Pay TV exec concedes Foxtel facing an “affordability issue”

TV1 CEO says in the current economic climate Foxtel is seen as too expensive by many Australians.

A Pay TV executive has conceded Foxtel is too expensive but says those who have the platform see the value in its content.

Peter Hudson, CEO of  TV1 and SF (formerly SciFi) was asked why Pay TV in Australia was more expensive than in other countries, when he recently spoke at an Open Channel conference.

“I agree with you it’s are too expensive for today’s market,” he said. “We’ve got to continually put out good product. We’re one piece of what I would call a 100 piece puzzle.”

Comparing the 50% take-up of Pay TV in New Zealand and the penetration in the UK he acknowledged Sport as a key driver of Subscription TV.

“But Australia is a different beast.  We have 4 sporting codes spread right across the country all with different affiliations. Not one is a massive driver.

“We saw the AFL come onto Foxtel this year and be seen as a big driver. It hasn’t been a subscription driver and I don’t think it’s not necessarily because of the sport, but certainly the price. In the economic times we’re currently in, it’s certainly too expensive.”

Current subscription rates for Foxtel are between $45 per and $132 per month.

Foxtel CEO Richard Freudenstein has recently said he wants to see subscription rates rise to 50% in Australia, but at the moment they sit at around 30% and have done for some time.

Hudson says part of the problem is also Australia’s population. Comparing local STV with a population base of 22 million against the US with 350 million is inequitable.

“More people would generate more cash, which would generate more productions.”

Later he told TV Tonight the issue was more one of affordability in the current economic climate than the price of subscription fees.

“We have 30% penetration so we have people who believe it’s not expensive and they see the value in it because they keep spending more on the technology aspects of it with additional IQs and those sorts of things,” he said.

“The issue is driven by economic circumstance and the economy isn’t in good shape. When you have simple things like Electricity Bills increasing, when the choice is between subscribing to Subscription Television or paying your Electricity Bill then probably the Electricity Bill takes precedence. So that’s where the challenge is for us.

“The great thing Foxtel has done was to showcase the Olympics. The offering in the Olympics with the 8 channels and the iPad was unbelievable. That took television to another level.

“I heard more positive conversations in the marketplace about that than anything Foxtel has done in recent times. So that’s what we need. People saying “Wow isn’t this great? Isn’t this valuable? You can get this but you can’t get it somewhere else.”

During the recent TV Tonight Audience Inventory readers indicated “Less ads,”  “More packaging options” and “More HD Channels” were considered Very Important issues, but also gave Foxtel a thumbs up as a “Reliable” and “Trustworthy” broadcaster. 37% indicated they watch Pay TV with the IQ used by 28% of homes.

“The core of the people who have the product love it, and see the value in it. I think it’s the economic circumstances around the affordability of it and collectively the industry needs to work on that,” Hudson explained.

“Be consistent in the content and the quality of the content we deliver and the entertainment value we deliver. It will come. There will be more people subscribing to the AFL next year because it will be more advanced. It does take people a while to change their habits.”

37 Responses

  1. I agree the price is a bit high and I just upgraded to MyStar HD but I don’t use the HD channels apart from FTA ones.

    I do get the whole advertising thing as PayTV would never work on subscriptions alone unless we paid much more each month. And you have to remember on many channels there are limited ads and with Showtime/MovieONE (and other movie channels) there are no ad breaks during the movies. That said the likes of Fox8 are as bad as the FTA channels when it comes to ads.

  2. Too expensive and not much value for money and not enough choice. Paying for commercials sucks too. And no R-rated movies and shows. And movies not in original aspect ratio. And multi-channel FTA offering pretty much what Foxtel broadcasts.

  3. Yes would should be grateful that we get things for free in this country. I guess you get ads so not as free. I enjoy the drama stations ( soho is great). Loving Fox footy at the moment during the finals even though they don’t have their own commentary at the ground. Also I get it for Horse Racing, AFL, NBA, MLB. NFL, EPL and the odd movie. For me their is plenty on.

  4. @Dayman, giarc et al – there are devices you can attach to any media device that allow you to transmit the signal to other parts of the house. It does mean that you cannot watch different things to what the kids are watching in another room, but it would seem to suit the situations you describe?

  5. I love Foxtel.I watch Foxtel more than i ever had this year.With all the reality stuff on the FTA stations.Foxtel is always a must watch.One thing i have been saying for ages is,it’s unfair that Foxtel can’t run like other paytv services around the world.Where they can only show there own product,and not allow FTA stations jumping in and grabing what they want.It’s amazing how much content is on FTA which is made for the paytv audience.Most people would have no idea.FTA in Australia is the best in the world we are extremely spoilt in this country

  6. Was just wondering whether there is any update on an IQ3 and whether that might be a wireless unit – which might make Multiroom pricing obsolete… And are there any ‘deal breaker’ channels O/S that ppl think would be worth Foxtel getting?

  7. One issue with price is multiroom.

    I’ve got a home theatre. Nice big screen ect. However no way am I paying $300 bucks on top of my already expensive foxtel bill to watch the occasional series.

    It’s too much to pay for a little flexibility. If I have paid for a bunch of channels. I should be able to watch them where I want in my house.

  8. I’ve had both Foxtel & Austar depending on where i lived at the time & i’ve only ever had it as a free option or when they were doing a ridiculously cheap deal (no install cost & free for 6 months with no contract, or free for 6 months with a new TV purchase). I only watch the sport & the occasional movie. If the sport package was available on it’s own for a nominal fee i would do it full time, i don’t need or watch anything else & only really watch the A-League & international tournaments. Not having an Xbox & refuse to buy one just so i can watch a bit of football every couple of months.

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