The proliferation of streamed subscription-based film and TV rental services will make life tougher for free-to-air broadcasters, according to PwC’s Australian Entertainment and Media Outlook 2013-2017.

PwC predicts US streaming giant Netflix will enter Australia in the next few years and notes it already has a foothold in the market after easing restrictions on the use of Australian credit cards.

That initiative recognises the informal use of the service by many Australians and indicates Netflix sees Australia as an attractive market, PwC executive director Megan Brownlow told IF.

Still, the firm expects FTA advertising revenues to stay relatively strong due to the networks’ focus on sport, event TV and innovative advertising solutions concocted by outfits such as Nine Entertainment’s creative ideas unit Powered.

It predicts FTA ad sales will grow at a modest compound annual growth rate of 1.7% from $3.3 billion in 2012 to $3.5 billion in 2017.

The fast tracking of US series soon after their US premieres isn’t curbing piracy to the degree expected but piracy levels decrease when subsequent seasons of fast-tracked shows go to air, the report found.

“The duplication of copyrighted material is the price the industry pays for not being agile enough with their business models,” said Brownlow.

The firm is much more bullish about online revenues, forecasting a 44% annual growth spurt in internet video advertising from $90 million to $559 million in the next five years.

“The completion rates (ie those who click through to watch at least 50% of) ads in long-form video content are much higher than for short-form content,” said Brownlow. “That should embolden all the free-to-air networks to get their catch-up TV and online strategies in good shape.”

The report concludes, “With international competitors targeting Australia and piracy an ever-present challenge, broadcasters need to innovate to retain audiences. Television is now available on an increasing number of platforms and in 2014 the industry, through Freeview, will launch HbbTV services…that bring together broadcast TV, IPTV and broadband delivery of entertainment and media through connectable televisions and set-top boxes.

“It will allow consumers to stream live TV, pay for an ad-free option or pay to see advanced episodes. Having access to content when and where we want is changing viewer habits. Not only are we watching TV on different platforms, we are using multiple devices at once; six in 10 Australians with an internet service use it while watching TV.”

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