Netflix faces fightback from Telstra TV’s coalition

Telstra’s coalition of frenemies can help the television industry fight back against US streaming giant Netflix.

Telstra’s coalition of frenemies can help the television industry fight back against US streaming giant Netflix.

Media executives failed to appreciate the speed with which Netflix would sap their companies’ fortunes after the launch of its local operations in March. Now this powerful enemy has become a scapegoat for many of the industry’s self-inflicted wounds.

On the surface, Telstra TV presents an unwelcome arrival with yet another all-access service offering unlimited content on multiple devices for a small monthly fee.

There are fears Telstra TV will prompt people to spend more time with other digital products, further fragmenting audiences, and heaping even more pressure on the money they mint via advertisements.

But executives, already fraught with tension in a tepid advertising market under siege from a growing crop of aggressive and unregulated overseas entrants, can relax.

In opting to partner with the media business, rather than go it alone, Telstra TV brings genuine opportunities for the free-to-air and pay-TV sectors. Any potential threat to their businesses should be put in perspective.

Powered by Roku, a smart TV device popular in the US and Europe, Telstra TV will host nascent streaming services like Foxtel and Seven’s Presto, and Stan, a joint venture between Nine and Fairfax Media.

As the main commercial broadcasters look to develop their multi-screen propositions in the face of Netflix’s ubiquitous presence, Telstra TV can offer retail distribution by leveraging their huge customer base.

A partner strategy also provides quality of online video delivery, and billing and customer service capabilities, something the Seven, Nine and Ten networks struggle with by virtue of their business models.

In a note to clients last month, managing director of Venture Insights Daniel Blair said a partner strategy in the fast-growing online video market had upside potential for Telstra and broadcasters. “This will enable Telstra to service the pay-lite market while being agnostic to the content provided,” he said.

Despite reports of its demise, FTA TV is not going to disappear anytime soon. The three main commercial networks will continue to deliver scale and attract advertisers in a market with the anti-siphoning regime, which ring-fences top-tier sports for Seven, Nine and Ten.

There are significant challenges for these networks, but as Netflix gains more control over movie and TV content with its global advantages, Telstra TV can provide a spur for their digital ambitions and check Netflix’s encroachment.