Netflix will eventually swallow up its small media competitors, a new study has claimed.
A team of management experts at the University of Auckland Business School say the streaming media giant will continue to grow and is likely to erase most of its smaller competitors in New Zealand.
"I predict the small players in New Zealand are not going to make it," says lecturer Dr Dan Tisch. He believes competitive offerings will go slowly and milk existing rights for as long as possible but "you need a Disney to take on Netflix."
The study, published earlier this year, is good news for the increasing number of New Zealanders who are taking to online streaming – and for local internet service providers (ISPs) including Trustpower, who are poised to take advantage of this growth.
Trustpower, was named in October (for the 10th month in a row) as having the fastest average Netflix prime-time download speeds of all local ISPs.
"Trustpower is no longer just an electricity company," says the company's general manager markets, Craig Neustroski. "We were the first major company in New Zealand to bundle together household energy and telecommunications services (electricity, gas, home phone and broadband) – and the first New Zealand ISP to get average prime-time Netflix download speeds above 4mbps (megabits per second)."
He says streaming services are meeting the changing needs of customers and are here to stay: "We think they will only get bigger and that justifies the focus and significant investment we have put in over the last few years in building our own network.
Stats NZ figures back up this optimism. They show more than 1.3m households have unlimited data broadband plans (up from only 127,000 four years ago) while a survey conducted by Australian research company Roy Morgan shows 1.91m Kiwis are in households with Netflix access.
Netflix launched in New Zealand in 2015 and now offers Kiwis almost as many TV shows and movies as the total available to US subscribers. In a survey conducted in June by Australian financial website Finder.com New Zealand was placed eighth out of 73 countries in terms of the number of options available, with 1,422 TV shows and 3,146 movies (81 per cent of those on offer in the US).
Meanwhile the university study, which has been published in the digital library SAGE Business Cases, used Netflix as a model of "disrupting" academic publishing. Analysis was carried out by a Business School graduate Paul Rataui and Dr Tisch and senior lecturer Dr Peter Zamborsky, both from the school's department of management and international business.
The team wanted answers as to how Netflix outmanoeuvred "the titan that was Blockbuster Video".
Zamborsky says it is hard to over-estimate the significance of how Netflix has leveraged customer data: "The world's most valuable resource is no longer oil, it's customer data."
He says it was also a case of being in the right place at the right time, as video streaming speed and reliability increased and viewing devices became cheaper.
Trustpower says it is now the fourth largest provider of fixed-line broadband in New Zealand and has over 100,000 customers with multi-product bundles.
"However because of our history as an electricity company, some people question whether we can deliver a high quality broadband service," Neustroski says. "But for the last 10 months in a row (since December 2017) we have been rated number one out of all ISPs in New Zealand in the Netflix ISP speed index.
"We aim to provide our customers with a high quality broadband experience - so having the fastest average prime-time Netflix download speeds out of all New Zealand ISPs is a big deal for us."
Trustpower, whose history can be traced back more than 100 years to the first hydro-electric power station in Tauranga, first recognised the potential of adding telco services to energy in 2007. At first telco services were provided under a separate brand, but in 2014 the company began bundling them together with energy.
"We believed bundling would have many benefits," says Neustroski. "Customers have many demands on their time and don't want to spend it on administration when they could be doing things they want to do; bundling services with Trustpower means they only have one company to deal with and one bill to pay for all the services they have with us.
"We can deliver copper and fibre broadband services across New Zealand and have established an extensive national network," he says. "Our team actively manages the network our customers travel on and we are constantly working to improve their speeds, connectivity and overall quality of service."
Neustroski says Trustpower prides itself on its customer service: "We were awarded Internet Service Provider of the Year in the 2017 Roy Morgan Customer Satisfaction awards in New Zealand, and our customer services are 100 per cent New Zealand based."
# For more information on Trustpower go to www.trustpower.co.nz or phone 0800 44 22 22.