Ultrafast broadband key to Fatso expansion

Online DVD rental firm Fatso says it could launch a movie-streaming service with majority owner Sky, but that will not happen until Kiwis are hooked up to ultrafast broadband.

Online DVD rental firm Fatso says it could launch a movie-streaming service with majority owner Sky, but that will not happen until Kiwis are hooked up to ultrafast broadband. The company, which has now ticked over 18,000 customers, will launch a revamped website next month that will suggest movies and TV programmes to members based on their preferences. General manager Rob Berman said it expected to exceed 20,000 customers by the end of the year and hoped to double that within the next few years. The firm, which merged with Sky's DVD Unlimited and Movieshack in 2008, had aimed for a customer base that size by March last year, but that had been overly ambitious, he said. "It's just over two years ago since we merged. None of the three contributing businesses were really making a go of it financially, but the business is working well now." Fatso was working with Sky on a streaming service that would be "closely related" to iSky – Sky's service that lets subscribers view a range of programmes on their computers – but there were no firm plans in place yet, he said. Its United States equivalent, Netflix, had made good inroads with its online streaming service and it was now delivering more hours of content over the web than by DVD, and British DVD distribution firm LoveFilm had also launched a streaming service, he said. "Both those countries have got a lot better broadband than us. Our internet structure needs to be able to handle peak-time viewing by the mass market. That is all tied to what the Government is doing in its ultrafast broadband scheme and they seem to be talking about a five to 10-year horizon. "We won't be able to deliver a mainstream service until then." Overseas streaming services still had relatively limited content, but were growing rapidly and some, including Netflix, would launch in New Zealand at some point, he said. Netflix currently has about 20,000 titles available for streaming, compared with about 100,000 that can be rented, and cannot currently stream any new releases. ITunes let customers download and rent movies for a certain period, and while that approach did not demand high-quality broadband, it was not something Fatso was considering, Mr Berman said. "Our model is not a transactional model." While it was difficult to measure their impact, the arrival of digital video recorders, particularly MySky, could have impacted on Fatso's growth, as people could now record more movies and programmes and watch them in their own time without the ads. "If anything's had an impact, [MySky] would probably be it. People who are using MySky tend to watch more content because it's easier to watch, but that doesn't mean they don't want our service too. Most of our content is not available through Sky and that's our major advantage." Netflix had been instrumental in putting video chain Blockbuster out of business in the US, but while video stores had an outdated business model and were retrenching in New Zealand, they would still stick around for a while, Mr Berman said. Some had mentioned plans to launch online video delivery channels, but making a success of those would be a "huge ask", he said. "Their customer base is not an online customer base and to get people migrating from one thing to the other – it's not a natural progression." - The Dominion Post

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Claire Rogers

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