Foxtel is looking to introduce a Roku type media player in an effort to expand Foxtel services, the move comes as the Company struggles to manage the return of over 125,000 faulty iQ3 boxes that have failed due to software problems.
According to Foxtel sources the bill for the disastrous launch of the iQ3 box is mounting, insiders claim that the bill already exceeds $20M with Foxtel engineers unable to come up with a fix for the Pace manufactured set top box which was in launched in a desperate attempt to hold onto subscribers who were being offered a $9.95 a month subscription to Netflix.
According to one Foxtel employee the Company is warehousing over 125,000 failed boxes that consumers have returned due to problems accessing content and recording programs.
In some cases, the boxes switch on and then switch off as they struggle to connect with a TV.
“This box was rushed to market, unfortunately the software was not developed properly to run smoothly with the chipset. This has resulted in a lot of software glitches that cannot be fixed”.
New Foxtel chief executive Peter Tonagh has unveiled to the Australian newspaper a revamped strategy for the struggling Pay TV Company that is having to watch other Companies grow at their expense.
Netflix was launched in March 2015, 12 months on they now have over 2.7 million subscribers.
At the same time Fetch TV who are partnering with Optus are reporting record take up for their Fetch TV service. The Company plans to launch a new smaller and faster box in August to coincide with the launch of the UK Premier League Football by Optus.
New ABS data reveals Australians downloaded a record amount of data in the three months leading up to December 2015, amounting to 1.7 Exabyte’s.
According to the Australian Bureau of Statistics that’s up 50 per cent from the same period in 2014.
Much of the credit for the spike has gone to Netflix.
During Tonagh’s first interview since his appointment on March 17, the former chief of News Corp Australia the owners of the Australian newspaper said that he will offers a wide range of content that does not require a cable or satellite subscription to Foxtel.
What he is banking on is to compete head on with Netflix via Smart TV apps, devices such as Googles Chromecast and Apple TV.
“I would expect to have an equivalent to a Roku-type device in the market within 12 months,” Mr Tonagh said. “At the moment Foxtel is positioned as an expensive premium product; I want to make sure that we’ve got packages available for all levels of affordability.
“It will provide a cheap entry point and allows people to get access to the Foxtel product without the cost of installing a set-top box and a satellite connection. We then have the ability to tempt ?people to trade up and start spending more.”
For years, cable and satellite subscribers have had to choose from large and often expensive packages, with little ability to control which channels were included. But with the advent of digital streaming, a la carte viewing is gaining in popularity as consumers can pick and choose the channels they want to access thanks to their availability as apps.
“We have an opportunity to extend our distribution through multiple channels because there’s a whole bunch of people who want to be able to access our content without being locked in. It’s very hard not to lock people in if you’re spending money on set-top boxes and installation. It’s much easier if you can provide a puck-type device.”
Mr Tonagh, a former Foxtel chief financial officer has not commented about the failed Q3 boxes that are now collecting dust in a Homebush warehouse.
Talking about the new streaming device he said “I want to have a device where you can walk into a local retailer, purchase the device, plug it in and get access to our product to complement the more premium service.”
“At the moment, Telstra TV doesn’t have a bundle of Foxtel channels but ultimately it should have at some point. Equally, there’s no reason why we wouldn’t be selling content to Optus” he said.
“We need to offer all content to our subscribers but some of the content will be only available on an exclusive basis, including major chunks of our sport, HBO programming and local dramas under the Foxtel brand name and retail service.”
While there have been no discussions about making Netflix available through the Foxtel ?platform, Mr Tonagh said he was “certainly open to it”.
The Australian said that Mr Tonagh’s longer term challenge is to oversee a potential merger with News Corp’s Fox Sports Australia and sell the breadth of Foxtel’s much larger and even more profitable operations to investors.
While Mr Tonagh would not comment on the merger and IPO speculation, Ms Weir will bring considerable experience of fronting public companies, having helped steer regional Pay-TV operator Austar’s IPO before its merger with Foxtel.