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Industry, TV

‘Market Pulse’ Update – The Entrance of Netflix into the Australian landscape

Heading Market Pulse


MarketPulse” is the  fortnightly newsletter produced by the ZenithOptimedia investment team. Here, we share our agency point of view on current and emerging media marketplace issues.

With more than 200,000 Australians currently subscribing to Netflix, we are reviewing the current state of the streaming marketplace in Australia & implications for advertisers moving forwards: “How Local players prepare for the entrance of Netflix into the Australian landscape?”.

Market Pulse


Reaching Gen Y via Torrents


When it comes to watching television, I’ll be honest and say that I’m one of the growing Gen Y demographic that does not watch telly. I don’t like having to commit to sitting down at a predetermined time of the day just to watch a program.

As most of the telly shows I follow aren’t “mainstream” per se, I hate having viewer aggro when the television network decides to can my show in favour of something with higher ratings. Trust me, too much viewer aggro on my part isn’t good for health.

But at the end of the day, television is business. There is only so much real estate on networks, and the numbers that make the most profits always win. In the old fashioned tv system, it doesn’t really matter how engaged people are with the show. Passion is not rewarded in the telly numbers game.

Something clearly has to change.

Introducing Pioneer One, a new indie sci-fi series that debuted on a bitorrent powered distribution platform Vodo, with P2P file sharing platforms such as uTorrent, Limewire and Pirate Bay also pledging their supports. A quick check on torrents distributing the first episode of Pioneer One at the time of this post – more than 40,000 people shraing content and over 5,000 people downloading today. 

One of the show’s filmakers Josh Bernhard made a great observation about how niche shows, though they enjoy high DVD sales and online viewing, cannot sustain themselves on network television:

TV has other priorities than making good TV. You have vocal fanbases whose enthusiasm is ignored, because to networks, their passion isn’t worth more than beating American Idol in the ratings. The fact that TV can’t sustain a show like Firefly, to use a well-known example, with such passionate viewers, shows that something is wrong with how that system works.

The trailer here:


However, it is not the anticipated 1 million views the show receives that makes it a success in my books, but rather the following:

  • reaching out to Gen Y demographic (like me), with quality content in a platform we natively use to get our entertainment media (bitorrent).
  • the sense of community – ventures like these definitely have a high “talkability” value. Pioneer One leverages this off social media platforms such as Twitter, Facebook, Digg and
  • added value – viewers donate money in order to have the 7 part show running. in return, they get bonus stuff like opening theme mp3 if they donate $5, or even a thank you note in the actual credits of an upcoming episode if they donate $100 amongst other bonus content. 


The concept is obviously resonating with people. The intial donation target of $20,000 was reached in the initial one and a half weeks, and the first episode has already been fan subtitled into 17 different languages ranging from Indonesian, Catalan, and German.




Studying the impact of online video advertising – initial results of ‘Ad Selector’


A couple of months ago Vivaki – a strategic entity of combined Publicis Group agencies including ZenithOptimedia – released the results of a large scale research project about online video advertising conducted out of the USA. The objectives of the research project were to identify the impact of online video advertising and build learnings around the multiple opportunities available.

The project took over 16 months to complete, studied 29 different models and involved 25 million consumers. The key findings were the outstanding results of Ad Selector - which was identified as the best model for online video advertising, one that works for both advertisers and consumers!

The ad selector is a new video ad unit (initially rolled out by Hulu) that gives the user the ability to choose the ad they want to watch: amongst 3 proposed ads, the user clicks on their selected one before launching their video experience and starting a pre roll. See examples on below.

The research found that the “ad selector” tested significantly better than the standard pre roll against all metrics studied:

  • Only format to lift purchase intent by over 30%
  • 3 in 4 respondents recalled the ad
  • Completion rate is 11% higher than pre roll average
  • CTR were at least twice as high than standard pre rolls



In Australia, Fairfax Digital was the first publisher to launch this format (soon to be followed by Youtube) and Nestle was one of the first three advertisers to test it with the Chokito says No, No, No campaign.

As per the USA survey the initial results for this new ad unit are very encouraging: Completion rate of the Nestle Chokito TVC through the “ad selector” is over 13% higher than campaign average!

We are already adopting it as a standard format. Let’s see how quickly the Australian market takes it up!




This will be my third post on TV in a fortnight, and for a media that has remained fairly unchanged over the past 30 years, save for subscription services, the introduction of colour, and the retirement of ROVE this surely indicates BIG changes are afoot.

Top of mind this week for Australian audiences was the launch of 3D Television.  This week saw the first broadcast of a 3D sports event on Fox Sports (with the Socceroos farewell match), this will be swiftly followed up by the first free-to-air broadcast of the State of Origin by Nine, this evening.  The Jury is very much out 3D TV and whether this is gimmick or a viable technology.  Most I have spoken to including heads of sales for two FTA networks and MCN tell me its early days and the broadcasts to date are largely bragging rights related.

So what have I uncovered regarding this technology;

- 3D TV is expensive to produce.  

- The equipment, operation and specialised skills required to shoot and edit it are new, expensive, and require bespoke set up and management

- 3D TV format programming cannot be downgraded or re-formatted to standard definition, this implies that any event or show being made in this format needs to effectively be made twice

- Then there are additional bandwidth requirements, 3D requires more MGHz than HD and almost three times that of standard definition signals. Networks only have a limited capacity allocation and already have to service HD and std. channels, so 3D presents an issue that could mean compromised quality for standard broadcast in order to get a 3D signal out.

On the costs Stephen Leeds of the Ten network indicated that the estimated cost for the 3D broadcasts of this week are in the region of a million dollars, and that the fit out of a 3D truck might even cost up to $18M.

But how big is the audience?
- the estimated number of 3D TV sets out there in Australia as of today is estimated at 6000-8000 with the retailers pushing sports and films like Avatar as key reasons to buy.

So the barriers as they stand;

- Content; there really is not very much to watch yet.  The TV networks see a future in sport, and special events, however the entertainment industry more broadly will be developing content; Movies, of course Avatar paved the way there, Gaming (massive opportunity) and dare i say it Porn (always a ahead of the game) are areas where content is expected to boom.

- Secondly is the revenue model; if content is so expensive to create, how will the content creators off-set these costs? Advertising is one option but it might not yet make it viable.

So this week has seen the launch of mass targeted IPTV via Google TV, and 3DTV thanks to some big sports events, our lounge room lives are about to get way more exciting.


Social TV – narrowing and deepening audience experience.



Starling is one of the new breed of Social TV companies looking to capitalise on the emerging behaviour known as "Media Meshing" (that is multi-media tasking, watching TV and tweeting from your phone or iPad at the same time).  Starling in their words are looking to optimise these experience, helping people find the #tags or facebook streams so that people can tap into these concurrent conversations easily and purely. They clearly have a vested interest in commercialising this through their application, but this is only one of companies venturing into this space.  

This media meshing behaviour is already happening in Australia.

If we look at popular programming we can clearly see these blips where mass media and social cross over. The below graph was taken from the time when the final episode of ROVE aired and shows a clear spike in twitter mentions from that single event.


Similar conversations are evident and capitalised on by programs like ABC’s QandA and can be viewed Monday nights on has tag #qanda if you are interested. QandA have taken this further and are the first to now publish tweets on screen encouraging the audience to participate in the debate, with perhaps the small incentive of seeing their name in lights.

TV is changing fast and this represents but one of only a few ways, so as audiences arguably fragment, the reach for shows might well be said to be narrowing, but therein, but on the other hand the relationship and engagement people have with these programs through social media means they are deeper.


Google TV launch


Google TV – yep, awesome.


Some context for this move by Google – they clearly see the best way to create a shift in ad dollars is aggressively changing the market place.

- eMarketer estimates that digital video ad spending will jump 48% this year to $1.5 billion.

- TV ad spend is $70 billion market in the U.S. alone. Compare to $25 billion for U.S. online advertising in 2010.

Google TV also runs Android, meaning apps that don’t require GPS will also work on your TV (imagine shopping apps, social apps, games etc)

The other interesting implication i’ve been reading about is what this will do for the SEO community as they now have a whole new brief for getting content found by this new browser.

So what does this mean for Australian markets?
Frankly not a great deal just yet, the barriers to IPTV remain the same, the internet and access are still too expensive and slow currently.  

What this will potentially deliver down the track however is a much more significant change to; traditional broadcast ad models and how content is paid for by these networks. Perhaps this will also have significant implications for the way content is created and paid for, as networks have less cash from advertisers the content owners might well discover distribution hybrid mechanisms like the music industry to get paid.

Exciting times ahead.


The future of TV…..



….is the internet.

Exciting times are ahead. In a few months from now people will literally be walking around our cities and suburbs with a Star-Trek-esque iPad tucked under an arm navigating via Google Maps to their closest MacDonald’s restaurant in order to leech their Wi-Fi and grab some downloads.

Once they’ve set their downloads to run, they might then decide to log onto one of the new IPTV (Internet Protocol Television) offerings that has emerged. That’s right you can now watch TV on the internet.  True you have been able to do a version of this for a little while, in fact the ABC and SBS have both had good players out for a while, and FOXTEL has its on demand service, but these new plays by Seven, Ten and coming soon from Ninemsn are just a little bit different.

Yes they offer a selection of hi-res video content – generally this is catch up TV, and archive episode content,  but coming soon will be new programming making the most of the interactivity this technology offers.  Second is they are also built to not only look pretty on a PC browser, but are also formatted for the in-built browsers of actual TV’s, the ones that adorn the walls of our lounge rooms. TV’s these days offer an array of features one of which is the ability to plug directly into your broadband connection.  Cool, and I’m sure you can see where this is heading, and yes you can buy a TV like this from Harvey Norman right now. The predictions for IPTV enabled TV sets in this market are for 5% penetration by 2013.
When considering IPTV implications for this trend are massive;

For TV planning old questions of accountability and old measurement metrics like TARPS become redundant. We’ll buy in interactions, views and durations.
For the consumer there is now as broad a content menu on offer to pick and choose from that is as big and global as their Internet cap and ability to usurp proxy settings enables.
For content providers & broadcasters, well they need more of it (content that is) to satisfy a growing demand, and an ever more discerning consumer.
For brands, well right off the bat it means its going to be harder to their target markets en masse, second it presents a unique opportunity to fill this content void.
Check the Seven and Ten IPTV sites out here;

Knowing this emerging market and studying the ways people consume content like video and longer form screen based content are the keys to understanding the right investment approaches to this channel ongoing. There are most certainly exciting times ahead.