Fairfax bets on online videoMichael Sainsbury and Andrew Colley...

Fairfax bets on online video
Michael Sainsbury and Andrew Colley
March 29, 2007

FAIRFAX Media has inked an alliance with Macquarie Bank-backed online video provider Anytime, but rivals believe widespread adoption of the technology is five years away.
The two companies have also stitched up a one-year exclusive deal to provide the service to broadband customers of the nation's third biggest internet service provider, iiNet.
Singapore-based Anytime is one of several companies effectively operating an online video store, including Telstra's BigPond Movies and financially troubled Reel Time, the shares of which have been suspended from the stock market for more than a month.

Fairfax and Anytime call their service Anytime on VOLT.

"Today's agreement with Anytime marks a significant step in Fairfax Digital broadening its information offering and becoming, among other things, a leading online entertainment network," Fairfax Digital chief Jack Matthews said.

But Australia's second biggest online DVD rental group, Quickflix, believes that it's too early for video on demand.

"This is an interesting development but it has already been shown that consumers have not warmed to a pure play download model due to the limited availability of high-speed broadband infrastructure and timely content from the Hollywood studios," Quickflix chief executive Stephen Langsford said.

"We maintain our view that while small incremental steps towards movie download services are positive, the market won't be ready for a full-blown service for another five years."

Anytime has beaten rivals Reel Time Media and VOD to win a deal to supply content for iiNet's upcoming national on-demand internet movie service.

Two weeks ago, iiNet chief executive Michael Malone said the company hoped to launch the service within six to eight weeks. At the time, Mr Malone said the aim of the service was to generate interest in broadband rather than a new revenue stream. He said it was time for Australia's internet industry to start focusing on the content side of the business.

"Our margin on this will be lucky to cover the cost of delivery," Mr Malone said. "The advantage is that it stimulates the need for high-speed broadband so you start to see customers moving up the value chain and downloading more and taking advantage of their connection more."

Documents obtained by Australian IT have revealed iiNet plans to spend about $5million upgrading its network capacity to accommodate the new movie service. The documents also revealed that iiNet expects to pick up about 60,000 subscribers for its internet movies service within four years and that it will stimulate growth of its broadband subscriber base to outstrip forecast growth industry-wide and rival carrier Primus.

The internet service provider has forecast that the movie service will help the company expand its broadband subscriber base to 260,000 by 2009.