SYDNEY Oct 4 An Australian internet streaming
company part-owned by News Corp said on Tuesday it will
cease operations less than three years after launching, a sign
that local start-ups are struggling against larger U.S. rival
After opening for business in March 2014, the same month
Netflix arrived in Australia, Presto will end its service on
Jan. 31, 2017, its co-owners Foxtel, half-owned by News Corp,
and free-to-air broadcaster Seven West Media Ltd said
in a statement.
The statement didn't give a reason for shutting down the
company, but it did say Seven sold its half share of the company
to Foxtel, and that Foxtel made the decision to close it.
The decision amounts to the biggest casualty to date in what
has become a three-way battle for control of the fast-growing
Streaming Video On Demand (SVOD) market in Australia.
Nearly 1.9 million Australians, or a sixth of the adult
population, had paid subscriptions to Netflix, compared to
332,000 people with paid subscriptions to No. 2 provider Stan
and 142,000 with paid subscriptions to Presto, Roy Morgan
Research said in June.
"The Australian SVOD market was always going to be
consolidated," said Brian Han, a media analyst at Morningstar.
"The likes of Netflix have opened our eyes to how much we
were paying for a packaged channel, 90 percent of which we don't
even watch, (and) forced the hand of Foxtel," Han added,
referring to Foxtel's halving of its subscription fees in 2014,
a few months after Netflix launched.
Presto also halved its subscription fees soon after Netflix
started in Australia.
A spokeswoman for Stan was not immediately available for
comment, while spokespeople for its joint venture owners,
newspaper publisher Fairfax Media Ltd and Seven
free-to-air rival Nine Entertainment Co Holdings Ltd,
were also not immediately available for comment.
Seven, which does not break out its earnings for Presto,
said in August that its "Other Business and New Ventures" unit
generated a loss of A$5.6 million ($4.3 million) in the 2016
financial year, compared to a pre-tax profit of A$3.5 million
the previous year.
"Losses from early stage investments reflect new businesses
such as Presto and our portfolio of digital investments," Seven
said then, adding that "these businesses are all investing
heavily for growth which will limit their contribution to the
group in the near term".
The Foxtel-Seven statement said Presto customers would be
changed over to Foxtel.
($1 = 1.3028 Australian dollars)
(Reporting by Byron Kaye; Editing by Michael Perry)