Telstra Courts Netflix To Boost Mobile Division's Revenues

Telstra is reportedly in negotiations with Netflix for a partnership that entails the former to "market, promote and host" the video streaming giant's services.

According to a report on The Australian Financial Review, Telstra would integrate Netflix's Open Connect Appliance, or OCA, servers into its data centres to allow it to pull up Netflix movies and TV shows in Australia from a local data bank than get it from overseas, thus reducing costs. As of press time, Telstra has yet to comment on the said partnership, although it earlier claimed that it has a number of contracts in the pipeline.

The report noted that Telstra is in dire need of finding a new income stream to bolster its mobile revenues and allow it to retain its share of the local mobile market. Prior to the announcement, Telstra mobile and wireline executive director Warwick Bray said "Australia's increasingly competitive telecommunications market" is hurting its mobile business.

"It is early days, but the recent competitive dynamics may have some impact," Bray was quoted as saying in a separate report from SBS. "Yes, there is more competition and we'll need to respond with great, new products." SBS continued that Telstra's average revenue per user, or ARPU, has dipped due to a decline in users' consumption of voice and data services. Consumers are using their tablets and smart phones more, expecting their data subscriptions to be on par with their computers' connection speeds.

Telstra expects the space to get more competitive as video streaming calls climb due to increasing network speeds. SBS said video content, which is comprised of content and calls, accounts for 50 percent of network traffic today. It is seen to jump to 72 percent in four years.

In March, the telecommunications titan also revealed that its partnership with video streaming service Stan was underway. Stan aims to tap Telstra's 3 million retail fixed broadband customers and 16.4 million mobile subscribers.

Data from Cisco's Visual Networking Index revealed that IP traffic would reach 1.6 zettabytes by 2018, thanks to the increasing number of internet users and devices worldwide, better broadband speed and quality, and increased video consumption. The index also noted that video will be responsible for as much as 79 percent of IP traffic in 2018, up from 65 percent in 2013.

Mobile streaming is a lucrative space which explains why technology and media companies are scrambling to get their slice of the profits. For instance, Amazon Prime's Instant Video has just launched a free app for Android tablets, following the recent release of a version of the apps for Android smart phones.

Audioboom (LSE:BOOM), a spoken word audio streaming website, also came out with an Android app in February, as a follow up to its iOS app release the previous year. The company has integrated said apps with Apple CarPlay and Android Auto platforms, allowing users to listen to Audioboom clips on demand while driving.

"2015 was always going to be the year Audioboom targeted the car, as 80 percent of all audio listening comes from drivers. With our Aupeo partnership and now the integration with Apple CarPlay and Android Auto, Audioboom is at the forefront of reinventing the in-car audio experience," said Audioboom chief executive Rob Proctor in a report by Alliance News.

Contact the writer: a.lu@ibtimes.com.au