Australia / Analyst Insights
NBN rollout having varied effect on different sectors

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by Brian Lo
May 22 2018

The ongoing NBN rollout has strongly enhanced domestic internet coverage and download speeds. According to the ABS, the number of internet subscribers in Australia increased by 5.6% over the 12 months through December 2017, with the number of high-speed fibre connections growing by 108% over the same period. According to the NBN’s March 2018 progress report, out of the 6.5 million homes and businesses that were ready to connect to the NBN, 3.7 million had taken up access to the network.

The rising accessibility and quality of internet access in Australia has favoured certain industries, particularly those in the retail, financial services and education sectors. Operators in the Online Education industry have benefited significantly from how course delivery has changed over the past five years. The number of online education providers has grown significantly over the period, as many existing bricks-and-mortar establishments have extended their services online. Incumbent industry firms have been more successful than new online-only providers, as existing education providers typically have an established reputation and the physical resources to support course delivery. Establishment numbers for the Online Education industry are expected to increase at an annualised 10.8% over the five years through 2017-18. Stronger domestic internet accessibility has fuelled industry growth, encouraging more players to enter the industry.

However, rising internet connectivity among Australian households has been detrimental for certain industries, including the Video and DVD Hire Outlets industry. The industry has been in decline since the late 2000s, and the rising availability of content delivered through the internet has hastened declines in industry demand. Higher internet speeds have encouraged consumers to adopt internet-based content platforms. These include online video sharing networks such as YouTube, and subscription video on demand (SVOD) services such as Netflix, Amazon Prime Video and Stan. SVOD platforms have invested extensively in developing original content to enhance the exclusivity of their film and TV program libraries. Netflix has announced that it plans to spend $8 billion in 2018 to create its own films and TV programs, aiming to maintain a library with half of its content being exclusive titles.

Rising domestic internet accessibility has also negatively affected demand for video and DVD hire outlets by enhancing the scope for households to take up online gaming. According to the Interactive Games and Entertainment Association, digital game sales grew at a compound annual rate of 20% from 2013 to 2016. Enhanced internet connectivity has also fostered the gameplay sharing culture in Australia, with 68% of households that play video games using online walkthroughs, videos and wikis to help their gameplay. In addition, 33% of gamer households streamed esport competitions in 2017. Due to the growing threat of external competitors, establishment numbers for the Video and DVD Hire Outlets industry are expected to decline at an annualised 22.7% over the five years through 2017-18. Establishments are expected to fall by a further 39.9% over the current year, as SVODs take a greater share of the domestic home entertainment market.


Related industries:

Online Education
Video and DVD Hire Outlets