Broadband Basics

Viewing behaviour disrupted by influx of options

By
Chorus
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September 08, 2015

‘There’s nothing on TV’ – a statement that is being heard less and less around New Zealand as Kiwi households embrace the international trend of viewing what we want, when we want to. A recent IDC survey of over 50,000 homes across 26 countries reveals that New Zealand is a market primed for future growth as more households choose streaming over the internet as their primary way of viewing TV.

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Fast Uptake

 

IDC New Zealand’s country manager, Peter Wise, says that a year ago, the legal options for on-demand Pay TV were scarce, but the launch of new services such as Netflix, Lightbox and Neon are driving new viewing behaviours.

 

“Our survey of 1,500 New Zealand homes shows 12% of Kiwi households now say ‘streaming over the internet’ is their main way of watching TV. This figure – which includes both paid subscriptions (38%) and free services (62%) – has doubled in the last year. This puts us ahead of other countries like Australia and the UK, and brings us into line with the more mature United States market.”

 

 

Competing Internationally

 

The survey also found 12% are already paying for online video streaming services. When compared to other countries included in the survey, this is higher than Australia, France, Spain, Malaysia, Japan and South Korea. And the use of subscription services may have risen significantly since then. Fieldwork for the survey was done in March and April this year, just three months after Lightbox was first made free to Spark’s broadband customers – an offer that ended in April – and around the same time Netflix launched on March 24. As these services have become more accessible, its likely more Kiwis are taking advantage of them.

 

Wise says international trends indicate New Zealand’s uptake of SVOD (subscription video on demand) services will continue to increase. SVOD usage in mature markets is much higher than our current uptake, leaving plenty of room for growth.

 

“Paid for streaming services in the United States and Canada sit at 43% and 37% of households respectively and it’s reasonable to expect that New Zealand could reach similar levels, or even surpass them. Technology for online video streaming – including Chromecast and Smart TVs – is relatively new. Furthermore, for much of 2014 and 2015 SVOD providers have focussed on simply educating people about the services that exist, to kick-start this young market. Despite our fast growth so far, we’ve only just begun.”

 

SVOD is also not the only area of streaming that is predicted to grow. Non-subscription services like TVNZ OnDemand, 3Now, Apple TV, Freeview Plus and Sky’s planned video on demand set-top-boxes will all contribute to increased internet video streaming in households.

 

Disrupting the Market

 

Though New Zealanders have historically had really only one option for pay TV (Sky TV), high-speed internet is already changing the way we view and pay for television. For example, streaming sport is now possible, with Sky revamping its ‘Fan Pass’ in August to let non-subscribers buy passes to stream Sky Sport channels 1-4 for a day or week. But it’s not as simple as just offering online video. Though the market is growing, VideoEzy On Demand and Ezyflix have recently closed. Spark broadband customers who signed up by the end of April have 12 months’ free access to Lightbox – but it remains to be seen how many of these viewers will become paying subscribers.

 

Wise says that as broadband continues to provide more quality viewing options the expectations of viewers will change. Users will demand the consistent viewing experience that came with traditional television and any dropouts or buffering that interrupt that experience will cause frustration – people want the internet to work ‘as it should’, all the time. These changes are driving demand for high-speed broadband, capable of handling heavy usage at peak times.

 

Chorus has noted the increase in demand for higher speed plans – for example, in July 2015, about 75% of new fibre connections were 100Mbps+ plans as consumers opt for the bandwidth that ensures a great experience.

Wise says this trend shows no signs of abating:

 

“As at 30 June 2015 UFB connections had reached 106,000 and, subject to enough physical installation resources, IDC is expecting this to double over the next year – New Zealand is really waking up to fibre!”

 

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