Competition for online video revenue is entering a new phase in Australia, as free-to-air broadcasters, pay-TV providers and telcos stake out their market positions with differentiated content and services.

Optus, the country’s number two telco in both fixed line and mobile subs, upped the ante last year by buying its own sports content, including two three-year deals with the English Premier League (EPL) and Cricket Australia respectively.

More genres will follow, adding to existing channels and services supplied via IPTV wholesaler Fetch TV, as Optus repositions itself from a broadband operator to a video provider.

“To win the game, I can’t just have something everybody else has,” explained Optus CEO Allen Lew, speaking at this year’s APOS conference. “I have to have something distinctive.”

The focus this year is on rolling out the EPL, which cost Optus more than US$140 million, including broadcast rights, over three seasons. That’s almost three times what the incumbent, Fox Sports, paid for the previous round.

After APOS, Optus announced exclusive EPL packaging and pricing, including apps, supporting content and a dedicated channel, for its postpaid and home broadband customers, overturning consumer expectations that the full set of games would be more widely available.

starting with sports

It’s a big bet on increasing loyalty, upselling prepaid subs and expanding the base, supported by additional investments in content, infrastructure and product. Getting it right will be key.

“Year one for us: get EPL off the ground, deliver a reliable product that resonates with that particular segment,” Lew said.

“Shortly after the launch of EPL, once we get our predictive analytics and our new UI in place, we will start to introduce EPL soccer fans to some other genres of content.”

Success also hinges on managing costs to keep consumer pricing low, while persuading other program suppliers to come on board.

Lew, who has also run promotional deals with SVOD platforms Netflix and Stan, wants a full content stack, so Optus the video company can appeal to different customer segments.

“My big message to content providers: work with us, look at how you can tweak your existing business models,” he said.

“The world around is changing,” he continued. “Linear television is here to stay, we will play in that; but where we will be making that big leap forward and be really aggressive is on mobile content.”

Windows and Rights

Differentiated content is also becoming more important for local SVOD startup Stan, which debuted in January 2015.

To set Stan apart, company executives have been buying some early window as well as exclusive content from the likes of Sony, Warner Bros and, as part of a bigger licensing deal, Showtime.

“The brand is the entire experience that you deliver to the consumer,” said Stan’s CEO, Mike Sneesby, also speaking at APOS. “First and foremost in our game, it’s about content.”

Stan is enjoying promising subscriber momentum, and is on track to break even by FY 2018 (i.e. ending June 30) from an initial investment of A$100 million (US$75 million).

The business, jointly owned by local broadcaster Nine Entertainment and local publisher Fairfax Media, is second behind Netflix in terms of paying subs in Australia.

Stan is also spending over A$10 million (US$7.5 million) a year on making its own content, selling programming as well as format rights overseas to offset some of that investment and replenish production budgets back home.

There are no plans to air these films and shows on Nine, however.

“One of the things that’s important – this applies both with our original content as well as the deals we are doing for first-run shows – is to ensure you have a complete exclusivity on them,” Sneesby remarked.

“One of the real challenges when you’re sharing windows on content is confusion in the consumer market around, where do I go to get that content,” he added.

“It’s been critical for us, and we’ve tightened up a lot of that.”

Telcos and TV

Six-year-old Fetch TV, meanwhile, which has assembled its own pay-TV platform for ISPs, spanning content, hardware and services, continues to upgrade its offering as the market evolves.

This includes a cheaper mini set-top box and a mobile-only service as well as a new PVR, all to launch this year.

“If you just have a high-end PVR, that might lend itself to a high-end broadband bundle but you also low-end broadband bundles, you have mobile services,” noted Scott Lorson, Fetch TV’s CEO, at APOS.

“You need an array of services, so that you can present entertainment to people regardless of how they initiate or what relationship they have with the telco.”

The company hit a speedbump in August last year, after one of its earliest ISP partners, iiNet, stopped selling Fetch TV’s service following the telco’s acquisition by TPG Telecom. Existing Fetch customers on iiNet can still access the service.

That leaves Optus as the main driver of growth for Fetch. Lorson dismissed the idea that the company may pool its resources with a single partner.

Fetch has been developed with a coalition model in mind, he explained, leveraging scale to provide a foundation service that provides 90% of what telcos need.

Partners can then focus their investments on the other 10%.

“It’s a formula that works quite well,” Lorson said. “I don’t think every telco has to own every part of the value chain,” he added.

“If they can just find those assets that uniquely brand and differentiate their organization, and power that marketing machine, we do the rest, the meat and potatoes behind the scenes.”