How Many People Use Netflix In Australia?

Netflix is rumoured to enter Australia early next year (that was later essentially confirmed), but that doesn't stop a few enterprising Australians from accessing it now. Actually, it's more than a few.

This post originally appeared on the Pocketbook blog

The article we linked to said up to 200,000 Australians signed up with the service. There are also many anecdotes about the popularity of Netflix in Australia in the forums and social media. So we decided to look deeper into the subject*.

Let's start with the basics: stat 1 — market share.

Our study found Netflix to be the second most popular paid-content media company in Australia, despite the fact that they are not officially available here and that they are actively geo-blocking Australians. Here's a breakdown of the market (click on the image to get a bigger picture):

That's right. Netflix owns 27% of the Australians currently using media subscription or rental services. And as you can see, they've tripled in size from just 9.88% in January 2013.

But the growth didn't come at the expense of the local dominant player: Foxtel. The growth came from the old-world end of the market: rentals and to a lesser extent, local clone — Quickflix.

I should note here that the graph is based on the number of users (popularity) as opposed to dollars spent (revenue). And that means it doesn't take into account metrics such as:

  • The number of transactions per customer. For example, if a person frequents Blockbuster twice a month for a year — we'll count them only once.
  • How long Netflix, Foxtel and Quickflix customers are subscribed for. See below for explanation.
  • The fees they charge. Netflix might be growing in popularity in Australia but they charge around $10 a month. Foxtel, on the other hand, can charge more than $100.
  • So it's true that Netflix is growing in popularity in Australia, but only among people who perhaps can't afford (or simply refuse) to pay Foxtel's fees. For those who are comfortable with paying those fees? They are happy to keep paying for the convenience Foxtel offers (in that they don't have to go through a VPN service to combat Netflix's current geo-blocking of our great country).

    Another interesting thing to point out are the tiny grey bars at the top. That's a lesser known alternative to Netflix: Amazon Prime. From what we can tell, it only started to gather momentum in Australia from September 2013, but as you can see, it has also grown — again, despite actively blocking Australians.

    And although by number of users Amazon Prime is small in Australia, they charge an annual fee as opposed to a monthly fee. So by dollar amount, it's actually quite significant. Again, the annual charge is a fraction of Foxtel — around $100 for the year.

    How long did the subscribers stay?

    The next stat of importance is how long subscribers stay with a particular service? This is a good indicator of how satisfied they are with the particular service.

    But there's a catch with calculating average subscription length.

    If Service ABC has been around for 10 years and Service XYZ has been around for 1 year. Let's say users of ABC stayed for an average of half the time and users of XYZ stayed for the whole time. ABC in this case would still appear to be doing better than XYZ because ABC would have an average subscription length of 5 years. Where XYZ would only be 1 year.

    To do the right comparison, we need to do what is called a cohort analysis. That is, of users who start a service (sign up) in a particular month, how long did they stay for?

    In the example above, we would look at only people who subscribed to ABC and XYZ with the same time period — to compare the two "cohorts". So what we might see is that ABC only has an average subscription length of 6 months and XYZ, 1 year.

    So we did that analysis for Foxtel, Netflix and Quickflix. Here's the data (our last date in the sample is 31 June 2014):

    As you can see, Netflix users stay around the longest and Quickflix the shortest. Australians who signed up to Netflix in January 2014 stayed, on average, for 110 days (roughly 3 months, 20 days). Those who signed up to Foxtel during the same period stayed for slightly less than 80 days (2 months 20 days).

    Another point is that given the effort it takes to set up Netflix in Australia, namely the research and setting up of a VPN service, there is more incentive to keep subscribing given the sunk cost.

    Quickflix appears way down the list as unlike Foxtel and Netflix, they also offer once-off purchases of premium programmes. And it appears a lot of people bought these once, and never went back.

    Market Share vs Growth

    This is such an important note, I have to point it out to avoid any confusion. It is absolutely possible for a company to grow, yet have a shrinking market share.

    That happens when the overall market is growing. The company is enjoying that growth, but at a slower pace than its competitors. So the fact that you're seeing Quickflix's market share decrease in this dataset doesn't mean the company is in trouble. In fact, it might be subscribing more users than ever.

    And the fact that Foxtel has a steady market share doesn't mean they are not growing in profitability. In fact, what this graphs shows is that the company has consistently grabbed 50% of overall market.

    It just so happens that Netflix is getting more of the growing pie than they do, remarkably without any Australian marketing or formal Australian servicing channel.

    It will be interesting to see how this develops. Who do you think will come to dominate the industry?

    *This study didn't include iTunes, Google Play, Spotify, Pandora and Xbox purchases. Our sample size is 21,000+ Australians consumers only. Foxtel has a lot of business subscribers — company kitchens, meeting rooms and bars — they would be excluded from the sample.

    How Netflix Is Doing In Australia: 2 Stats That Should Scare Foxtel and Quickflix [Pocketbook]

    Andrianes 'Andre' Pinantoan heads up marketing at Pocketbook. He's an accounting graduate but hates crunching numbers. When not pumped full of caffeine and working away, he spends his (equally crazy) time with his wife and 1 year old son.

    Picture: Getty Images


Comments

    When we were signed up to Austar (now Foxtel) it was like being hooked on a drug, in that it seemed like it might be painful to stop, and we were on it for several years... However once we stopped and found the majesty of torrents, and the occasional latest release Blockbuster DVD, it was like being freed from prison... We are not recidivists..! :)

    I have been a Netflix customer for about 3 months now and love it ! So cheap and there's no Ads or repeats like Foxtel , in my eyes Foxtel can't even compete.

    I will probably stay on Netflix US though. I can see exactly how the Aus version of Netflix will be , it will have none of the good content because of media rights but it will be more than double the cost.

    I don't mind paying more seeing as costs of running this in Aus will be higher but the only reason I go to the effort to watch the US Netflix is because is has the content I want to pay to view.

    I cut the Foxtel cable around 3 months ago. Picked up a pair of Roku boxes and signed up for Hulu and Netflix.
    I wont be going back - the original content like House of Cards is amazeballs and access to new content on demand in full HD is a welcome change of pace from Foxtel's antiquated system and general lack of full HD content.
    From a price point it's amazeballs all up I'm paying $19 per month including VPN, Hulu and Netflix. A welcome change to the $114 I was paying monthly for old content on Foxtel.

      What VPN do you use? I have an Amazon Prime account, but neither OpenVPN nor Hotspot Shield provide access. I'm guessing they're not true VPNs?

        GetFlix maybe?

          Thanks, will have a deeper look into that. reviews here and on WF seem positive.

            Have a look at UNoTelly too. A mate in NZ pointed it out to me about a year ago and haven't looked back. I use it for Netflix but it supports a whole bunch of services including Prime as far as I can remember. 8USD beats the pants off Foxtel in my books haha

        Google Unblockus great service

        Hotspot Shield works if you have a premium account, not if you have a free account

        Pretty much every popular VPN worth its salt can access Netflix easily. They usually advertise the fact heavily if they do support it. I myself use ExpressVPN but you can check out a list and comparisons/howtos here: http://www.bestvpnservice.com/blog/netflix-australia-watch-everything-without-restrictions/

    What this really tells us is that Quickflix is shit.

      Yeah quickflix is essentially an online store to buy the seasons or movies and stream them. Its like $30 for a season of breaking bad , more than most brick and mortar places sell the blu ray for

    the one thing im worried about when netflix comes out over here is whether we will get the same service as americans or if the version we get will be watered down and overpriced like every other service is when it comes here ( steam being a good example with publishers being asshats and charging us more for the same product)

      My money is on the latter being the case, not the former, unfortunately. I'd be stunned if they price it at less than $30/mo. and be equally surprised if it had even a fifth of the content the US service offers.

        Nah it will be watered down just like it is in many other netflix countries.

        Login to Netflix Netherlands and see how much content you get. (a lot of their stuff is tied up in old world cable contracts as well)

        I think probably $15 is the likely price point.

        Last edited 14/07/14 5:39 pm

      The US version of Netflix is missing a lot. Amazon Prime in my opinion is a lot better. Netflix doesn't have Game of Thrones, and a lot of other top shows.

      But unlike the US, who have more than 5 different online streaming services - all of which have exclusive content, we will have 2 here. Some shows have different seasons on different providers. So you need to subscribe to 3 different services if you want to watch those shows

    The popularity of the Hulu's, Netfilx, Unblock and Unotelly in Australia proves that people are willing to pay for content rather if priced fairly. If Netflix lands here, i'll still use my US Account because I know Foxtel and Quickflix will grab all the decent content. -Hopefully the dynamo setting within my DNS will still allow me to change countries if that happens.

      Hasn't Amazon Prime got most of the good content in the US? - I know they have Games of Thrones and most other HBO & Showtime shows. Netflix Original shows are better than Amazon Prime & Hulu Plus original shows though. The other 2 major online streaming services original shows are just plain awful.

        Are the Amazon Prime HBO shows up to date? I had a free month on PS4 and the only HBO shows I could watch were last seasons...

        Furthermore your US Netflix account will work with UK Netflix as well (very easy with Hola, less easy on apple TV etc) and they have a surprising amount of content that American netflix obviously can't license and vice versa, worth a look-in.

        This also makes me wonder whether my US Netflix account will work for Australian Netflix, if that is the case then fantastic... if not I'm with the others and will more than likely have to stick with my US account.

    Fresh Prince of Bel-Air on Netflix Canada +1

    I put it to the author that if one uses a Chromebook, has a TV by Kogan and a phone by LG or HTC (or any other maker who is not Samsung/Apple) then setting up netflix is significantly easier than getting Foxtel or Quickflix - in that their applications simply won't work.

    Netflix (and Hulu and BBC iplayer for that matter) can be watched using any browser, and the smartphone apps are easy to get. VPNs are easy to setup on chromebooks, and there is even one with a dedicated chrome app (zenmate).

    If I am on holidays somewhere i've put myself in a situation where I can't access foxtel. That's why I cancelled it, and unless they change their ridiculously restrictive "list of supported devices" I won't be going back.

      I think you'll find Quickflix is across most devices Chromecast/Kogan/LG and gaming consoles

        Quickflix is not available on chromebooks though (as it requires silverlight), and while it's unofficially possible on the most popular linux distributions, that involves running it through a windows program emulator anyway.

        Silverlight is dead technology. Even Microsoft have stopped development on it.

        Netflix has moved to HTML5 and quickflix should do the same before they become extinctflix. Sales of alternatives to windows (like chromebooks) are growing not falling.

        Last edited 16/07/14 10:12 am

    Firstly I think we need to ask for some more information here from Pocketbook-- about the sample site and how well that translates to the population.

    Secondly if there are a lot of users of Netflix via VPN (ie unauthorised bypassing geoblocking) then that's cause for concern for the Australian industry and consumers longer term. Netflix is getting a massive free kick without having to secure license rights in Australia and without paying taxes on Australian revenue. Meanwhile Quickflix is missing out on revenues and the opportunity to reinvest those into more content and attract more customers. So local competition suffers leading to a more dominant Netflix --- how do you think Netflix will behave if they were left to flex their market dominance? Jack up prices.

    Support local the Australian company looking to compete.

    Stephen Langsford
    Founder/CEO Quickflix

      Your prices are a joke Steve, why would anyone consider Quickflix when they can pay for an unlimited on-demand service per month for the cost of a couple of your "premium" movies or tv shows. You won't win any fans by dragging out the Gerry Harvey spiel either. Look at why Netflix is succesful, replicate that & offer it at a fair price and with fair conditions, deliver it in the seamless manner they do and you'll succed. Until then, good luck getting people to pay $3 an episode when they can buy the Bluray for less than the cost of your service.

      If Netflix tripled their price, I would still use them over Quickflix.

      Thanks for making your case Stephen. Objectively, most people probably do appreciate the concept of supporting domestic organisations.

      Like so many purchases for me, content viewing/consumption comes down to overall value. We bought a Holden b/c the differences in make/model at our price point were negligible. However, electronics in our home predominantly (all?) come from overseas manufacturers. The value dictates that we go elsewhere (not sure if consumers even have Aussie-made options for TV/phone/PC/etc.).

      In a vacuum, Quickflix stands up extremely well compared to the local video store or Foxtel. However, in a global economy, when we all have/know acquaintances/friends investing around $150 per year in the USA for practically unlimited views of content of all types, that makes me say "I could invest $840 p/a with Foxtel (at a minimum), spend on average $500-600 per year with Quickflix ($36 p/m + premium shows), OR I could spend $150 p/a with a US streaming service, and that leaves me with at least $350-450 per year to put towards entertainment in the form of better routers, surround sound, wireless-entertainment, Village Cinemas, etc.",

      Australians are practically begging to pay money for content, but there is not a desire to pay "overs" simply because we're in a different time zone. We don't have to physically send the movies and shows via air couriers to get to Australia anymore; the additional "costs" are simply fat that distributors don't want to cut out. Unfortunately, it seems to place businesses such as Quickflix in the middle. There is little doubt you'd offer your service for far less if your costs were less. Until that time though, investment will dictate viewing through other means.

      Or we'll just get library cards and read books again.

      Hi Stephen,

      Pocketbook users come from a variety of sources, the majority of our users (more than 50%) have come from mainstream media coverage and word of mouth. Coverage on media such as News.com.au, SMH and Sunrise.

      We also get over 100 emails everyday from our users and that gives us a sense of who they are. Some of them are as young as high school students managing their pocket money to retirees looking after their retirement. Empirically, our sample is definitely broader than young males - we can tell just by looking the amount of expenses categorised as "childcare" and "retirement", as well as spending in retailers like Sportsgirl and Katies.

      Our sample for this research is the anonymised real spending information from 21,000 Australians. All our results are concluded by aggregating this sample. This sample is pared down from a larger growing user-base of 85,000 to be representative - we've employed statistical methods such as k-means data sampling, and using sample-on-sample historicals in doing so.

      As a relative measure, Nielsen TV ratings is calculated from 5,000 households across Australia.

      ---------------

      As for the right and wrong of it, that's not for me to judge. :)

      Andre

        Hi Andre

        Your survey is not a true representation of consumers across Australia. While you may have sampled 21,000 pocketbook users, the sample percentage across the board will be very small.

          Hi spikejonze, most research, apart from the government's census, rely on sampling to come to a conclusion. 21,000 subjects is a small portion of the Australian population, but it's a lot bigger than most other sample size - like the Nielsen TV ratings I mentioned above.

          That said, this sample is not without its limitations. I've mentioned businesses are not included - and that might be others. Unless you have a specific limitation in mind, I can't really address what you're concerned about.

    I just wish that someone would tell me how to pay for Netflix. I just signed up for the free month using hola unblocker but now they won't accept my PayPal or cc as they can tell its from Australia?

      Use a US Credit card. Credit card numbers are nation specific, so you need to pay with a US card.

        Nope. Don't need a US credit card. Just need to use a US address. Google it.

          I tried to do exactly that using a US postcode however it recognised my card immediately as being from Australia (with Hola turned on in browser).

          I will look into the netflix gift card option

            Unless things have changed in the last 6 months…I do remember a friend having an issue with Mastercard though. Visa was no problem.

    I cut the Foxtel cables 6 months ago and signed up for Netflix, Amazon Prime and Hulu via UnoTelly and it was the best decision I ever made. I now get to watch what I went, when I want and at a reasonable monthly price without being bombarded with ads and repeats. I've since let my Hulu subscription lapse (we just weren't using it) and find that Netflix and Amazon Prime (especially now it has added a number of HBO shows to it's Prime service) are all we need. Foxtel is an overpriced joke, and only began caring about me as a customer when I wanted to cancel my account after 8 faithful years as a customer. I feel no sympathy for Foxtel or Quickflix or the likes when Netflix finally comes here and dominates. Australians are sick of being ripped off, and I have no qualms about spending my money with Netflix instead of locally. Heck, even Choice acknowledges we are being ripped off an provides a guide on their website on how to bypass geoblocking http://www.choice.com.au/reviews-and-tests/computers-and-online/networking-and-internet/shopping-online/navigating-online-geoblocks.aspx

    This article doesn't answer the question it asks in the title "How Many People Use Netflix In Australia?".

    Estimates range from 50,000 to 200,000, and this article doesn't come up with a number to challenge those estimates.

    It says "27% of the Australians currently using media subscription or rental services" use Netflix.

    But it doesn't say how big that market is in terms of how many people. i.e what is 100%??

    So "27%" is a totally useless stat if you don't know how many people that translates to.

    Last edited 15/07/14 10:38 am

      I agree. And that 27% becomes even more useless when you take into account these are pocketbook users which Im sure make up a minuscule % of the Aussie buying population

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