Australia’s Fevered Streaming Market Isn’t Waiting for Netflix

Australia is an odd market for entertainment. English-language fans of Hollywood content abound in densely populated major cities. But pay-TV penetration is a measly 30%, and the modest broadband infrastructure is overrun by piracy.

But what may be odder still Down Under is the sudden surge of streaming-content providers seemingly intent on competing with Netflix, which hasn’t arrived yet in the territory — sort of.

Just last week came the launch of Presto, a $19.99 movie service from Foxtel, Australia’s pre-eminent multichannel TV and broadband provider. Despite Foxtel’s core video business, Presto offers a standalone bundle of linear channels and VOD that doesn’t require a pay-TV subscription.

The launch hasn’t come a moment too soon, considering reports that two big Australian media companies, Seven West Media and Hoyts Group, are in talks to team up for their own subscription VOD play. Then there’s word that a consortium of companies linked to Virgin Group chief Richard Branson is mulling entry into the market, as well as any other promising territory where Netflix has yet to expand.

But if Robert Thomson, CEO of News Corp. — which co-owns Foxtel with Telstra — was concerned about competition, he seemed to have a bigger worry his mind in an appearance at an investor conference March 11 in Florida. “The only problem you have in Australia is there’s a significant amount of piracy,” he warned.

SEE ALSO: Netflix 2014 European Expansion: An Overview

That’s particularly problematic for Stephen Langsford, CEO of the small Australian SVOD service Quickflix. He visited the West Coast last week in part to share with the Hollywood studios a troubling allegation: Netflix technically may not in Australia yet, but a large enough audience has been illegally accessing the U.S. version of the streaming giant’s programming that it was not only hurting his own business but depriving media companies of additional revenues that would come from selling content rights in the market.

“Netflix is enjoying a free ride, and the studios should be very concerned about that,” Langsford maintained.

A Netflix spokesman begged to differ. “Because of licensing restrictions, we employ industry-standard measures to prevent cross-border usage of Netflix,” he said. “The use of technology to virtually cross borders and use Netflix in another country violates our terms of use.”

Any way you slice it, all these streaming services are counting on Australia’s broadband infrastructure to improve. The country’s government approved
an ambitious buildout known as the National Broadband Network, but only about 300,000 homes have been upgraded so far. That hasn’t deterred market entrants. Google Play launched in Australia last week, and coming in May is Freeview Plus, a broadcast-online hybrid catchup service from the nation’s top broadcasters. One of them, Nine, is already testing its own SVOD service.

Cynics could argue Netflix’s best move is to stay out of Australia for now and just inflate its U.S. numbers via a black market diaspora. As for why the U.S. giant isn’t already Down  Under, Jonathan Wilner, VP of products at Ooyala, the video-streaming specialist powering Presto, has a theory: “The challenge for Netflix is that Foxtel has all the good movies locked up,” he said.

Yet there’s another unexpected entity that’s already a part of the Australian streaming landscape: HBO. The Netflix rival owns 8% of Quickflix, and much of its content ends up on the service, though not before hitting the pay TV window, where an output deal steers shows like “Game of Thrones” first to — wait for it — Foxtel.  Quickflix is not exactly a priority investment, according to an HBO insider.

Next month marks the new season of “Thrones,” which has the distinction of being the most pirated TV series in Australia. While Foxtel has in-season rights to the series in its pay TV package, episodes won’t be available to stream until after the finale. It’s a sure bet pirates won’t be waiting until then.

Popular on Variety

More Digital

  • T.J. Dillashaw, right, kicks Cody Garbrandt

    Disney Plans UFC Broadcast for FX

    UFC matches will return to FX  – but not on a permanent basis. ESPN has been showing preliminary bouts to UFC pay-per-view events for the last while on ESPN and ESPN2, and then showing the main card on its ESPN+ subscription video service. In September, the early lineup will air on FX, which the UFC [...]

  • fundo logo

    Google‘s Area 120 Is Testing Fundo, a Crowdfunding Service for Creators (EXCLUSIVE)

    Google’s skunkworks lab Area 120 has been quietly testing an events-centric crowdfunding service for YouTubers, Variety has learned. Called Fundo, the service allows creators to invite their fans to virtual meet & greet sessions and other paid online events. A Google spokesperson confirmed the testing in a statement provided to Variety: “One of the many [...]

  • Telling Lies - Logan Marshall-Green

    Sam Barlow's 'Telling Lies' Government-Surveillance Thriller Game Sets Release Date

    After more than two years in the works, “Telling Lies” — the investigative thriller from acclaimed game creator Sam Barlow — is ready to take the stage. The game, produced with and released by Annapurna Interactive, will be available next Friday, Aug. 23, via Steam and Apple’s Mac and iOS app stores. “Telling Lies” will [...]

  • YouTube logo

    YouTube Will Stop Letting Copyright Holders Seize Revenue via Manual Claims on Very Short Music Clips

    YouTube is pushing back against overzealous copyright policing by music companies. Starting in mid-September, the video giant will forbid copyright holders from making manual claims to commandeer revenue generated by YouTube videos that include very short music clips (e.g., five seconds of a song) or “unintentional” music (like music from passing cars). “One concerning trend [...]

  • Chelsea Handler memoir book buy online

    Chelsea Handler Bonds With Alexa in iHeartRadio Smart Speaker Promo

    iHeartRadio has teamed up with Amazon to promote Chelsea Handler’s podcast “Life Will Be The Death Of Me.” Beginning this Thursday, users of Amazon’s Echo smart speaker and other devices with Alexa built-in can opt to get their mornings started with Handler cracking jokes and exchanging banter with the smart assistant. Users simply have to [...]

  • David Messinger, Activision Blizzard

    Activision Blizzard Hires CAA Veteran David Messinger as CMO

    Activision Blizzard tapped David Messinger, a former 15-plus-year veteran of CAA, as its first corporate-wide chief marketing officer. Messinger, based in Santa Monica, reports to Coddy Johnson, Activision Blizzard’s president and COO. It’s the first time the video-game company has appointed a CMO who will oversee the global marketing operations across all of Activision Blizzard [...]

More From Our Brands

Access exclusive content