Demand for Netflix could wane in the next few weeks as subscribers who got a free trial decide not to proceed to a pay version due to a lack of first run content claims the Australian Home Entertainment Distributors Association.
A new report forecast a tepid short-term future for the new digital subscription video-on-demand broadcaster as well as Stan and Presto. This mirrors analysis this week by Fusion Strategy suggesting the lack of first-release content will also hurt Netflix who do not collect GST or pay tax in Australia.
The Australian Home Entertainment Distributors Association have also reported that sales of physical DVDs are outstripping digital sales in the home entertainment market as Australians remain reluctant to adopt digital home entertainment, the numbers bode well for JB Hi Fi who are Australia’s largest seller of DVD’s.
Disney’s Frozen was the top-selling physical DVD by volume and value last year ahead of The Lego Movie in numbers and Game of Thrones season three by revenue.
The physical DVD business was worth $980 million in 2014 compared with digital sales for screen entertainment of $160m, according to the Australian Home Entertainment Distributors Association 2014 Yearbook.
54 million discs were sold last year a number that is remains a global oddity as other markets have seen DVD sales plummet.
Physical sales of film and TV has steadily declined in Australia since its 2009 peak (when disc sales reached $1.57 billion) but they still represent the overwhelming share of revenue currently generated by the home entertainment industry.
The number it is not expected to drop dramatically in the short term with new films and TV series swamping the market this year.
Blu-ray and DVD discs declined 10 per cent in the 12 months to September 2014 (with Blu-ray volume declining for the first time ever).
Online video-on-demand services such as Foxtel On Demand and iTunes drive digital consumption with movie rentals at the forefront of the push (growing 14 per cent in 2014) but television electronic sell-through (EST) was static as movie EST increased by 18 per cent to $16.4m.
The decline in sales of TV series last year was wholly attributed to the absence of Game of Thrones from Apple’s iTunes platform.
The impact of Game of Thrones on the sector remains immense. Physical disc sales of TV series continue to grow, accounting for 36 per cent of DVD sales value in 2014. Game of Thrones seasons one to three took the top three positions among the best-selling TV titles in 2014.
During the past 24 hours the first four episodes of season five of hit television series Game of Thrones was leaked on the internet hours before the first episode went to air on the HBO cable network, news site TorrentFreak says.
More than 25,000 pirated versions of the poor quality copy were downloaded in Australia and New Zealand.
“The leaked episodes, which appear to come from review copies sent to the press, have been downloaded more than 100,000 times in just three hours,” the site, which specialises in news about copyright and file sharing, said.
The first episode of the new season of the medieval fantasy saga was supposed to air simultaneously at 0100 GMT on Monday in 170 countries, regardless of their time zone.
The launch of the fantasy’s fifth season on Foxtel today is one of the reasons the sector remains optimistic about physical disc sales, with it and new films from the Hunger Games, Terminator, Mad Max, Star Wars, Jurassic Park and Avengers releasing in cinemas in 2015 before cascading through home entertainment platforms during the next 18 months.
AHEDA said European experience suggested their entry was not likely to affect retail disc sales although it would quell sales of digital inventory.
IHS Technology also forecast the online SVOD business segment would see “explosive growth” from a low base, with the market expected to more than double this year to $4.6m in revenues but only forecast to broach $7m by 2016 and $10m in 2018.
IHS expects subscriber numbers to increase by 800 per cent to more than 155,000 paying SVOD subscribers by the end of the year.
AHEDA estimated that from 2014 to 2018 the Australian digital screen entertainment market would grow by a compound annual rate of 5 per cent to reach $US140m ($182m).
In other developments over the weekend Listed film producer Village Roadshow has come out and said that they want to work with internet service providers to combat movie piracy instead of hunting down illicit downloaders individually, as the producers of Dallas Buyers Club are doing.
Australia’s biggest telecommunications companies and film studios last week put aside their long-running spat over copyright to create an industry code aimed at crushing internet piracy.
Village co-chairman and co-chief executive Graham Burke said the company would use that document rather than the courts to tackle internet piracy.
“We see this as our main, go forward vehicle,” Mr Burke said, adding that fighting illicit downloaders was “triparted”.
