Video-on-demand service Dendy Direct is the latest Australian streaming service to fall on its sword, announcing on Thursday it will cease operations from May.
In a statement, cinema operator Dendy said it would be ending its direct downloads service, which allowed users to buy and rent new release films and television shows, on May 14 after four years in operation.
The company said that despite offering a “curated experience to customers”, the introduction of a number of competitors in the Australian video streaming landscape has brought about challenges, which mean it’s now a better bet to focus on operating its cinema network, rather than persisting with the streaming option.
Dendy Direct launched about one year before US tech giant Netflix entered the Australian market, and while there are no figures on the Dendy customer base, research suggests the Netflix viewer base has well outstripped growth among its competitors, including free-to-air television.
In November 2017, figures from research firm Roy Morgan suggested close to 38% of Australian viewers now have access to a Netflix account. The streaming service has driven the growth in the overall number of households subscribed to a video-on-demand service, said Roy Morgan: in the March quarter of 2016, 18.6% of households used a streaming service, but by November 2017, this number was up around 32%.
Meanwhile, a number of other local video streaming models have changed direction or shut up shop entirely in recent years.
In 2015, local model EzyFlix bowed to the pressure of international competitors and closed, while in 2016, Seven West Media offloaded platform Presto to Foxtel, with the pay-TV operator looking to relaunch its own video streaming offer.
Australian customers currently have a choice between Foxtel Now, Stan and Netflix as the three major brand-name operators in the content streaming space.
Will Netflix be the victor?
At this point in the Australian market, it is incredibly difficult for streaming operators to effectively scale unless they are a “Hollywood studio-size” business, says Telsyte managing director Foad Fadaghi.
“You have to have substantial content assets already to become a viable player,” he tells SmartCompany.
Reviewing the current streaming landscape, Fadaghi says it’s not as simple as Netflix intentionally crushing smaller competitors: for vide0-on-demand streaming to succeed, you need a large audience and a large pool of content, which can be difficult to launch if you are a smaller entity.
Into the future, companies like Disney and Amazon will have more scope to deliver bespoke content to Australian audiences, he says, which will make it even more difficult for providers who don’t produce their own film and TV content in-house.
“It sets them apart and really solidifies their position [when companies create their own shows]. The original productions are a reason for existing customers not to switch off from the service.”