Digital, Legal & Anywhere

Digital, Legal & Anywhere Innovation in Australian TV

Table of Contents

1 Introduction 2

2 Report Conclusions 3

3 First, Some Definitions 5

4 Australia Today 7

5 The Shape of OTT in Australia 14 1 Introduction

2 Innovation in Australian TV The way Australians watch TV is Alongside this report we are launching changing www.finddigitaltv.com.au, a pilot “one-stop” online resource showcasing legitimate TV services available Consumers are taking advantage of faster internet to consumers in Australia. It follows on from a and mobile connections and the proliferation of similar online resource launched in Singapore last connected devices to watch content in multiple year, which attracted very positive attention at press, locations and across multiple platforms and devices. industry and consumer levels. It also builds on work done by organisations in Australia such as the MPAA In turn, consumer interest is driving innovation at and IP Awareness. An enhanced service of this type industry level. The TV industry, technology platforms could be useful to Australian consumers and industry and content providers are responding to this growing alike to keep track of the range of content offerings demand by making available an increasing range of available. services. This study uncovered a broad range of “New Media TV Offerings” in Australia, ranging from catch- The intention is that this report and www. up services from the free-to-air broadcasters like finddigitaltv.com.au will together drive awareness ABC iview and subscription-based services like Foxtel about innovation in the Australian TV industry and Play to web-delivered aggregator OTT services like generate discussion about the changing face of TV in Quickflix (a “home-grown Netflix”, as it were). Australia and the challenges for legitimate services in competing against continuing piracy. But despite the ever-increasing range and variety of legitimate TV services available, many Australian consumers are still accessing pirate content. Piracy levels in Australia are high by any international standard. The reasons for this are varied and About this report: This report and FindDigitalTV. approaches for tackling piracy have been widely- com.au have been prepared by Olswang and discussed. However, one key finding of this report CASBAA. is that there is some scope to increase consumer awareness of legitimate services, both of the Olswang is a leading international law firm specific offerings available and the way in which specialising in media and technology. CASBAA is those offerings can be accessed. In other words: the authoritative voice for multi-channel TV in the consumers would benefit from a service that helps region. More information about the authors can them to find the legitimate content that is out there. be found on the last page of this report.

Drawing on a combination of publicly-available data (from Government and other sources) and discussions with academics, industry bodies and senior executives across the media and technology industries in Australia, Digital, Legal & Anywhere looks at the changing face of TV in Australia and the drivers for change at consumer level. It considers the challenges and opportunities that exist for the TV industry and the way in which it is reacting.

Digital, Legal & Anywhere 3 2 Report Conclusions

4 Innovation in Australian TV Australians love TV. The population of tech-savvy, New services are launching all the time. In early-adopters is voting with its clicks, taps and preparing this report we came across new services swipes – it wants to watch TV across as many devices launching almost by the week. These ranged from and platforms as possible. new catch-up offerings such as Nine’s “Jump In” and Ten’s “TenPLAY” through to new offerings from Demand is high and, as this report shows, industry international channels businesses such as Cartoon is responding by offering, arguably, the broadest Network Watch & Play and even niche offerings such range of content offerings available in any market as Surfing Australia’s mySURF.tv. in Asia-Pacific. Almost every commercial model on offer internationally is available to users in Australia, There is a huge variety in economic models. from “all-you-can-eat” streaming packages through to People often think of OTT in Australia as being increasingly innovative catch-up offerings from all of dominated by more expensive offerings tied to pay the major free-to-air broadcasters. TV subscriptions. There are indeed many such high- quality premium offerings. However, we also found a Put simply, there has never been more demand for wide variety of alternative payment models used as online video content delivered “over-the-top” (or well as various excellent free services. “OTT”) and industry is doing more than ever before to cater to the growing demand. Now is a good time to build on the work that has been done. This report uncovered a diverse range of These were the key findings of Digital legitimate content offerings in the Australian market. Legal & Anywhere: It also uncovered the opportunity to make users better aware of what content is out there. The market is ripe for OTT. The population is young, tech-savvy and affluent. The technology The piracy problem is not going away. Piracy infrastructure is improving rapidly and Australia is remains a huge problem. Despite all of the work that a world-beater when it comes to mobile broadband has been done to make available legitimate content, penetration. TV remains the most popular form of levels of video piracy in Australia are high by any entertainment consumption. All of these factors add international standard. Although the Government up to some great opportunities for the TV industry. is taking some initial steps to address the problem, there has been less decisive action in Australia A diverse range of offerings is available. This than has been seen in comparable markets such report found that at least five different types of OTT as the UK. In order for the TV industry to be able to offering are available in Australia, covering the full develop and invest in further legitimate offerings spectrum of commercial models seen in markets for consumers, participants in this report were internationally. unanimous in their call for the Government to take decisive action to address the problem.

Digital, Legal & Anywhere 5 3 First, Some Definitions

6 Innovation in Australian TV The fast pace of innovation in Australian TV is at risk 3. Stand-Alone Offerings of creating confusion in the kinds of terminology that OTT offerings provided direct to consumers (usually is used to describe the offerings available. by channels or content providers) independently of platform subscriptions. This is usually either on a The concept of “over-the-top” or “OTT” is now widely free and/or ad-funded basis (in the case of catch- understood as being the provision of content over the up services provided by the free-to-air channels, for open internet without the content provider managing example) or on a transactional or subscription basis. the “pipes” through which that content is provided (i.e. distinct from managed IPTV services such as Examples: ABC iview, BBC iPlayer, Setanta, Sports Fetch TV, where the pipes are managed by the content Plus Surfing Australia, Cartoon Network Watch & providers themselves). However, our analysis of TV Play, Adult Swim offerings in Australia and other countries found that there are at least five broad sub-categories of OTT 4. Contingent Offerings offerings, each of which works differently both in OTT offerings provided by channels or other content terms of business model and consumer experience. providers which are only available to subscribers of It is worth pausing for a moment to consider each that particular channel or channel tier on the relevant of these in turn and to look at some examples in platform. Australian TV. Examples: ESPN3 and any of the offerings on Foxtel The Five Categories of OTT Go.

1. Aggregator Offerings 5. Hardware Offerings OTT services where the majority of the content has These are best described as “dedicated device been sourced and aggregated from third parties. offerings” – content delivered over-the-top that can Typically these services are provided either on a pay- only be accessed on a specified device. Service per-view, monthly subscription or ad-funded basis. An providers control both the content and the hardware international example would be Netflix. on which that content can be viewed.

Examples: YouTube, iTunes, Quickflix, Crackle, Examples: Apple TV, Google TV. Viewster

2. Platform Offerings OTT offerings provided by TV platforms, for example through VOD and catch-up services, only available to subscribers of the platform in question or who specifically subscribe to that platform service as a distinct offering.

Examples: Foxtel Play, Foxtel On Demand

Digital, Legal & Anywhere 7 4 Australia Today

8 Innovation in Australian TV 4.1 Some Context Australian TV Australian TV is, for the most part, free-to-air Overview dominated, with a relatively low penetration of pay TV To understand the state of Australian TV today and (making up somewhere around 30% of households), the direction it is heading in, it is useful to briefly something that may, amongst other things, be consider the unique geographic, cultural, economic attributable to the relatively late start for pay TV in and political context in which it exists. 19958.

As at the last census in 2011, Australia had a TV in Australia is regulated by the Australian population of 21.5 million1. It is a vast geographic Communications and Media Authority (ACMA). space, the sixth-largest country on earth by land area, There is assertive regulation of media, including equivalent in size to mainland USA and one-and- “anti-siphoning” restrictions on sports content (a a-half times the size of Europe2. These factors are mechanism whereby a large number of titles/events directly relevant to the TV industry because they have are reserved for free-to-air broadcasting) and pay TV implications for broadband and mobile infrastructure, advertising revenue regulation (e.g. no more than which we deal with below. 50% of a pay TV operator’s total revenues can come from advertising). Australia is culturally diverse. Over a quarter of its population was born overseas and a further one-fifth Digital switchover in Australia is complete. Australia’s have at least one overseas-born parent3. final two regions switched to digital-only TV on 10 December 2013. English is the official language of Australia and by far the most widely-spoken, with 76% of households being English-speaking only4.

Australia has a mature economy. Unemployment is relatively low and recently has been between 5.5% and 6% (5.8% as at January 20145) but that is 1. Australian Bureau of Statistics, 2011 Census QuickStats: www.censusdata.abs.gov.au/census_services/ its highest level for four years and the economy is getproduct/census/2011/quickstat/0 facing the challenge of diversification away from a 2. The Australian Department of Foreign Affairs and Trade, traditional reliance on trade in natural resources. www.dfat.gov.au/aib/overview.html 3. Australian Bureau of Statistics: http://www.abs.gov.au/ausstats/ [email protected]/Lookup/2071.0main+features902012-2013 Broadband and mobile infrastructure There were 12.4 million internet subscribers in 4. Australian Bureau of Statistics, 2011 Census QuickStats: www.censusdata.abs.gov.au/census_services/getproduct Australia as at June 2013, representing an annual /census/2011/quickstat/0 6 growth of 5% . However, Australia’s broadband 5. Australian Bureau of Statistics, January 2014: www.abs.gov.au/ infrastructure has plenty of challenges in relation ausstats%[email protected]/mediareleasesbyCatalogue/ 46DFE12FCDB783D9CA256B740082AA6C?Opendocument to take-up, speed and pricing. The Government’s 6. Australian Bureau of Statistics, measured as at June 2013: response is the roll-out of the National Broadband www.abs.gov.au/ausstats/[email protected]/Products/8153.0~June+2013~ Network, which we consider below. Chapter~Subscriber+Sector?OpenDocument 7. Australian Bureau of Statistics, measured as at June 2013: www.abs.gov.au/ausstats/[email protected]/Products/8153.0~June+2013~ When it comes to mobile, there are 19.6 million Chapter~Mobile+handset+subscribers?OpenDocument subscribers with internet connections via a mobile 8. Various sources, including: www.budde.com.au/Research/ handset in Australia and the 4G roll-out is well underway7. Australia-Pay-TV-Statistics-Subscribers-Overview-and-Analysis.html

Digital, Legal & Anywhere 9 4.2 Challenges and Opportunities in delays to the rollout led by the incumbent Labour Australian TV Today Government. The NBN was subject to a review in December 2013 and there remains some uncertainty 1. eVOLVIng Broadband Infrastructure as to the future of the project. However, the Coalition is promising that, by the end of 2019 (when the Challenges: Relatively low fixed broadband project is now scheduled for completion) the NBN penetration and rollout of National Broadband should be able to deliver access to wholesale speeds Network has become fraught with political of up to 50 Mbps to 90% of Australia’s fixed-line considerations. footprint and wholesale speeds of up to 100 Mbps to 65%-75%.

Opportunities: The overall position is The NBN has been developed with OTT in mind. improving fast and this should provide new There are two solutions to enable delivery of video stimulus for OTT services. content over the NBN: (i) unicast for delivery of OTT and VOD content; and (ii) multicast for delivery of The technology infrastructure in Australia is evolving simultaneously viewed linear content. Some industry fast and that has some major implications for players have already started to make use of these providers of OTT offerings. technologies to deliver their services.

On the one hand, Australia seems to have fallen Whilst the speed of the roll-out has been criticised behind countries like the Netherlands, Switzerland, and there remains some uncertainty as to the future Denmark, Norway and Korea when it comes to of the project, there is an opportunity here for new broadband infrastructure. In the OECD’s 2014 data services to take advantage of these improved speeds release, it ranked 18th out of 34 OECD countries and availability. ACMA, the industry regulator, itself in terms of fixed broadband penetration per 100 acknowledged this in its 2012 report on online video inhabitants. In the latest data from Akamai’s “State content services: “The rollout of the NBN and the of the Internet report”, it ranks 43rd in the world for development of new OVC [Online Video Content] average connection speed, well below markets such access devices are likely to provide significant stimuli as Korea, Singapore and Taiwan9. This has a real to the supply and take up of OVC services in the impact on consumer activity. 54% of Australians (and future”12. 73% of those in the 14-23 age range) would pay more for faster internet, even though Australia is one of 2. Mobile Taking Off the more expensive countries for broadband10. And to underline the importance of broadband speed to OTT Opportunities: Australia has the best mobile in particular, it is revealing that 59% of Australians broadband penetration in the world. “Mobile have said they would watch more videos online if the first” is a growing trend. connection speed were faster11.

On the other hand, plans are in place to improve the When it comes to mobile, Australia is already in situation – most notably, the rollout of a new National good shape and, indeed, ranks at the top of OECD Broadband Network (NBN). The NBN became a key countries when it comes to mobile broadband focus during the September 2013 Federal Elections, penetration (at around 114%)13. The top three with the Liberal/National Coalition led by Tony Abbott Australian carriers are spending billions upgrading challenging the perceived spiralling costs and their networks to high-speed 4G LTE services and

10 Innovation in Australian TV roll-out is expected to intensify through 2014. It is industry is damage to its revenue streams, which understood that by Christmas 2013, 4G was available in turn discourages further investment in legitimate to around 85% of the population14. In parallel, the offerings. volume of data being downloaded by users via mobile is increasing rapidly. For example, for the A senior industry figure we spoke to neatly three months to December 2012, the volume of data summarised the issue: “In some ways it’s the work downloaded by mobile handsets was 38% higher than of a generation to fix the piracy problem”, pointing to that in the previous three month period15. Consumer a “widespread sense of entitlement” to get access to demand for content on the go, improving network all content instantaneously and for no cost. Foxtel speeds and competition in the 4G market should fuel Chief Executive Richard Freudenstein has called an increasing demand for mobile OTT services. As Australians “world-beaters” when it comes to levels such, mobile will certainly remain high on the agenda of piracy. At a speech at the American Chamber of for every OTT service provider and many providers Commerce in Australia, Freudenstein added that may consider a “mobile first” strategy with services “This is a serious problem not just for Foxtel but for all specifically targeted at mobile users. of the creative industries in Australia. For this reason alone the government has a duty to act.”17 3. Piracy and Government Support

Challenges: Piracy remains a big problem.

Opportunities: There is certainly no issue with demand for TV content online and the Government is making some tentative steps towards addressing the piracy problem. 9. Akamai “State of the Internet” as at Q3 2013, at: www.akamai.com/dl/ akamai/akamai-soti-q313.pdf?WT.mc_id=soti_Q313

10. All OECD statistics at: www.oecd.org/sti/broadband/ Piracy remains a huge problem for the media industry oecdbroadbandportal.htm#Penetration in Australia. 11. Deloitte, “Multi-device consumption has come of age: Australians are digital omnivores”, at: www.deloitte.com/view/en_au/au/ e4cd62fc7673f310VgnVCM2000003356f70aRCRD.htm The TV show “Game of Thrones”, one of the most- 12. ACMA Communications report 2011–12 series, Report 1—Online video pirated items of content across the global internet, content services in Australia, Latest developments in the supply serves as a useful example of the scale of the and use of professionally produced online video services” at: www.acma.gov.au/webwr/_assets/main/lib310665/ problem in Australia. Australians were reportedly the report%201_online_video_content_in_australia.pdf world’s most prolific illegal downloaders of Game 13. Deloitte, “Multi-device consumption has come of age: of Thrones episodes worldwide. Similar statistics Australians are digital omnivores”, at: www.deloitte.com/view/en_au/au/ have recently been reported in relation to other e4cd62fc7673f310VgnVCM2000003356f70aRCRD.htm TV content, most recently in relation to “Breaking 14. Various online sources, including: www.gizmodo.com.au/2013/07/ telstra-expanding-4g-to-85-per-cent-of-aussies-by-christmas/ Bad”. Australians also reportedly make illegal music 15. Australian Bureau of Statistics: www.abs.gov.au/ausstats/ downloads more frequently per head of population [email protected]/Products/8153.0~December+2012~Chapter~ than any other country16. Physical (disc) piracy also Mobile+handset+subscribers?OpenDocument appears to be rife and, in October 2013, the Motion 16. As reported in the Sydney Morning Herald in September 2012: www.smh.com.au/entertainment/music/australians-worlds- Picture Association of America identified a market worst-for-illegal-music-downloads-20120918-2643a.html in Australia as being amongst the world’s worst 17. Financial Review, at: m.afr.com/p/technology/legitimate_movie_ physical piracy hotspots. The obvious impact on downloads_on_the_6rnq6FBguY6LpHDqTlN2JI

Digital, Legal & Anywhere 11 Some action is happening. The new Attorney-General, Another potential opportunity in Australia comes George Brandis, is understood to have sent letters to from its reputation as a market of early adopters of many of Australia’s leading telcos and rightsholders new technologies and services. to seek their participation in a series of industry roundtables to resolve the piracy problem as a matter Australia is often heralded as a “test-bed” for new of urgency. However, some would argue that this is technology. A 2011 CASBAA report suggested perhaps too little, too late. that this “test-bed” reputation arises from the fact that “Australia enjoys a unique combination of Despite the high piracy figures, there are positive sociogeographic factors”, pointing to the fact that signs coming out of the legitimate market which its consumers have a relatively large disposable show that, despite the challenges, industry is income, it is English-speaking with Western business providing legitimate OTT content that people want to practices whilst being removed from major markets watch. The legal downloads, electronic sell-through such as Europe and North America and enjoying and VOD sector grew at an estimated 36% between proximity to Asia22. 2011 and 2012 and digital revenues in 2012 exceeded 10% of total revenues across the whole $1.174 billion This early adopter reputation makes it easy for new Australian home entertainment industry18. Data entrants to adapt offerings they may already be released by the Australian Home Entertainment providing in other territories and Australia’s largely Distributors Association (AHEDA) in November 2013 “tech-savvy” population is in general very open to shows that Australians have actually become the using new and next-generation devices and services. second-biggest users of legitimate download and streaming services for films and TV per capita. As 5. Law and Regulation: How to Level the AHEDA Chief Executive Simon Bush put it: “What Tilted Playing Field? we’re seeing is a bit of a shift from illegitimate to legitimate which is good…I think the whole pie is Challenges: There is a regulatory “tilted growing but piracy is still at high levels”19. playing field”, where onshore pay TV services are subject to a much heavier regulatory And there is clearly no problem with demand. TV burden than online-only offerings. remains the predominant entertainment activity when it comes to media consumption, with 63% of consumers preferring it to any other form of media In the area of content regulation, there is currently consumption (amongst the highest such level of something of a “tilted playing field”, where online preference worldwide)20. In March 2013, 11.5 million (and particularly offshore) services remain subject Australians streamed online videos, with the average only to the relatively loose regulations applied person spending 7 hours and 17 minutes watching to internet services, as opposed to the more online video21. comprehensive regulations which apply to pay-TV networks. In other words, content delivered over a 4. Australians as Early Adopters “traditional” pay-TV network is subject to a heavier regulatory and compliance burden than identical Opportunities: Australia’s tech-savvy, English- content delivered via online services, whether speaking population has a clear appetite for legitimate or not. next-generation devices and services.

12 Innovation in Australian TV Online TV in Australia is already subject to some 6. Consumer Awareness content regulation. In particular, there is an access/ control system applying to online content which is Opportunities: Building on the work that has sexually explicit, violent or otherwise classified for already been done to bring legitimate content mature audiences. However, there are some key to users’ attention. differences between the online rules and the pay-TV rules, particularly in relation to advertising revenue restrictions, content quota rules and captioning We have already seen that the demand for legitimate requirements. services is high and, as the next section of this report demonstrates, industry has developed a The federal Government in Australia recognised the broad (and growing) variety of legitimate services for need to look at the issue of convergence and how consumers. The market has momentum behind it and regulation should address it to balance the playing the question is therefore what more can be done to field. In May 2012, it published its Convergence make sure that these legitimate services are drawn to Review. consumers’ attention. In other words, as the market expands, how can growing demand be linked with The pay TV industry’s hope was the report would growing supply? recognise the need to reduce the regulatory requirements on pay-TV operators to bring them more One opportunity, it seems, could be in building on in line with the requirements applicable to online-only the work that has already been done to increase operators. Instead, the report recommended that the consumer awareness. It is hoped that FindDigitalTV. regulatory burden on online operators be increased to com.au, the online resource showcasing legitimate bring it in line with the more strict pay-TV regulation. TV services which is being launched in parallel with However, this recommendation has yet to be put on this report, will further improve awareness of the the Australian statute books and given the lack of range of legitimate content available, ensuring that discussion of the issue around the 2013 election the the work that industry is already doing to get content “tilted-field” regulatory position looks set to remain for out there across a variety of platforms and devices is the foreseeable future. captured.

The pay TV industry will certainly be hoping that the new Coalition Government will recognise the need to balance the tilted regulatory playing field to enable it 18. Financial Review, at: www.afr.com/p/technology/digital_film_tv_ to better compete with online-only operators. purchases_jump_pc_k4LkS1fFrU8fuJTiVikO2J

19. Financial Review, at: www.afr.com/p/technology/legitimate_ There has also been some direct Government movie_downloads_on_the_6rnq6FBguY6LpHDqTlN2JI support for OTT services. For example, the Labour 20. Deloitte, “Vox Populi”, at: www.deloitte.com/assets/Dcom-Australia/ Local%20Assets/Documents/Industries/TMT/Vox%20Populi_ Government announced in its 2013 budget that it State%20of%20the%20Media%20Democracy%20Survey.pdf would be making available an additional AUD $30 21. Nielsen, “Australian Online Landscape Review”, million in funding over the next three years (scaling at: www.nielsen.com/content/dam/corporate/au/en/reports/2013/ nielsen-au-online-landscape-review-march-2013.pdf up from AUD $3.8 million for 2013-2014 to AUD $13.8 22. CASBAA, “Australia in View” report, 2011 million for 2014-2015) to maintain and expand the 23. Australian Government Budget Measures 2013-2014, Part 2 (Expense ABC’s online services and “to provide for an expected Measures), Broadband, Communications and the Digital Economy: increase in demand for these services”23. www.budget.gov.au/2013-14/content/bp2/html/bp2_expense-06.htm

Digital, Legal & Anywhere 13 5 The Shape of OTT in Australia

14 Innovation in Australian TV 5.1 Overview of Offerings business at that time and that’s very exciting for This study has confirmed that there is a broad mix us….The trick is to be sufficiently invested in the of OTT services available to Australian consumers new technology without getting too far ahead of the 1 covering the full range of commercial models. Each of customers’ usage behaviours” . the five different categories of OTT services described in section 3 of this report is available in Australia Quickflix’s OTT offering is Quickflix Play, which offers (i.e. Aggregator Offerings, Platform Offerings, Stand- a range of new releases and archive film and TV Alone Offerings, Contingent Offerings and Hardware content. In terms of a business model, Quickflix Play Offerings). is currently bundled with subscriptions to its DVD rentals business as opposed to being available as In this section, we look at what offerings are available, an OTT-only offering. However, in a partnership with current trends in each of the five categories, which Disney, it is also offering a pay-per-view model for offerings are shaping the market and we make certain Disney films. It also has a per-episode and some observations on the differences with other per-season deal with HBO. markets. The detail for each offering can be found at FindDigitalTV.com.au, the “one-stop shop” resource It certainly seems that, once the company feels that to help consumers locate legitimate TV services in customer usage behaviours have shifted sufficiently, Australia. it will focus more on its OTT services, at which point we would expect to see Quickflix Play being marketed 5.2 Aggregator Offerings as a stand-alone, OTT-only offering.

An appetite for all-you-can-eat? A Netflix launch on the horizon? The increasingly popular “all-you-can-eat” streaming One cannot talk about Aggregator Offerings in model operated by companies like Netflix (in the Australia without considering Netflix (or, rather, the US) or Amazon’s Lovefilm or Prime Instant Video (in absence of Netflix). the UK) is available in Australia but, interestingly, not from those international players (who have not For now, Netflix has not launched in Australia yet targeted Asia-Pacific) but, rather, from a smaller (and indeed has indicated that it would not do domestic operator, Quickflix. so until it has made further progress with its European expansion), although it is widely-available Far from being a new entrant into the market, illegitimately through VPN services. Indeed, such Quickflix has been trading for more than ten years. has been the level of VPN activity that, according to Like Netflix and Lovefilm / Prime Instant Video, various press reports, Netflix is considering a launch Quickflix’s traditional business is in DVD rentals by in Australia sometime in 2014. post and that still appears to be a key focus for the company, although it is looking ahead to the “tipping A Netflix launch is pure speculation at this point point” at which a greater focus of its activities will be but the evidence from other territories is that Netflix on streaming. can substantially shake up the OTT market, putting increased pressure on incumbent operators but also According to founder, Steve Langsford: “The decline generating fresh interest in legitimate OTT services of the bricks-and-mortar rentals is only increasing, but amongst consumers. the DVD business is still a $1.5 billion-a-year market. 1. The Australian, “Quickflix gears up for shift to streaming”, at: So while there’s no doubt that the market will contract www.theaustralian.com.au/business/companies/quickflix- in coming years, we plan to be growing the streaming gears-up-for-shift-to-streaming/story-fn91v9q3-1226762109794

Digital, Legal & Anywhere 15 In the meantime, as in other markets in Asia-Pacific, A large part of the success of iTunes in Australia, as this gap means that domestic operators such elsewhere, is driven by the ecosystem and following as Quickflix have an opportunity to try to build a that Apple has built around its products and services headstart and a strong OTT subscriber base. and, as always, what has worked for Apple will not necessarily work for other players in the market. YouTube continues to be popular Google’s YouTube is popular in Australia. It is the Streaming certainly seems to be the direction that fourth most-visited site overall and the most visited the market is heading in so there would appear to video-on-demand platform2. However, as in many be limited opportunities for other players to launch other markets, the vast majority of YouTube’s content download services. It is perhaps telling that according is short-form and user-generated as opposed to to a recent ACMA study, all online activities in longer-form TV and film content. Australia saw a steady increase in the five years to June 2013 with one exception – the number of people This is even more the case in Australia than it is in downloading video clips peaked at 1.58 million in some other markets like the US, where YouTube has June 2011 and was down to 1.33 million at June been experimenting with more “TV-like” content, 20134. whether on a paid or ad-funded basis. With a limited range of long-form content being available on In the meantime, there are some other services YouTube in Australia right now and a bigger problem having some success with a rental model. BigPond with users uploading pirated content, the TV industry Movies from Telstra provides access to over 4,000 is unlikely to view it as a legitimate TV industry player movies (including new releases to rent from around in the short term. However, given the profile and $5.99 per rental). The service is available via the popularity of the service, one cannot discount a move Telstra T-Box DVR or compatible IPTV or connected TV by YouTube into the legitimate content market having devices. Telstra seeks to address consumer concerns a significant impact on the Australian OTT market. about the cost of downloads by offering unmetered downloads to their broadband customers. Downloads – room for anyone except Apple? OTT the new home for older content? Apple is often the exception to the rule and this is As mentioned above, Australians want fresh content no different when it comes to OTT in Australia. The at the time of release. But is there still a place for majority of the services identified on FindDigitalTV. older content? com.au are streaming services but iTunes stands out as a successful Aggregator Offering that provides The Sony-backed Crackle service launched in 2009 downloads. It does not yet offer a streaming service and streams TV and films for free (on an ad-supported in Australia unlike the US (although with the launch basis) from the library of content controlled by Sony of iTunes Radio streaming service in Australia in Pictures. February 2014 – the first country outside the US to get this, further streaming services may not be too Aside from a recent soap acquisition (a new series far behind). The iTunes Store in Australia offers a of “Days of Our Lives”), Crackle has tended to offer a broad range of film and TV content on a download-to- range of older TV and film content rather than new own or download-to-rent basis. Indeed, its offering in releases. Crackle is therefore quite different to many Australia is broader in terms of the amount and types of the other services profiled in this report in that it of content available than many other countries in caters to those with an interest in watching collated Asia-Pacific3. “classic” content for free.

16 Innovation in Australian TV A market for free Aggregator Offerings of platform subscriptions. In this respect, it is similar Crackle isn’t the only free and ad-supported to BskyB’s NowTV product in the UK. This is a new Aggregator Offering in Australia. Another example is model and not one that is seen in many other markets Switzerland-based Viewster. It provides a range of in Asia-Pacific. content from independent producers right through to major Hollywood studios such as Warner Bros. The obvious question is whether an independent New movies are typically available to watch around 18 OTT offering might eat into Foxtel’s set-top box months after theatrical release. subscriptions (which make up a large majority of its revenues) but Foxtel does not seem to be concerned. Viewster’s CEO, Kai Henniges, sees “free” rather than According to its Director of Product, Jim Rudder: “transactional” as the future of OTT: “I think paying on a transactional basis is an attempt to relive the “The bottom line to this product is that we see this days of the DVD where it was rented or bought. But as a way of targeting another group of customers. I don’t think those days are coming back. The world The customers that currently have the full set top box has changed, and there is now an expectation of free subscription love it, they love the PVR functionality, content”5. the HD, and everything that goes with it. This is really catering for a market that I think we’ve been missing Australia certainly has more in the way of legitimate, for a long time. It’s a very different market and a very free aggregator offerings than the other markets in different group of people”6. Asia-Pacific. It is of course interesting to note this in the context of the high piracy figures in Australia The service provides a range of entertainment, drama, – despite free services existing, users are still documentary, kids, sports and premium movie accessing pirated content. content. The focus is on device neutrality with the service aiming to be available across as many devices 5.3 Platform Offerings as possible – at the time of writing it is available on Xbox 360, PCs and Macs, Samsung Smart TVs, Blu- Foxtel’s leading position Ray Players and LG Smart TVs. The Australian pay TV market is dominated by Foxtel and it is therefore no surprise that the key Platform Offering is provided by Foxtel, in the form of Foxtel Play.

Foxtel has been experimenting with OTT services for a number of years and launched Foxtel Download, 2. www.alexa.com/topsites/countries/AU its first OTT offering, in October 2009. This OTT 3. According to Apple’s overview of its iTunes offerings by country at: service allowed users to access content from Foxtel’s support.apple.com/kb/ts3599. For example, the iTunes service available in a number of territories in Asia-Pacific does not offer TV shows. platform on PCs via a dedicated player. The service 4. ACMA Communications report 2011–12 series, Report 1—Online video ceased operation in 2012. content services in Australia, Latest developments in the supply and use of professionally produced online video services” at: www.acma.gov.au/webwr/_assets/main/lib310665/report%201_online_ Foxtel’s newest OTT offering is Foxtel Play, which video_content_in_australia.pdf launched as recently as July 2013. Foxtel Play is an 5. Interview with Kai Henniges, LIfehacker, at: OTT-only offering that is available to users regardless www.lifehacker.com.au/2013/02/can-viewsters-free-video-on-demand- service-beat-the-torrent-pirates/ of whether or not they have a Foxtel subscription. As such, it is an interesting model in that it is an offering 6. Interview with Jim Rudder, Good Gear Guide, at www.goodgearguide.com.au/article/522677/ provided by a TV platform that operates independently play_won_t_eat_into_set_top_box_subscriptions_foxtel/

Digital, Legal & Anywhere 17 A separate but related OTT service from Foxtel is The large number of Stand-Alone Offerings also Foxtel Go. This offering enables subscribers to indicates that the TV industry, from small niche Foxtel’s services (whether subscribers to the Foxtel players like Surfing Australia through to international TV platform or to Foxtel Play) to watch the same media companies such as Turner Broadcasting, content that they would get through their set top see OTT as a route direct to market and a way to box (linear and catch and on demand) on a limited communicate directly with their customers. We see number of mobile devices. As such, it is more of a many of the features of these new services seeking to “TV everywhere” distribution mechanism targeted at take advantage of this direct customer interface. user demand for “content on the move” rather than a distinct content offering in itself. Catch-up is king When it comes to OTT offerings, the statistics suggest Foxtel also offers a catch-up service in the form of that catch-up is by far the most popular activity. Foxtel On Demand. The service is included in a Foxtel subscription and allows viewers to watch According to a recent ACMA study, the majority catch-up content from their subscription channels. of OTT activity in Australia relates to the use of Viewers can access the service via a connected iQ or online catch-up TV (as opposed to pure on-demand iQHD box or by using Foxtel Go on various devices. services). In the six months to May 2013, 6.7 million Australians had used a catch-up TV service compared With OTT offerings there is always some concern to around 2 million in the case of pure on-demand about data charges. Foxtel Play and Foxtel Go are services7. Users are, in effect, using OTT services as a unmetered with Telstra BigPond home broadband time-shifting tool and fresh, “talking-point” content is services but are metered with any other ISP or mobile still extremely popular. network, which means that usage will come out of a user’s data allowance.

5.4 Stand-Alone Offerings

Large choice of Stand-Alone Offerings This study uncovered a large choice of Stand-Alone Offerings in Australia, the great majority of which were available for free. In fact, Stand-Alone Offerings made up the biggest category of OTT offerings in terms of consumer choice available. Australia stands out as the market in Asia-Pacific with the largest range of such offerings.

There is a clear consumer expectation that TV content will be available both via traditional broadcast means on a linear basis as well as via live streaming and catch-up on all devices and platforms. The Australian TV industry is being driven to meet this demand, as evidenced by a number of recent launches of Stand-Alone Offerings.

18 Innovation in Australian TV All of the major free-to-air broadcasters in Australia have a free OTT catch-up and/or live streaming offering, as shown in the table below.

Broadcaster Offering Description Launched Model ABC ABC iview First and most popular OTT service in Australia. 2008 Free, no ads (gov’t Provides a range of catch-up content as well as -financed live streams. Most catch-up content available for 14 days. New programmes added daily. Seven Plus7 Range of catch-up content and live streams. 2010 Free, ad-supported Availability varies by programme. SBS SBS On Demand Range of catch-up content and live streams. 2011 Free, ad-supported Most programmes are available for 7 days; some programmes are available for 14 days; and others for 30 days. Also offers some programs indefinitely. Network Ten TENplay New service from Network Ten. Range of catch- 2013 Free, ad-supported up content and live streams. Availability varies between seven and 30 days. Nine Jump-In New service from Nine. Range of catch-up 2014 Free, ad-supported content available. Programming is usually available by midday on the day after broadcast. Availability varies between programmes.

All of the free-to-air catch-up offerings are available Plus7 and SBS On Demand also have a large for no charge. The majority are ad-funded (with the following, whilst recent launches from Network Ten exception of ABC iview, which does not have ads, and Nine further underline the growing interest in consistent with its broadcast programming). OTT services.

ABC iview remains the dominant service, with In late 2013, Network Ten launched TENplay, offering viewing figures that are almost double those of its a range of catch-up content and live streaming. The closest competitors according to an ACMA study. The service was launched to coincide with the much- majority of ABC iview activity is via the app, which hyped broadcast of the “Homeland” series. has amassed close to 2.5 million downloads and is understood to attract more than 550,000 unique users each month. According to Arul Baskaran, ABC’s Controller of TV Multiplatform: “The real story here is a dramatic shift in how Australians are consuming 7. ACMA Communications report 2011–12 series, Report 1—Online video content on tablets and mobile”8. content services in Australia, Latest developments in the supply and use of professionally produced online video services” ABC iview has made a big effort to address at: www.acma.gov.au/webwr/_assets/main/lib310665/ report%201_online_video_content_in_australia.pdf consumer concerns about data costs associated 8. “ABC iview most popular entertainment app”, ABC press release, with OTT services. At the time of writing, its service at: about.abc.net.au/press-releases/abc-iview-most- is unmetered with a large number of ISPs9 where popular-entertainment-app/ viewed on PCs and Macs. However, the service is still 9. ISPs offering unmetered access to ABC iView include AARNet, Adam Internet, Apex Telecom, BarNet, Cinenet, Comcen, Dreamtilt, metered on internet-enabled TVs and connected TV Engin, IIG, iiNet, Internode, iPrimus, My Telecom, devices, gaming consoles, and mobile applications. Spectrum Networks, SpinTel and Westnet.

Digital, Legal & Anywhere 19 On 13 January 2014, Mi9 announced the full population coupled with a relatively high population commercial launch of Nine’s Jump-In OTT service. of UK expats or families with a UK connection) but Previously Jump-In had been focused on social the success of an international service in the market interaction with TV (more in the mould of a second could pave the way for others to follow – one of which screen social app like Zeebox than an OTT content is the freemium offering from TV5 Monde. delivery app) but the service has been expanded and is now a full OTT offering with a range of catch-up Freemium content available. The social interaction element Freemium is a model being exploited by Spotify, is still central, however. By way of example, Nine amongst others, in the music industry and promotes the opportunity for users to get a “bigger the Australian TV industry is also increasingly experience” via Jump-In than is available through experimenting with this model. traditional broadcast, including 360 degree tours, the latest news about stars and the ability to vote. A good example of a recently-launched freemium offering in Australian OTT is the 2013 offering from The international angle – BBC iPlayer TV5 Monde. This service provides live TV content for It is not just the Australian free-to-air broadcasters free but in a limited format. Full screen access to live that are active in making available Stand-Alone TV content, as well as VOD content, is subject to a Offerings, nor is the market limited to domestic subscription. operators. We asked Alexandre Muller of TV5 about their A good example of an international Stand-Alone decision to launch an OTT service in Australia. He Offering is BBC iPlayer International, which pointed to the fact that it would be very challenging has been available in the Australian market since for an operator of their size that does not cater to the summer of 2012. BBC iPlayer is the UK’s most an English-speaking audience to launch through a popular catch-up and streaming service. platform such as Foxtel: “The good thing about OTT is that it offers another, easier route to market - if you Unlike in the UK, where BBC iPlayer is available cannot get in through the door then you go in through for free (albeit that a television licence is required the window and an OTT offering enables us to do that in order to watch live TV in the UK), the Australian across a number of territories.” offering uses a subscription model, with users being able to choose from monthly or annual payments. Enhanced functionality Another difference with the UK is that in Australia One advantage of OTT offerings over traditional linear only catch-up content is currently available, whereas broadcast is the ability to add additional functionality the UK offering also provides live streaming. to the user experience and some operators are taking advantage of this to offer enhanced features to users The service has been successful in Australia, which of the OTT service. is understood to be the biggest market for the BBC by subscription numbers and revenues, accounting The interactive functionality to be offered by Mi9’s for around 20% of global revenue for the BBC iPlayer Jump-In is one example in the free-to-air market. In International product10. the pay TV market, meanwhile, Turner’s Cartoon Network Watch & Play is a good example of a Clearly there are some Australia-specific factors service that uses OTT to provide an entertainment driving the popularity of BBC iPlayer International experience beyond that which is available on linear in the country (not least the English-speaking broadcast TV.

20 Innovation in Australian TV Cartoon Network Watch & Play, which launched in Some may question whether the launch of these 2013, seeks to blend video content with gaming. It stand-alone services may cannibalise the services’ allows users to simultaneously watch video from a channel subscription revenues. However, as with TV series and play games from Cartoon Network’s Foxtel Play, it would appear that the services are website – by rotating their tablet device, users can targeting a different market with their Stand-Alone switch between tasks. Offerings so it is complementary and additive rather than cannibalising. Watch & Play effectively bridges the “Stand-Alone Offering” and “Contingent Offering” categories of Riding the OTT wave: mySURF.tv this report in that a range of shorter-form content is The focus of Setanta and Fox is on mainstream sports available for free, whilst the intention is that longer- such as rugby and football where demand is high form content will only be available to subscribers of across Australia. However, can OTT services also Cartoon Network on broadcast TV. provide an opportunity for more niche sports?

Turner launched another Stand-Alone Offering in 2013 A clear benefit of OTT services is that they enable under its Adult Swim brand. This service is available rights holders, regardless of size, to take their for free to all users and provides a range of archive services direct to market and manage the entire user content, which is refreshed around once every two experience, rather than distribute their content via weeks. traditional TV platforms. A good example of a smaller rights holder in a niche sector taking advantage of Sports services making a play for the the interest in OTT services is the launch by Surfing OTT market Australia of mySURF.tv. Setanta Sports Plus and Fox Sports’ EPL On Demand are two sports services that bridge the Surfing Australia, Australia’s largest surfing “Stand-Alone Offering” and “Contingent Offering” organisation, launched mySURF.tv late in 2013 categories of this report. as a stand-alone content offering, with a range of short and long-form content. It is financed through Setanta Sports Plus is the company’s OTT offering commercial deals with sponsors and partners and in Australia. Launched in 2011, it offers around also has some government funding. 1,500 live football and rugby games, of which 800 are exclusive to the Setanta Sports Plus service. It is “Our goal was to control our channel and to control available for free to subscribers of Setanta on Foxtel our content”, explained Chris Symington at Surfing but non-subscribers can also sign up to the services Australia. for a fee. Clearly a niche offering of this type would struggle Similarly, Fox Sports’ EPL On Demand service to obtain the viewing figures expected or indeed is available for free to subscribers of Fox Sports required of a broadcast channel but an OTT offering on Foxtel. However, it can also be purchased as enables it to take its content direct to interested a stand-alone service independent of channel consumers with relatively low capital and operational subscriptions, with nine-day, one-month and season expenditure. The service was part-funded by the passes available. There are some parallels in this respect to the Coliseum service, which launched in

New Zealand in 2013, although that is an OTT-only 10. BBC Media Centre press release, service. at: www.bbc.co.uk/mediacentre/worldwide/230212littleford.html

Digital, Legal & Anywhere 21 federal Government and over time should act as a The role of Foxtel Go useful “test case” for smaller, more niche offerings The launch of Foxtel Go has effectively facilitated a seeking to cater to their audience online. number of channels making available their content on an OTT basis, as Contingent Offerings. 5.5 Contingent Offerings The service itself is free to Foxtel subscribers but the “TV everywhere” as a minimum relevant channel offerings can only be accessed by requirement subscribers to the channel in question. By way of The success of Foxtel and, more recently, Fetch TV example, a Foxtel subscriber who subscribes to Fox underlines the fact that linear apy-TV broadcasting Sports can access the Fox Sports offerings on an is alive and well. However, the range of Contingent OTT basis via Foxtel Go but another Foxtel subscriber Offerings in the market suggests that even for without a subscription to Fox Sports cannot. channels that are available via TV platforms like Foxtel, “TV everywhere” is now understood as being a The majority of channels whose content is available basic requirement for TV services in Australia. on Foxtel Go provide both live and catch-up content, as shown in the screenshot below.

Drama Documentaries UKTV CATCH UP LIVE National Geographic CATCH UP LIVE FX CATCH UP LIVE Nat Geo Adventure CATCH UP LIVE SoHo CATCH UP LIVE Nat Geo Wild CATCH UP LIVE 13th Street CATCH UP LIVE A&E CATCH UP LIVE BBC Knowledge CATCH UP LIVE Entertainment Crime & Investigation CATCH UP LIVE FOX8 CATCH UP LIVE History CATCH UP LIVE The Comedy Chanel CATCH UP LIVE Discovery Channel CATCH UP LIVE Arena CATCH UP LIVE Discovery Turbo Max CATCH UP LIVE Bio CATCH UP LIVE Discovery Science CATCH UP LIVE E! CATCH UP Discovery Home & Health CATCH UP LIVE STUDIO CATCH UP LIVE Aniamal Planet CATCH UP LIVE TVSN CATCH UP LIVE TLC CATCH UP LIVE TVSN LIVE Universal CATCH UP LIVE Sports MTV CATCH UP LIVE FOX SPORTS 1 LIVE Syfy CATCH UP LIVE FOX SPORTS 2 LIVE TVH! TS CATCH UP LIVE FOX SPORTS 3 LIVE Australian Christian Channel CATCH UP FOOTY PLAY LIVE

Many of the channels on Foxtel are now effectively available as Contingent Offerings via Foxtel Go.

22 Innovation in Australian TV Bridging the “Stand-Alone” and shorter-form than the video content available on “Contingent” Categories ESPN3 and its pay TV channels. Many of the services we looked at bridge the “Stand- Alone” and “Contingent” categories, with their OTT The future – more hybrid offerings? offerings being bundled as part of a subscription to Contingent Offerings are proving to be a popular the linear channel on Foxtel. solution for content providers who are concerned about cannibalising premium pay TV subscription These hybrid services represent a real middle-ground revenues with a stand-alone product but who still between those content owners that have chosen want to have a direct relationship with their viewers the direct-to-consumer route and those that still and/or to meet the “TV everywhere” demand. make a large portion of their revenues from channel subscriptions. Our prediction is that hybrid offerings (similar to the Setanta, Fox Sports and Cartoon Network Examples of these hybrid services include Setanta Offerings described above) will be the big growth Sports Plus and Fox Sports EPL On Demand (both area in the next few years, driven by content owners of which are available for free to subscribers and who are becoming more relaxed about the risk of as stand-alone subscriptions) and Cartoon Network cannibalising their pay TV subscription revenues (and Watch & Play, which will offer some content for free therefore more open to offering direct-to-consumer and the rest only to channel subscribers. subscriptions on a stand-alone basis) but for whom those pay TV subscription revenues are and will ESPN: a consistent global strategy remain a large part of their business for many years Kelly Cooke, Director of Digital Media for ESPN in to come. The delicate balance to be struck for these Asia-Pacific, is bullish about the growth potential for services will be in going after these stand-alone OTT in the Australian market. She told us that “It feels customers without damaging long-standing affiliate like the year of online video is finally here”. relationships.

ESPN’s strategy in Australia is consistent with its 5.6 Hardware Offerings approach globally – that is, to only make its OTT content available to subscribers of the ESPN channel Google and Apple or sports tier on pay TV. GoogleTV and Apple TV are perhaps the best- known examples of Hardware Offerings available in The ESPN3 service is a browser-based, affiliate- Australia. authenticated and ad-supported offering that is only available to subscribers of the sports tier on Foxtel. The former launched in 2012 via a partnership with It provides a broad range of live and on-demand Sony. It provides access to aggregated content content, the majority of which is available for a including various international TV channels, film and window after the linear broadcast. TV rentals. It also enables users to install Android applications. However, despite having the weight of ESPN also makes available a broad range of mobile Google behind it, the service has so far struggled applications to cater to fans of the sports that it to make much of an impact. Nonetheless, given covers – such as CricInfo (for cricket fans) and the strength of the Google and YouTube brands and ScoreCenter (for football fans). ESPN told us that Android’s market share, a bigger move by Google into it has around 30 such apps in Asia-Pacific. These the TV space (whether via new Hardware Offerings or incorporate some video content, which tends to be otherwise) cannot be written off.

Digital, Legal & Anywhere 23 Apple TV has been available for longer and via its The expectation of device ubiquity extensive content partnerships with broadcasters and A key challenge for Hardware Offerings is the growing studios it has had a lot more success than GoogleTV, expectation of “device ubiquity” amongst Australian although it is still far from being a truly mainstream consumers. TV service capable of challenging the likes of Foxtel. The popularity of internet-connected devices in Rumours of an “iTV” have been circulating for a Australia is rising. According to Nielsen, “Australians number of years but there has been no indication that have adapted aggressively to the changing media such a service will launch in the near future. landscape, consuming considerably more media across more devices”. This trend is global but the Fetch TV: one to watch reputation of Australia as being a nation of “early Fetch TV is often talked about as a potential adopters” appears to be well-deserved, with 82% of challenger to Foxtel’s dominance, although as a new Australians spending at least 23.3 hours online each entrant into a challenging market it has a long way week, more than one in three households having at to go in terms of market share. Nonetheless, with least four devices that connect to the internet and considerable investment behind it in the form of around 74% of Australians “second-screening” by Astro, the dominant Malaysian pay TV operator, it is watching TV and using the internet on a second starting to make progress in the market. device at the same time11.

The main focus of Fetch TV’s activities has, to date, All of these statistics add up to one thing: an been managed network IPTV through its set-top box expectation amongst Australian consumers that as opposed to what we would call OTT services in content will be available across multiple platforms this respect. It works with Australian ISPs (notably and devices. The explosion in connected devices has Optus, iiNet and Adam Internet) to bundle the Fetch triggered an explosion in multi-platform offerings. TV service with ISP subscriptions on an unmetered basis. However, it is showing a growing interest in A good example of the need for device ubiquity can OT T. be seen in the free-to-air market. All of the free-to-air OTT offerings looked at as part of this report were For example, the Fetch TV app allows users to pair available across multiple platforms and devices. their devices with their set-top box to watch content on other devices. It is also reportedly set to offer Fetch set-top boxes via retail distribution (as opposed to bundled with ISP offerings), giving users the opportunity to watch Fetch content through their set- top box on an OTT basis rather than via a managed network connection.

We expect to see Fetch launching more new products and services and entering into new partnerships over the next couple of years as it attempts to make further inroads into the Australian market.

24 Innovation in Australian TV OTT Offering Devices It seems clear that both from a technical and a ABC iview PC, Mac and Linux, iPad, iPhone, commercial perspective both the providers of OTT iPod Touch and Android, smart TVs services and the platforms are getting better at (Sony, Samsung, LG and Panasonic), enabling the launch of multi-platform applications set-top box (Humax, Topfield, WD TV Plus), consoles (PS3 and Xbox 360) quickly. Given consumer demand we expect to see the Plus7 PC, Mac and Linux, Samsung proliferation of multi-device offerings, with offerings and Apple mobile devices, Sony, that are limited to one or two devices becoming a Samsung and LG TVs smaller minority over time. SBS On Demand PC, Mac and Linux, iPad, iPhone, iPod Touch and Android, smart TVs (Sony, Samsung, LG, Panasonic Device manufacturers catering to a and Hisense), set-top box (Humax), growing demand consoles (PS3 and Xbox 360) From the perspective of device manufacturers, the TENplay PC, Mac and Linux, mobile devices (iPhone and iPad), Xbox, Windows 8 multi-platform expectation amongst Australian app, Sony Bravia TV consumers translates into a need to obtain as much Jump-In PC, Mac and Linux, iPhone and iPad content for their platforms as possible.

It is also telling that all of the publicity materials for In the games console sector, both Microsoft and multi-platform offerings that we looked at had a big Sony are, unsurprisingly, active in the Australian focus on the range of devices and platforms that the market. Through a series of content and service service is available on. Clearly this is a big selling partnerships, many of the OTT offerings featured in point and providers do not wish to miss out on any this report are available on their Xbox 360 and PS3 potential subscriber because their offering is not platforms. However, the big story in 2014 will be available on that subscriber’s favoured device. the battle between their next-generation consoles – Xbox One and PS4 – which are both perceived to be The multi-platform challenge making a bigger “play for the living room” as all-round Multi-platform offerings may be a minimum entertainment devices. As such, we expect to see a expectation for Australian consumers but this does range of innovative OTT offerings appearing on these not make it any easier for the providers of OTT devices as each company seeks to differentiate its services to launch quickly across multiple platforms. offering through content.

The key challenges for operators lie in the need to build multiple versions of their application to work on each of the different platforms and to get through each of the individual contract negotiation and approval processes. The trend that emerged from the research for this report was that OTT offerings will tend to launch first as a website (whether utilising Adobe’s Flash, HTML5 or otherwise) because this gives them access to the biggest audience fastest. They will subsequently tend to launch on iOS and then Android. In parallel, the operators will tend to negotiate deals with the smart TV, set-top box and 11. Nielsen: “Ten Year Analysis Reveals Australians’ Thirst For Connected Devices”, at: www.nielsen.com/content/dam/corporate/au/en/press/2013/ games console manufacturers. Nielsen-media-release-then-and-now-ACC-november-2013.pdf

Digital, Legal & Anywhere 25 Limiting the number of devices for consumption Foxtel Play has adopted a model often seen used more by technology companies such as Apple for its Hardware Offerings whereby it supports a large range of devices but limits the number of unique devices that can be registered to an individual account and then further limits the number of devices that can be used to watch content simultaneously. By way of example, a Foxtel Play customer could register an iPhone 5, an Xbox 360 and a Samsung Smart TV for the service but no additional devices. Content could only be viewed on two of those devices at any one time.

Apps vs. PCs: the tipping point The biggest platform for OTT viewing in Australia has, historically, been on PCs (or Macs).

The huge growth in the number of connected devices is changing that and there is a feeling that Australia is at a tipping point where users prefer to consume content on their mobile connected devices rather than via PCs or Macs.

As the most popular catch-up service in Australia, the ABC iview app is a good example. In April of 2013, the ABC iview app overtook iview through PCs and Macs for the first time, making up 53% of all iview plays. Its app is understood to have amassed around 2.5 million downloads, putting it in the top ten most downloaded apps in Australia12.

Clearly consumers appreciate the experience provided by “content via app” and we therefore expect to see more and more OTT apps launched across multiple devices over time.

12. “ABC iview most popular entertainment app”, ABC press release, at: about.abc.net.au/press-releases/abc-iview-most- popular-entertainment-app/

26 Innovation in Australian TV

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