If a database of 3.5 million active movie lovers counts for anything, early entrants in Australia’s
nascent IPTV market might have cause for worry when DVD rental chain Video Ezy makes its
online debut later this year.

While already known to be developing an electronic distribution strategy, Video Ezy Managing
Director Paul Uniacke used the CommsDay Summit last week to announce the company would
make an initial video-on-demand debut in late 2006 extending to a full mass market launch in 2007.
The company is believed to be well advanced with technology and network developments and is
undertaking a large-scale consumer research project over the coming months to perfect its business
model.

With some 560 stores and commanding 35% of Australia’s home video rental market, Video
Ezy is arguably one of the country’s largest entertainment providers. During its peak hour on a Saturday
night it shifts as many as 300,000 units, but according to Uniacke, cannot afford to rest on its
laurels. “We’re not just competing against other video stores. We’re competing with football, television,
piracy, anything that wants a slice of people’s time and money… We need to be more relevant
than what we are today,” he said. Hence, “the next stage of our development is VOD, it is content”.
Video Ezy has been working with digital media consultancy The Content Factory to develop
its online business and could have a few surprises in the final wash-up. With such a strong shopfront
network, Uniacke indicated a preference for “enhancing the current in-store and out-of-store
experience” rather than replacing it and the company is looking at putting franchise operators in the
driving seat of local VOD businesses.

“The plan is that the franchisee will actually execute the online business but it will be done
within an overall structure developed by Video Ezy itself”, said Content Factor Principal Steve
Hogben. He added that significant resource was being deployed to discover just what consumers
want from a Video Ezy VOD service.

“Video Ezy is in a difficult position because as it is a leader in its market, it is the incumbent in
a sense. It cannot afford to experiment with new types of services. It is not a new start-up, it can’t
just go out with a new offering and see if it works and tweak with it,” he said. “What we’re trying
to do is provide an innovative distribution technology that can support the product. It’s got to have
the right content, the right quality, the right usability for a specific customer base.”

While giving nothing away on technology partners or distribution models, Hogben indicated that
Video Ezy will likely tread the set-top-box path. Simply put, he claims the Australian market is a
long way from accepting anything else. “The market that watches television is different to the new
technology market. As the sales figures for VHS and DVD show there is a very long hangover period
before new technologies dominate the market. Broadband in Australia is growing very fast but
most of the people watching movies don’t have broadband,” Hogben said.

While the main focus is on Australia, Video Ezy is also planning a 2007 IPTV launch across its
international businesses in New Zealand, Thailand, Indonesia, Singapore, Malaysia, Fiji and the
UAE. The coverage, and a 20-year rental relationship, makes Video Ezy an attractive proposition
for Hollywood studios. According to Uniacke, “we believe that our channel does have a future but
we shouldn’t just look at what we have today. The video store of the future should have more of an
offering to the consumer.”

Peter Fray

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