Wednesday, January 20, 2016


At long last, Netflix has arrived in the Southern Hemisphere.

Australia's is a reduced version compared to its American cousin, indeed, but Reed Hastings and Co are playing a long form game. What content they can't license now, they'll bide their time for, waiting for the existing deals to expire. Then, they'll outbid.

Make no mistake, deep pockets and licensing strategy will be needed to become the Alpha provider in the Australian video on demand (VOD) market. Content aggregation has so many big players, it's like a game of survivor. Outwit, outlast and, to become the dominant platform, overpay. At least in the short term.

And Netflix have landed with all fires blazing. A swanky red carpet launch, attended by the big players in the Australian film and TV ecosystem. A user interface beta-tested to within an inch of its life in the Australian technology landscape. Oh, and let's not forget, content. Exclusives and an extensive back catalogue.

Word-of-mouth has already started. One friend literally texted me:

'(Netflix) was love at first sight. I'm now a retired pirate.'

Strong sentiment like this can instill hope that we are finally progressing out of the dark ages of film and television distribution in this part of the world.

But such bold predictions would be premature. It will still be some time before the 'ex-pirate' mantra is the universal perspective.

The market, you see, is fragmented.

A plethora of VOD options means that there is not the consolidation of audiences which lead to a critical mass of financial success and positive user experiences. Too many thought they could be tech entrepreneurs in the screen content distribution world, crying "me too!" and launching a VOD service.

As if everyone with spare millions can be Steve Jobs.

It's like the recent celebrity-studded launch of Jay Z's streaming music service 'TIDAL'. Jay Z, Madonna, Rhianna, Coldplay, Beyonce, etc etc, all standing on a stage, calling themselves visionaries, pretending that Spotify, iTunes, Pandora and Pono don't exist. Not to mention the eventual arrival of Apple's 'Beats' music streaming service. It's a Monty Python sketch, playing out in real life.

And in the midst of this frenzied media spectacle, these artists declared loudly that they are helping the cause of music.

Come again?

Even if you cast aside the cynicism of the economics involved, an ordinary person would struggle to take such proclamations as anything but self-aggrandisement.

Creating another splinter in a fractured market actually makes things worse for artists.

Streaming services you see, whether in film or music, need volume. It is a transactional business model. Instead of a single audience member paying a large amount to own a physical copy of something, you replace that one person with several streaming subscribers, at a lower price per stream.

In this streaming paradigm, all 'TIDAL' will do is diminish the ability of the few best music streaming services to consolidate their market share and deliver more lucrative artist payouts. And, in turn, this will have a direct impact on the experience of the most important entities in this ecosystem: the audience.

Meanwhile, in the VOD universe, the cloning has become ludicrous.

'Dendy Direct' offers streaming rental and purchase of mainstream films and television shows. 'Quickflix' offers much of the same, albeit with the addition of a DVD mailing and a very bare-bones ongoing subscription VOD service.

Yes, you heard correctly.

Dendy and Quickflix thought it was a good business decision to offer an identical service to the most dominant digital rental and purchase services in the known universe: iTunes and Amazon.

Bizarrely, they're not alone in the pantheon of questionable decisions.

In the lead up to 'Netflix' launching in Australia, Foxtel re-launched 'Presto' as a subscription VOD service, and Fairfax launched 'Stan'.

Again, the business logic was to launch the exact same service as the dominant international VOD player, in response to their movement into the local market.

Huh? Not even a minor variation to make them unique?


And if you don't think this is ludicrous, keep in mind that Hotys Cinemas shelved their own VOD service, after years of development, which hilariously was going to offer an identical service to Dendy Direct. There could have been yet another mouth to feed in the overpopulated VOD household.

How does this achieve the mission of simplifying the VOD experience for audiences, exactly?

When you're standing on a busy street in the Italian district, face-to-face with a row of restaurants offering exactly the same menu, how easy is it to choose one?

When you return, two years later, and there are only three remaining, well patronised, Italian eateries, how far reduced is the degree of difficulty for the exact same choice?

The VOD world faces a similar simplification around the globe. Because the audience is king, and they demand convenience.

If you are in the VOD business? Competition. Failure. Take-overs. Consolidation. That is the character of your approaching years.

Audiences will vote with their wallets, and filmmakers will simply have to make the best of it until the bloodshed ends.

You may also hear from snake-oil salesmen, like Jay Z, as this seismic market adjustment plays out. People who claim that they have surmised a "better way", then propose to offer their own version of a solution that already exists.

And you must always have a compass in this fog of unbridled change. A simple question to navigate these tempestuous waters:

A "better way" for whom, exactly?

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