Netflix a gateway to multiple SVOD service adoption

By Jim O'Neill on Dec 03 2016 at 11:30 PM
Netflix a gateway to multiple SVOD service adoption

Netflix is serving as the “gateway drug” for subscription video on-demand (SVOD) users in Australia, as it’s often the first service consumer’s trial before adding others.

A report from Roy Morgan Research points out that other services in the market, like Stan, benefit from continued Netflix growth.

“Netflix is the gateway into SVOD,” said Michele Levine, CEO of the research company. “The bulk of Stan’s customers started with Netflix before adding the second service to their home entertainment mix.

And, Levine said, as more mid-life households are discovering SVOD, pay-TV operators are under more pressure to justify their premium cost to subscribers.

Netflix, meanwhile, now has an audience in Australia of more than 5.75 million person 14+, about 2.22 million household subscriptions, according to the researcher. That’s up from just more than 4 million in February and nearly 5 million in May.

But, it appears that more than 40% of subscribers watch less than three hours of Netflix a week.

According to the firm, 26% watched less than three hours and another 16% watched none at all in the past week.

The remaining 58% watched more, including:

  • 35% who watched between three and seven hours of content on Netflix.
  • 14% who watched eight to 14 hours. And,
  • 9% who watched 15 or more hours of content.

The company said the overall take-up of Netflix rivals that of Foxtel (although Foxtel subs spend 2X as much time watching content).

Meanwhile, who actually subscribes to Netflix is also changing, as early adopters and younger viewers have begun to be joined by more mature subscribers.

“Over the past few months, almost half of Netflix’s total growth has come from homes of empty nesters aged 45 to 64,” Levine said. “Notably, this is the most common household type in Australia—and their Netflix adoption still has plenty of room to grow. The full impact of Netflix as a competitor for viewership, and entertainment dollars, remains to be felt.”

And, Netflix’s decision to offer content that can be downloaded for offline viewing likely will accelerate its uptake among all viewers, as it allows them to use mobile device to watch downloaded content without impacting data caps.

“Video streaming weighs heavily on mobile data limits,” Levine said. “Offline access now further distinguishes SVOD from traditional broadcast television, which remains an at-home media. Other free and paid-for media owners will need to continue to adapt to the new ‘on demand’ world of television in different ways.”

Stay tuned.

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