Netflix could shake up the Australian video streaming market if it ever chooses to enter, analysts told Computerworld Australia.
Netflix, which reported 36 million video streaming customers globally in the first quarter of 2013, has not announced any plans to enter Australia. However, the company has said it continues to explore a number of international markets.
The rumour of Netflix's entry into Australia is "well-founded" as the country "makes sense for Netflix's expansion," IBRS analyst Guy Cranswick told Computerworld Australia. He added that there are no apparent barriers stopping the company from entering the market.
Telsyte analyst Foad Fadaghi said it's "likely more over-the-top video providers [will] target Australia, especially as we start to see the arrival and adoption of NBN services."
"Australia is a great target because of our high prices for subscription TV, high dollar and relevantly strong consumer economy," he said. "This is however offset currently by a varied broadband experience in different areas and the high rates of content piracy."
In a letter to investors dated 23 January, Netflix wrote: "For the first half of 2013, we aren't planning to launch additional international markets. We are evaluating several expansion markets for late 2013 or 2014, but have not made any decisions yet."
On its investor relations page, Netflix explains that it evaluates international markets based on broadband infrastructure, including speeds, number of households and projected growth; content availability and cost; entertainment consumption and consumer interest; the competitive landscape; and e-commerce maturity.
Australians are interested in Netflix content, if a recent a Torrentfreak study is any indication. According to the study, 15 per cent of people who pirated the new season of Arrested Development were located in Australia, second behind only the US (18 per cent).
Demand for Arrested Development even prompted Australian consumer advocate Choice to send an open letter to Netflix requesting a legal way to watch. It hasn't received a response.
"Currently Australians are prohibited from accessing the Netflix website," Choice wrote in the 8 April letter. "This is frustrating for a number of consumers, however more so for consumers who may be fans of your original series, to which you have exclusive broadcasting rights."
On the other hand, recent Telsyte research showed declining consumer interest in subscription TV over broadband, largely due to the strength of free-to-air TV, said Fadaghi.
"However this could get re-ignited with the arrival of more competition," he said.
Netflix vs Quickflix and Foxtel
Cranswick said Netflix could use a low price to undercut rivals in Australia. The company's streaming-only plan in America costs US$7.99. Compare that to the recently announced Foxtel Play plan for $25 monthly or $14.99 for the lowest-tier Quickflix plan including streaming and 1 disc by post per month. Both Australian plans charge extra to stream new-release movies.
Sign up for MIS Asia eNewsletters.