Stan a cautionary tale on the demands of streaming

Mike Sneesby is the CEO of Nine Entertainment. Picture: Hollie Adams

News that Nine Entertainment could be searching for a buyer to offload part of its streaming service Stan cuts to the heart of the big challenge for streamers now: you either need to have top quality sport or be making your own content.

Both can be extremely expensive. But without them, it will be hard to compete with global streaming services that have arrived in Australia or local rivals that have most of the best sporting content snapped up.

As first reported by The Australian’s DataRoom column on Friday, Nine is mulling a partial sale of Stan after missing out on the lucrative AFL rights to Foxtel and Seven West Media in September. It also lost the content contract from US film studio giant NBCUniversal to Foxtel and Seven West Media.

Stan has about 2.5 million active subscribers and had some $28.5m in earnings before interest, taxes, depreciation and amortisation in the 2022 financial year, down 28 per cent from its $39.5m result in the previous year when much of Australia was in lockdown and bingeing movies and true crime series at home.

It also spent $75m on its Stan Sport service that costs subscribers at least an additional $10 on top of the starting packages for all the other Stan content. The question is whether the sport Stan currently is offering is both worth keeping and if it is compelling enough for subscribers.

Nine has just completed the second season of a three-year deal with Rugby Australia to show Wallabies test matches, usually on its free-to-air channels, and Super Rugby, mostly on the Stan Sport platform.

The streaming service also has other rugby content, including overseas test matches.

Nine also has tennis rights, with the Australian Open its free-to-air crown jewel every January. It showed matches from Wimbledon, the US Open and French Open on free-to-air, as well as some content on Stan Sport.

Then there is soccer’s European Champions League, almost all of which is on Stan, albeit with live matches usually kicking off in early morning timeslots.

Rugby is likely the most popular sport on Stan, but Rugby Australia will be back in the market soon searching for a new contract. Rugby Australia chairman Hamish McLachlan would be hoping Nine has some competition for the rights, further pushing up the price.

But even with that, Stan doesn’t have either of the two best sports competitions: the AFL, which it missed out on after making a late bid, and the NRL.

One possibility is cricket, which will also soon be in the market. Seven wants out, but Foxtel is likely to want to keep streaming rights.

Then there is the entertainment content, with Stan set to lose content from US film studio giant NBCUniversal. NBC may decide in the future to launch its own Peacock streaming service in Australia – always a risk for a local player taking its content.

Nine boss Mike Sneesby has previously indicated he wants to commission more of Stan’s own shows, which subscribers like, and hopefully distribute them overseas. But producing more shows brings more costs.

Nine management will need to decide what it wants Stan to be. It looks like it is on the verge of deciding it doesn’t want to be all in on it any more.