news The founder of DVD and streaming online video service Quickflix has made a stirring speech to a local investment conference, arguing that Australia is at the beginning of “an IPTV revolution” that will see the nation’s entertainment choices reach equal par with those available in the US through popular platforms such as Netflix.

In the US, multiple options for streaming and downloading online movies and TV shows are available, ranging from Netflix to Hulu, Amazon Prime and Apple iTunes. In addition, it is common for new television shows and movies to make their way onto such platforms shortly after release. However, in Australia, content is often delayed before it is released online, and platforms such as iTunes do not contain the full range of content.

Netflix does not operate in Australia and has no immediate plans to do so, with Quickflix, which has its roots in DVD rental via physical mailouts but has also recently branched out to online streaming, FetchTV and Telstra’s T-Box platform being the main options for online video.

However, Quickflix founder and executive chairman Stephen Langsford told a conference held by Macquarie Bank last week, Australia was currently “at the beginning of an IPTV revolution, which will fundamentally alter the way we enjoy movie and TV content”. “The battle for the lounge room in Australia is only starting,” he said.

According to Langsford, at the heart of this revolution was several factors. Firstly, he said, all major TV manufacturers were now selling Internet-connected TVs with native interfaces to content services such as the one which Quickflix provided. “Penetration of these new TVs is still relatively small at less than 8 per cent of households but is set to grow dramatically as Australians upgrade their TVs,” he said.

This, combined with the fact that game consoles such as Sony’s PlayStation 3 and Microsoft’s Xbox 360 and tablets and mobile phones were becoming platforms to stream content, meant content was being liberated through the Internet and giving consumers ” unprecedented choice and access”.

Langsford pointed out that in the US, Netflix streams accounted for 20-30 percent of all Internet traffic in the country. Quickflix wanted to replicate this success in Australia, he said. “Our mission is to become a major entertainment brand with over one million subscribers by 2016.”

The Quickflix executive pushed the view that the best option for Australian consumers was a streaming platform which would offer an unlimited “all you can view” movie and TV streaming service for a single monthly price across any device or platform. This, he said, was an important point because currently in Australia, most companies — notably, FetchTV, T-Box and iTunes — locked customers in to a particular device, which he said limited the number of consumers who would take up such services.

Langsford said much of the growth in the sector would come through the cannibalisation of existing sectors of the entertainment market.

“In the 1990’s there were over 3,500 video stores in Australia — that number is now around 1000,” he told the audience. “PayTV in Australia has flat-lined at just over 30 per cent household penetration. In the US where cable has achieved 90 per cent household penetration there is increasing evidence of cord-cutting—consumers turning off their TV opting for over-the-top internet services such as Netflix.”

In addition, DVDs in general were going to go the way of the dodo.

“Even with the rise and rise of streaming, DVD still accounts for 80 per cent of Hollywood’s revenues,” Langsford said. “The inevitable overtaking of DVD by streaming and digital download as the primary way in which households enjoy movies and TV will play out over the next decade as more and more consumers IP-enable their lounge rooms and as Hollywood makes more content available digitally, removing the earlier release window advantages that DVD still enjoys today.”

“Video stores are receding from our suburbs, facing the same issues as other retailers. Not only are they confronting high cost of rent and labour but they face competition online from services like Quickflix which offer better choice and convenience. Quickflix 50,000 titles compares to around 2,000 titles in the average video store. Each day as Quickflix range expands and our service improves , our proposition to consumers becomes more enticing —we’re in a virtuous cycle of growth, while video stores are in a state of terminal decline.”

In addition, Langsford said even those currently downloading pirated content online through platforms such as BitTorrent were a potential target market for IPTV services like Quickflic.
“We’re targeting the $1.5 billion DVD market as well as a segment of the piracy market who we believe we can revert to legal usage by quality streaming content experience; ease of access and attractive price point,” he said. “Today more movies are streamed legally through Netflix than are illegally downloaded through Bit Torrent.”

opinion/analysis
From what I’ve seen so far, Quickflix’s IPTV streaming video platform isn’t all that crash hot; in terms of codec quality and range the service still leaves a lot to be desired. But we already knew that.

What I think it’s important to take away from what I believe is a landmark speech by Stephen Langsford is that finally, FINALLY, someone in Australia’s entertainment market has recognised precisely what consumers want when it comes to online video content and is preparing to give it to them. One monthly subscription cost for all you can download, with content that you can view on any device and that isn’t tied to your broadband connection. Bingo. This is what everyone wants, and I applaud Langsford for finally saying what very few executives in Australia’s entertainment sector have had the courage to say.

DVD is dying, and our TV networks are not giving us what we want. It’s time for a new model; a model which has already been proven in the US through Netflix and similar platforms. All that remains for Quickflix now is to execute on that vision. And if a home grown Australian company can do that before the big multinationals come along and try to steal the pie for themselves, even better. As Bender Bending Rodriguez would say, “Netflix? We’re going to build out our own Netflix. With blackjack, and hookers!”

Image credit: William Murphy, Creative Commons

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1. Brendan
   Posted 08/05/2012 at 5:04 pm | Permalink | Reply

   “One monthly subscription cost for all you can download, with content that you can view on any device and that isn’t tied to your broadband connection.”

   Except IPTV is tied to your broadband connection. :)

   The thing that has always hamstrung IPTV, and video content in general, has been and always will be distribution rights.

   The recent ruling that cleared the way for the Foxtel and Austar, includes requirements around breaking open access; so over the next year or so as existing “exclusive” deals expire, we can expect to see the likes of FetchTV, etc benefiting from broader access to content.

   So, perhaps it’s the knowledge of this that has emboldened Mr Langsford’s comments. The NBN will also usher in the types of services that will potentially allow a lot more IP based content to be distributed without it necessarily impacting usage.

   I am hopeful that we’re seeing the start of something good. But then I’ve been “hopeful” on this topic for a few years now and it’s really only in the last year that things have started to shift. :)

   • Clytie Siddall
     Posted 08/05/2012 at 5:36 pm | Permalink | Reply

     I think Renai’s point about the connection is that FetchTV and T-box are tied to that particular connection. A Netflix-type service would be account-based: you could access it from any device on any capable connection. So you could log into your account on your iPad (for example) and view movies while staying at hotels, or while visiting friends or family.

     Customers are mobile, but the product currently isn’t.

     • Renai LeMay
       Posted 08/05/2012 at 5:37 pm | Permalink | Reply

       Precisely :)

2. JimyKK
   Posted 08/05/2012 at 5:06 pm | Permalink | Reply

   YES! Please please give me what I have wanted for the last 5 years (at least).

   I already have a HTPC attached to my TV and if Quickflix starts offering more decent quality and range I won’t hesitate to sign up.

   • JimyKK
     Posted 08/05/2012 at 5:08 pm | Permalink | Reply

     I should mention of course, I won’t tolerate waiting over a year to see new release TV shows or movies like we currently do

     • Quasar
       Posted 08/05/2012 at 7:28 pm | Permalink | Reply

       I don’t think that will change. Netflix doesn’t have current TV episodes. Only Hulu does (aside from purchasing services like iTunes and I assume Amazon Video) and that looks to be moving to the HBO model where it only works if you are a cable subscriber.

       And certainly as long as local networks pay up big for exclusive distribution deals we won’t be seeing much of the way of foreign content available locally in a timely fashion. The one exception seems to be Doctor Who.

3. artywah
   Posted 08/05/2012 at 5:43 pm | Permalink | Reply

   Imagine if 20-30% of current bandwidth capacity was video in Australia.

   Now remember that if the Liberal Party wins the next election and Turnbull gets his way, the NBN rollout will be changed to fibre to the node instead of the home and any hope of decent speeds for streaming quality video will be lost in Australia.

   • Coreten
     Posted 09/05/2012 at 5:43 pm | Permalink | Reply

     Not actually right re: quality of video. As someone very familiar with the technology, you will still get fast speeds to the home even over copper from the node, speeds that are more than acceptable for video. Cable TV right now is streamed over copper. In addition, the network won’t cost $42B to implement. That amount of money is way beyond what is required. Many people smarter than the gov’t (Slim Carlos, Mike Fries, telco analysts from everywhere) have said this is an irrational and negative ROI amount. In addition, the gov’t has made a fundamental flaw in investing in a single technology, instead of looking at hybrid models that are more cost effective – and don’t lock you out of technology advances in mobility.

     • PeterA
       Posted 09/05/2012 at 6:37 pm | Permalink | Reply

       It is a hybrid model.

       It uses fixed wireless and satellite where the better technology is too expensive to roll out.

       What other technology should the NBN use to achieve 100/40 speeds other than fibre?

       • Coreten
         Posted 09/05/2012 at 8:07 pm | Permalink | Reply

         Wireless & satellite is used in <10% of the proposed network. And broadband via satellite is ridiculously expensive and your requests and uploads need to go through some other technology. On the wireless front, MMDS is line of sight and WiMax was rejected as a technology because the gov't only wants to back a single technology for political reasons (look at the solar industry as an example of why the gov't shouldn't be involved in industry decision making). All in all it adds up to a massively overpriced network without a significant increase in speed and a lock on technology wrong. Don't get me wrong though. I applaud the idea but I believe the businesses should do this, not the government. That's why no one will put in the balance needed without significant caveats that reduce competition and artificially inflate prices.

         • Tel
           Posted 12/05/2012 at 2:21 am | Permalink | Reply

           “And broadband via satellite is ridiculously expensive and your requests and uploads need to go through some other technology.”

           Huh? You mean one-way satellite? That was so last century.

           The price of satellite very much depends on what you want and where you are. Compared to dragging a fiber across 100 miles of desert, satellite is cheap. Compared with connecting to a local copper loop in a big city where it has all been built and paid for decades ago, satellite is expensive.

           • Coreten
             Posted 12/05/2012 at 2:36 am | Permalink | Reply

             Nice simplification. Dragging fibre to remote sheds is more expensive than satellite. And you are correct that you can get satellite at retail for $30-120 month. But you have download limits of between 3-10Mb within that price range and upload speeds of 384K-2Mb. |And download limits of 3-40G. Might as well go with ADSL+. And might as well let the commercial guys do this. Why do I, as a taxpayer, have to pay for it?

4. Simon
   Posted 08/05/2012 at 6:01 pm | Permalink | Reply

   I know you already said it Renai, but FINALLY, a distributor agrees with the consumers.

   Interesting what he said re- piracy
   “Today more movies are streamed legally through Netflix than are illegally downloaded through Bit Torrent.”

   According to Hollywoods statements over the years that means that Netflix must be huge huge huge.

   • Coreten
     Posted 12/05/2012 at 2:41 am | Permalink | Reply

     A few people have done the analysis that Hollywoods claimed financial loss is vastly overstated. Even when it is based on the premise that every movie illegally downloaded is a 1-to-1 loss of a movie ticket or a DVD, the number they spout is ~2.5x that calculation.

5. Richard
   Posted 08/05/2012 at 6:01 pm | Permalink | Reply

   This is all well and good, but until they have 720p/1080p HD quality content that’s released within hours of the US airtime, or BluRay release then they are still behind the 8 ball when it comes to piracy.

   I’m glad that Quickflix is making the right noises but until they come up with a competitive product the very content providers that hamstring these kinds of companies with their regressive agreements will stymie a promising service.

   • John
     Posted 09/05/2012 at 7:42 pm | Permalink | Reply

     I no longer use channel BT with my Hulu and Netflix sub – 720p on the Xbox 360 ;)

     • Gwyntaglaw
       Posted 12/05/2012 at 4:57 pm | Permalink | Reply

       I’ve found iTunes to be a very satisfactory solution – streaming 1080p works very nicely for me. US accounts work perfectly well in Australia (and I can buy US iTunes codes over the Internet in under 3 minutes).

       While I prefer Blu-ray for movies (especially big special effects ones), I’ve found iTunes (through Apple TV) has almost completely taken over all other delivery & media for TV watching.

       Quite simply, one purchase replaces both monthly cable access AND the cost of buying DVDs or Blu-ray later on. And no clunky box sets or physical media to find room for.

6. Bob
   Posted 08/05/2012 at 7:29 pm | Permalink | Reply

   Definitely the way of the future. FTA TV is in its death throws, Pay TV never gained widespread adoption by being GREEDY, visiting the local video shop screams 1988 whilst Channel BT keeps gaining momentum.

   The clincher will be NBN. Game changer right there.

   Meanwhile Quickflix on existing broadband infrastructure will gain a small market share, perhaps 5% at best. And this will be dependant on deals being struck with ISP’s in not metering downloads like it’s 1999.

7. Simon Gilligan
   Posted 08/05/2012 at 11:25 pm | Permalink | Reply

   Congrats to Quickflix for pursuing the dream .. but lets remember that after 9 years in business Quickflix hasn’t yet turned a profit. That’s a very different profile to Netflix that subsidised its streaming business with run-away DVD earnings, and also secured it’s streaming beginnings with a bargain basement Starz licence. With that deal reverted to standard commercial rates (ie that the cable groups get) and Netflix trying to scale it’s streaming operation, their profitability has been sucked dry and from a $300 high (not even 12 months ago) Netflix now trade at $80. My point is the commercials behind streaming are hard work.

   Despite what Renai thinks, *nobody* in the entertainment industry will deny the vision – it’s the reality behind the vision that requires extremely deep pockets to implement. Few companies have had the balls to step-up: lets hope Quickflix can deliver and show that you can actually make money from it.

   • Quasar
     Posted 10/05/2012 at 5:27 pm | Permalink | Reply

     That the DVD rental business could not turn a profit is interesting (I’ve used it happily myself for a couple of years). Rental stores have mostly gone, so it doesn’t look like we are all just using stores instead.

8. Gav
   Posted 09/05/2012 at 12:17 am | Permalink | Reply

   It’s interesting that Microsoft is dropping DVD-playback support from the vanilla consumer edition of Windows 8 because they think people mainly use online video services now. They’d have better data than just about anyone.

9. CMOTDibbler
   Posted 09/05/2012 at 8:17 am | Permalink | Reply

   Are we talking about multi-cast or on demand streaming here? If it’s on demand streaming, how does the NBNCo’s CVC charging fit into the model. This question was asked by Bevan Slattery in a thread on Whirlpool about NBN pricing started by an NBNCo rep. afaik the question was never answered.

10. Ger Vloothuis
    Posted 09/05/2012 at 8:42 am | Permalink | Reply

    Go HbbTV young man. About time our DBCDE and their NBN Co make multicast do what multicast was designed for. And likewise to what has been done with the introduction of terrestrial digital television,, roll out a scheme to ensure compatibility of Australian Connected television with Australian Television Broadcasting via the Australian National Broadband Network multicast facility as a standard feature whenever someone connects to the fibre.

    Get rid of the quack-mire of incompatible devices, systems, and streaming content operators. Go HbbTV and make it the Australian broadband standard.

11. posty
    Posted 09/05/2012 at 10:12 am | Permalink | Reply

    I pretty much agree with Renai’s opinion added, and I applaud what Langsford has said as well.

    Thanks for linking to that older Netflix article that I missed. however, I doubt that will be the case forever.

    Just because a company says that it has no plans to do something right now doesn’t mean it wont in the future, and they did just expand to two new markets in that linked article.

    I think it’s great that quickflix is trying to bring some valid competition into the market, quickflix currently sub par to netflix’s offering IMO and should it become popular enough it could prove enough to spark the streaming giant Netflix to actually make a move to australia… officially.

    Although, if quickflix managed to get the title range,platform support and PRICE that netflix has, I’d be more than happy to jump ship. The range and platform might just be enough for even slightly more expensive or on par to unblock-us + netflix subscription :).

    Because of geolocked stores like the itunes store, i can’t stream to my iphone, ps3 or wii like they can in the US or an ipad if I had one (I can stream netflix to my android tablet though :) ). that covenience may push it enough.

12. Damien
    Posted 09/05/2012 at 11:06 am | Permalink | Reply

    We recenty signed up for Quickflix 14 day free trial. The quality was acceptable, but not exceptional. The range was woeful, we did not continue our account beyond the free trial.

    Until the reality catches up with the rhetoric, piracy rates will continue to be astronomical in Australia.

13. Tel
    Posted 12/05/2012 at 2:34 am | Permalink | Reply

    By the way, the latest ASX release for Quickflix was 100k paying customers with 20% of those streaming video. So firstly, I’ll just point out that there is nothing that prevents streaming video over last mile copper because they are doing it right now, and secondly, the DVD is far from dead because 80% of customers are happy to use the postal service.

    “Even with the rise and rise of streaming, DVD still accounts for 80 per cent of Hollywood’s revenues,” Langsford said. “

    Yeah well that percentage matches up with the Quickflix reports as well, so might be a bit soon to announce the DVD is dying. I suspect it is still growing actually.

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