national broadband network backed by the Australian government.
Despite the great opportunities arising in advertising and technology segments, the entry barriers for newcomers in the OTT space have become increasingly difficult to overcome, concludes Dataxis.