Technology

Netflix undercuts competition by $1 a month ahead of local launch

Kirsten Robb /

Netflix will charge $8.99 a month for its standard service when it launches tomorrow across Australia, undercutting rivals Presto and Stan by $1.

Neflix’s move to undercut its Australian rivals comes as competition reaches fever pitch in Australia’s streaming market, with a slew of services vying to secure viewers.

The company officially announced its Australian pricing structure this morning after details were leaked on Reddit and Imgur last night.

Netflix will offer its single-stream standard definition plan for $8.99 a month, a dollar cheaper than rival Foxtel and Seven Network’s Presto and Fairfax and Nine Entertainment’s Stan, which both offer their entry-level plans at $9.99 a month. The fee will allow users to stream all Netflix content on one device.

The three-tier pricing structure also allows users to choose to stream content on two devices for $11.99, or on four devices in ultra-high definition for a $14.99 “family” plan.

Meanwhile, Telstra today announced it will offer its T-Box customers a free six-month subscription to Presto. The service will be available unmetered through Telstra’s fixed home broadband, meaning users can watch shows without it affecting their monthly data allowance.

Presto’s offering is headlined by US comedy Modern Family, alongside popular TV shows Homeland, Sons of Anarchy, The Newsroom and Girls.

Netflix is meanwhile pushing House of Cards and Orange is the New Black, and Stan has Breaking Bad spinoff Better Call Saul as its meal ticket.

All three services are also offering 30-day free trials to new members.

A Presto spokesperson told SmartCompany the service was not worried about the pricing wars.

“We think Presto’s range of TV and movies – led by exclusive HBO and Showtime series and titles – is stronger than its competitors, making it a compelling choice for Australian consumers,” said the spokesperson.*

Telsyte managing director Foad Fadaghi told SmartCompany it will be the battle for content – not pricing – that will make the difference in the streaming wars.

“It will be about getting new content and killer programs that entice people to first run with the service and then stay with it,” says Fadaghi.

“The biggest challenge will be churn. It will be easy to get trial members and easy to have one [or] two hook shows,” he says, believing users will mix and match content to suit their interests from different providers.

“Users might get Better Call Saul on Stan, use Netflix for House of Cards, and have a Foxtel subscription for subscription for sport.”

“We think it will be a fragmented marketplace and it will remain that way,” he says.

Fadaghi believes Netflix’s pricing will have the biggest impact on Foxtel’s multi-pack premium offerings.

“It’s very likely people will look at $25 a month for content [with Foxtel] and put that side by side with $15 with Netflix,” he says.

“Foxtel’s premium pricing will face the biggest threat, given consumers now have more choice,” he adds.

SmartCompany contacted Netflix, but did not receive a response prior to publication.

 

*This article was updated March 23, 3.15pm to include a statement from Presto. 

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Kirsten Robb

Kirsten Robb is a former journalist at SmartCompany. Previously, she worked at News Corp as a property reporter for Leader Newspapers and the Herald Sun, and holds a Masters of Journalism at Melbourne University.

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