Netflix Set to Reach 10 Million Subs Down Under — Despite Scant Physical Presence

Netflix ended June with 9.8 million subscribers in Australia, up about 30% from a year ago, according to new data from research firm Roy Morgan. The SVOD pioneer launched service in Australia and New Zealand in 2015.

Morgan contends Netflix will reach 10 million subs by September, based on an online survey of 13,200 consumers from April through June. Netflix now has 48% market penetration among Australians, aged 14 and older.

Impressive stats in a country of about 25 million people; more so considering Netflix has yet to release an original native series (“Tidelands” is in production) and reportedly doesn’t have a single Australia employee.

The service spearheads an over-the-top video market with more than 13 million subscribers. Other players include Stan, a joint venture between Nine Entertainment Co. and Fairfax Communications, with 2 million subs; YouTube Premium (formerly You Tube Red) with 1 million subs; Fetch with 710,000 subs and Amazon Prime Video with 273,000 subs.

Prime Video officially launched in Australia in June.

“Although Netflix clearly is well ahead of its rivals, other SVODs are also growing strongly – and generally at a faster rate,” Michele Levine, CEO of Roy Morgan, said in a statement. “In a changing media landscape, highlighted by the recent merger agreement between Nine and Fairfax, the impressive performance of SVOD in recent years shows there are avenues to growth for incumbent media businesses challenged by new entrants into the market.”

“Australia is a great market for us,” CEO Reed Hastings told The Sydney Morning Herald in March.

Indeed, yet how great has Netflix been for the Aussie economy? Foxtel, the country’s largest pay-TV operator, saw its subscriber base decline nearly 3% in 2017 to 2.8 million – largely due to Netflix. The nation’s pay-TV market stands around 3.6 million subscribers.

Netflix in 2016 shut down the ability for subs employing virtual private networks (VPNs) from accessing content outside of their geographical location – such as Australia.

Outraged by the apparent one-sided business model, former Treasurer Joe Hockey in 2015 introduced legislation (dubbed the “Netflix Tax”) aimed at taxing foreign companies delivering digital content into Australia. The updated GST (goods and services tax) went into effect last year.

Now, countries such as Holland are considering laws that would require foreign SVOD services (i.e. Netlflix and Prime Video) to stream/produce localized content.

“Quotas are well-intentioned ways for governments to try to make sure there’s investment in local content, to try to strengthen local culture,” Hastings told The Morning Herald. “But, like most things, the regulations often backfire.”

“Tidelands,” the 10-episode series about an ex-con who returns to her local fishing village and discovers more than old memories, is set to begin streaming this year.

 

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