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Nine Entertainment Co wouldn’t like to characterise the move by its wholly owned pay television creation, Stan, into sport as defensive. Many others will.
Even at its inception five years ago, at a time when streaming video was coming into its own, Stan seemed like a punt – albeit one that correctly recognised the changing of consumer viewing habits.
Rugby union will become part of a broader play for Stan.Credit:Getty
But establishing Stan was as clever a move back then as moving into the sports arena is today. (Nine is the owner of The Sydney Morning Herald and The Age.)
The streaming landscape has changed radically in the past couple of years, and while Netflix remains the clear market leader it faces plenty of competition.
The market has since welcomed very large and very well funded new entrants including Disney and Amazon-owned Prime. These run direct-to-consumer models and spend billions each year on original content.
As such audiences are more fractured than ever before.
There is still plenty of risk attached to Nine's decision to tough it out with the Hollywood streaming services – but its entry into sport should mitigate some of it.
Stan always needed a point of relevance and a point of differentiation.
Having been a successful part of the disruption of free to air television, Stan has needed to disrupt the closest thing it has to an Australian competitor – Foxtel or more particularly Fox Sports
Foxtel’s pay TV service has been struggling for viewers and for relevance since the less expensive streaming services took hold in the Australian market. Sport remains its last line of defence.
The creation of Stan Sport required just one cornerstone sporting code which Nine sealed on the back of a snafu in negotiations between Foxtel and Rugby Australia.
Foxtel was said to have played hardball in its negotiations in order to seal a discount to the price it had paid under its existing contract. Such discounts had already been achieved for other codes including the Rugby League and AFL.
It may go down in history as a mighty Foxtel knock on because it created a seat at the negotiating table for Nine – which has secured all Rugby rights across free to air and pay.
Until now Foxtel had cornered the pay television market through its sport coverage – the biggest weapon in its armoury to retain subscribers.
Given most of the big ticket sporting codes run long multi-year contracts it could take a significant time for Nine to snare additional premium sports contracts. In the meantime, Stan Sport will be looking bulk up its schedule with second tier sports.
So now Nine has a new mantra: the ‘whole of television approach’.
In other words, the plan is to offer extensive live and on-demand coverage to Stan subscribers, as well as making select premium events available on Nine’s FTA television channels. "The move will allow Nine to choose the appropriate platform for its various sports offerings while also enabling our partners to fulfil their growth ambitions," according to Nine’s chief executive Hugh Marks.
Stan chief executive Mike Sneesby has played a key role in the Australian streaming environment. Credit:James Brickwood
"With the scale of streaming combined with network Nine we are in a better position than any streaming business or free to air TV business to be able to partner to maximise the commercialisation opportunity," Stan’s boss Mike Sneesby said yesterday.
Already Stan has 2.2 million accounts, which it says translates into an audience reach of more than 6 million. And in the first half of the 2019 calendar year turned its first profit.
The enhanced cash flow will be in demand to further Stan’s other selling point – that it is the largest streamer in Australia for local content. It has already told the market it will ramp up to 30 shows a year within five years.
This will allow new local dramatic product to be released via Stan and broadcast later on the free to air network – thus amortising the cost across multiple platforms.
However, despite the shot in the arm that sport should provide, concerns will remain that as Stan’s existing Hollywood contracts roll off, it will be difficult to access new offshore content.
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