As Foxtel works out how to get a return from their multimillion AFL investment, a bitter fight is set to break out between Optus and Telstra in an effort to lure the 70 percent of Australians who don’t have a content subscription provider.
Key elements of the fight will be content and the quality of set top boxes that are to be used, claims Scott Lorson the CEO of Fetch TV who is partnering with several ISPs, including Optus and iiNet in an effort to take on Foxtel and Telstra.
Lorson does not believe that the current generation of Smart TVs have the hardware or the functionality to deliver “high quality” content services.
He claims that a set top box is still needed to deliver Full HD content especially when a provider needs to deliver multiple tuners, state of the art content chipsets, middleware software and up to a terabyte of storage.
Yesterday Foxtel announced a deal with Telstra that will allow downloaded video content on the Xbox 360 to be unmetered for BigPond broadband customers, who will also get six new BigPond TV channels added to their Xbox Live service.
Meanwhile Optus is set to deliver a brand new media centre box to up to 500,000 Australians in an effort to take on Telstra’s T Box service, which has, in 8 months attracted over 175,000 users. What is not known is how Optus will get so many boxes to market.
Some analysts are speculating that the company will move to a low cost Apple TV type device with the Fetch TV service delivered as part of a low cost subscription service.
Scott Lorson, the CEO of Fetch TV, won’t talk about his recent deal with Optus in detail but what he does claim is that Australia is a perfect market to mount a content fight as up to 70 percent of Australians are undecided when it comes to using a subscription content service Vs 14 percent in the USA.
Several analysts have told SmartHouse that as the incumbent in the content market, Foxtel has the most to lose in any upcoming content battle.
Their services are seen as expensive; with the subscription TV company recently admitting that they are struggling to sign up new customers.
With a churn rate of 14 percent Foxtel is now banking on AFL to attract new customers, after forking out $85 Million to secure the rights to nine AFL games.
Telstra, a 50 percent shareholder in Foxtel, stumped up another $155 Million with analysts now questioning whether there is actually a market for approximately 125,000 new Foxtel customers who will be expected to pay over $85 a month to get access to the AFL coverage which will also be shown on free to air TV.
Scott Lorson believes that a monthly subscription sweet spot is around $19.95. For that subscribers will get a high end Fetch TV set top box complete with 1 TB of storage, 3 tuners and access to movie content.
Lorson said: “There are four things that Australians want from a content subscription provider, access to free to air TV, time shift and recording capability, access to movies and the ability to download them as well as access to the Internet. These are essential going forward”.
“We know that 25 percent of Australians will pay for sport so the real issue is what does the other 75 percent of Australians want from a provider? We know that with 1.25 million households, English is not their first language, we know that people want more lifestyle content and we know that they want movies, because Australia has the highest consumption of rental movies in the world. So this is where we are starting from”.
Lorson claims that TV content delivered by iView and the new YouTube TV service which is set to be launched shortly is important for a subscription provider he said.
He added: “Smart TVs are not really smart yet, and won’t be pre the roll-out of the NBN. They lack a lot of features like pausing content and some lack unmetered broadband which makes content expensive via a Smart TV”.
Lorson also said that there problems with delivery of content to gaming consoles. He cited a recent article by Adam Turner in the SMH when Turner said: “One hassle with the Xbox 360 service is that you need to fire up the games console, mess around with the controller and log into the Foxtel service whenever you want to watch something – which is a lot of hassle when you just want to flop down on the couch. It’s a shame it won’t stay logged into Foxtel. To me the biggest difference compared to the full service is that you can’t pause, rewind or record the Xbox 360 service”.
Lorson said that he believes that multicast and a high quality set top box is the way to go for subscription TV as it allows providers like Fetch TV to deliver high quality content.
And like Kim Williams, the CEO of Foxtel, Lorson has questioned the value of Netflix in an Australian market as rumours swirl that Telstra is talking to them with a view to delivering their content in Australia.
