Consolidation of OTT markets in Australia and New Zealand: still room for growth?

This year, Dataxis hosted the first edition of Next Series Australia & New Zealand. The event was the opportunities for actors across the OTT landscape to discuss the state of the competition within the SVOD, AVOD and OTT pay TV markets in Australia and New Zealand, which have faced significant transformations over the last few years. The most salient feature is the multiplication of OTT services observed until 2020, followed by a first wave of consolidations until the end of last year. We already covered the state of the competitive landscape in Australia in another recent article available here: Australian SVOD market expected to nearly reach 40 million subscriptions by 2026. New Zealand in particular witnessed several major consolidations in the OTT landscape: the acquisition of Lightbox by Sky NZ's Neon, creating the biggest local SVOD service, ranking third after Netflix and Disney+ in terms of subscribers. But the biggest spoils of war was probably the acquisition of Mediaworks, its television channels Three and Bravo and its streaming services ThreeNow, Three+1, Bravo+1, The Edge TV and The Breeze TV by Discovery at the end of 2020. Traditional TV assets in the region have become increasingly attractive for international observers and investors, due to their successful strategies, especially in AVOD. Despite the decline of traditional broadcasting, which remains significant compared to Europe or North America, broadcasters capitalized on their strong content offers from their FTA programming, in addition to the creation of their own virtual channels, replicating the successful FAST model of US services such as Pluto TV. The context of the pandemic also helped OTT platforms to accelerate the monetization strategies of their ad-supported streaming services, especially on smart TVs as explained during the Nextv Series event. While usage progressed in video, gaming and audio, engagement increased alongside on TV apps, especially for sports content. These changes in consumer behavior led brands to realign their advertising strategies toward connected TVs. As described during the conference: " CTV represents the best of both worlds – providing the scale and attention of traditional TV, with the addition of a more attuned audience, addressable & interactive advertising opportunities.” However, despite being central and very flexible, connected TVs are still facing issues when it comes to measurement capabilities, especially reach quantification which is limiting advertisers and OTT services. The war for attention in the wake of the increased competition also led content providers to focus on non-exclusive deals, especially in the sports segment. Exclusive agreements have become less sustainable, while non-exclusive agreements have allowed content providers to share the costs and diversify their distribution channels, in a region where audiences remain small and fragmented. Besides, local platforms and operators massively invested in local productions...