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.
- Published by David Knox
- on
- Filed under Subscription, Top Stories
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
Recently FoxFooty have shown how they can be innovative even without exclusive sport coverage, and have done it well.
Tend to agree with most posters here, the repeats esp on Lifestyle batch of Channels is tedious at times. You can prob get away with it on Kids shows like Dora, Mickey Mouse Clubhouse, etc., but sometimes the ‘new seasons’ are still at least 18mths old. I’m encouraged hearing about recent Fast-Tracking, and I think as a selling point of difference this is where Foxtel can target and specialise in that ‘reliability’ aspect – if done properly of course! The key driver overall in Aust is sport, and if Ch9 and Foxtel can arrange the cricket then that will help, but the A-S List hampers them in terms of exclusivity. An undertanding of ‘affordability’ is different to applying a strategy to address it, so hopefully those who need to know at Foxtel take this article and postings constructively.
the one thing that I think really needs to change is IQ and Multi-room. you get charge $15 per multi room and then $10 for IQ. my foxtel bill is $71 for the packages and another $65 for IQ and Multi-room. How can they charge anyone twice for the same product, I don’t think you should have to pay extra for multi-room just for IQ
and why are they allowed to charge ABC news 24 under there HD channel’s? I know it’s a HD channel but it’s free to air. just like the other abc and sbs channel’s. why is kids and music package together? why can’t music be package with entertainment and Kid’s package alone (maybe even have FMC added)
the pricing is to much and have a few times considered ditching it, but then there are the show’s I watch that aren’t on Freeview. and I agree with Bazza it’s great there are so many channel’s but with the amount some channel’s run replays to fill in time wouldn’t it be better to combine some channel’s? why is there +2 for food but not for home. there channels are all over the place and should be shuffled into a better order. and why is there lifestyle you and stlye… they show the same shows, and often the same as E
all the news. movie, sports, doco channels are together but the lifestyle channels are scattered, as are the entertainment channel. and why not launch a channel that just shows animations like the Simpson’s, family guy etc. and please get rid of the talent shows on FOX8
If your not happy, ring and ask for a discount. I’m paying $76 per month for the Sports HD package which is normally $102.
I’m happy with the current Foxtel pricing, but for those who don’t want that they should have a separate pricing system. They could do it like this – Entertainment Channels $10 p/month p/channel, Movies $15 p/month p/channel and Sports $20 p/month p/channel. That way if you only want sport say Fox Sports 1, Fox Footy and ESPN, if would cost you $60.00 p/month. You would have to pay for each channel individually and thus have “Choice” on what you watch. As a trade off you get not grouping (FS 1, 2, 3 counted as one channel), no free on demand or catch up etc.
My friend in the US has FiOS, which is part of Verizon.
Considering you can get 385 channels + 110HD channels for $90/month, we are being ripped off here in Australia.
@ unclepete is on the money here. I understand why they do it but the packages aren’t convenient.
If I were to get it, it would be for the AFL games and talk shows but then I’d probably end up a single man again.
Well we can’t have that happen, can we?
Why cant they just provide all the channels for one flat fee of say $60 per month?
+ 10 for your IQ & HD
Why is there no real competition in Australia? What happened to Optus Vision?
No interest in signing up with Foxtel, whenever I go to someones house wo have it, I can never find anything of interest. (OK maybe Banged up Abroad)
If it wasn’t for the Sport, we wou;ld not have it, absolute crap on, went to a friends house last Sat Night and they have the Platinum package, we flicked through each channel, bar the Sports and there was nothing worth watching , today they did what we did go the basic package(because you have to) and the Sports package
I have never had Foxtel and probably never will. I have stayed at a friends for a week and there was nothing I watched on their Foxtel that makes me want to sign up and give away my hard earned money. I also don’t want to pay for television that has commercials in it that makes money for them as well. I don’t quite understand how that works to be honest. Also when there’s no competition, companies can charge premium prices.
Absolutely correct, we are being ripped off compared to overseas cable TV
“If Foxtel want to increase their uptake then there is an easy and simple solution… have individually priced channels.”
Spot on unclepete, I’m seriously looking at cancelling my Foxtel because of the take it or leave it attitude with the various packages which dont address my viewing choices. Look at it this way, 30% of audience watching what Foxtel tells them they want, or a much higher audience watching what they want to and pay for.
I had to cancel my Foxtel subscription after about 14 years after I moved to an apartment building that isn’t wired for Foxtel (apparently Foxtel charges quite a bit for that now).
Cant say I’ve missed it. There are other (legal) ways of getting most content (Apple TV is one).
The only sport I watched was MLB (baseball) and NHL (ice hockey). Both are available on the Apple TV, iPhone, iPad & PS3 (as is NBA I believe) for around $120 a season for every game streamed live (not just the few chosen by Fox Sports or ESPN). A much better option for me.
Foxtel is much more expensive than STV in other countries. They operate on much high profit margins but because of the cost have much lower penetration. With the smaller population means their costs are very high per household
The basic package is basically just a connection charge. There is nothing worth watching on it, and it is the same nothing that on Eleven, Go! and 7 Mate. Then you have to pay a lot for decent dramas, movies and sport.
In most countries the connection and most channels are much cheaper. But you pay a lot more for Sport e.g. Sky may be fairly cheap in UK but their Premier League package costs a packet. The anti-syphoning list stops that sort of model working in Australia because Foxsports can only get exclusive rights to foreign sports and local soccer (which came along after the list was drawn up).
The main problem for Foxtel is that the internet and DVDs are already a cheaper way of getting the drama and movies that you want to watch, when you want to watch them. If the NBN succeeds in getting people for fork out a fortune for high speed unlimited broadband then Foxtel’s model will completely collapse. They will end up having to compete with Telstra as a broadband company bundling retail broadband with content on the NBN And with Telstra being a major shareholder in Foxtel, and having been screwed over by Murdoch and Packer for decades with content deals, they won’t be keen to allow that.
Foxtel need a restructure of the channel & pricing plan. I’m on the sports pack, but never watch the other non sport channels so I’m paying $70 a month for sport. However there is plenty of content I would watch on other channels if only I had the option to purchase single channels or to design my own Foxtel package. Come on Foxtel be innovative & at least trial it?
The main thing I subscribe to Foxtel for is sports- AFL, Super 15, 4 Nations, NBA, NFL, Netball (coming soon), NHL (subject to CBA) and International Cricket. Weekends I love to sit down on the couch and watch the AFL and use my remote to record NRL matches. So Foxtel is good value for money. For the sports fan, it’s great.
People who argue it’s mostly re-runs haven’t looked at cable in a long time. There’s plenty of fresh content every day. I think it’s great value for money … and, no, I don’t have the sport channels!
The reasons why I dropped Foxtel this year were:
– There was no basic IQ/IQHD box, I live in an apartment building with a single satellite aerial feed to each apartment. In order to have IQ on satellite, you need aerial two feeds. I would have been happy with a box than can only record one channel bus I got stuck with the standard non IQ box.
– The new channels were predominately shows taken from existing channels and played in a very high rotation.
– There is a great deal of US and UK content available, however Foxtel played reruns of their own shows to the brink of death (Law and Order Franchise) and they played what we’d seen earlier in the year on FTA.
– There was no channel selection options, I had basic, plus an additional three entertainment packs, (no sport, no movies, wasn’t able to get HD). Out of all the channels I had, I watched maybe 10-12 of these, the others I was forced to get as part of the packs, and the the popular channels are purposely spread over numerous packs to make you pay more.
– The weekend programming was almost as bad as FTA.
To echo others in here, it’s not the ‘affordability’, it’s the bang for your buck. Too many junk or unwanted channels in overly restrictive packaging options.
We can debate the actual cost and whether it represents good value or not, but I really think that exclusive, premium sport really is the key driver for future growth of pay-TV on this side of the world.
In the UK, Sky have spent literally billions over the last decade on Premier League football tights; undoubtedly that has had a big impact on the significantly higher market penetration of pay TV. Also, for about five years now, the only way to watch live domestic and international cricket has been to subscribe to Sky Sports. And Formula 1 motor racing – which has always been more popular and had much more exposure in Europe -is now shared between free to air (BBC) and pay television.
I’m not saying this is necessarily a ‘good’ thing (usual issues: the sporting bodies generally can extract much more money but it can mean lower exposure / audiences and those who can’t pay clearly lose out) but I’m sure has been the single, overriding factor driving subscriptions for pay TV in Britain.
Not only too expensive but also not a necessity anymore now that we have all these other wonderful channels such as 7Mate, 7TWO, GEM, GO, ONE etc etc. I have never…and will never pay for televison, Foxtel or otherwise….
This is the main thing stopping me from having Pay – although it’s not the “affordability” per se, it’s the ridiculous pricing system that forces garbage we don’t want along with what we do. For example, for me to have the ten channels I really want from Foxtel, they have cunningly placed them all into different “packages” so that I would be up for the full $132/month and with a bunch of channels I would simply never watch.
If Foxtel want to increase their uptake then there is an easy and simple solution… have individually priced channels. Have a minimum spend of about $50/month, but all channels are individual and not in packages and people select the ones they want up to (or above) that value. Premium (popular) channels get charged at a higher rate than the cheaper ones.
And please don’t try to tell me that the technology does not allow them to do this (as one cocky Austar salesman did). If they can move channels from one package to another (as they regularly do in an attempt to rip more people off further) then this type of pricing is possible.
Hell, they can even keep some packages as people are silly and believe they are getting better value (people think more channels = better value, even if they do not watch 3/4 of them) – but smart people should be given this option.
I don’t think it’s affordability, it’s value for money. We had it for years but gave it up when we realised we really weren’t getting much value for the money we were spending. We never watched sport though (no-one in this house is interested), and I do think the key to getting far more people subscribing is having more sport exclusively on Foxtel.
What a long-winded way to say that 20-30% of the population see this as an effective child minding tool. In our circle of friends and family, those are the *only* people still using pay TV. The rest abandoned it ages ago.
We had pay TV and never will again, not in its current form. It’s 80% reruns of old shows that you can now see on FTA multi-channels. The movies aren’t aired any sooner than you can see them on other media and when they are, they are on too high of a rotation (yet never on at an appropriate hour to watch). The doccos are also on high rotation and you can see much the same things on ABC and SBS for free. The broadcast EPG is more accurate most of the time as well and the FTA PVRs more versatile.
About the only channel we miss are the music channels (though not their vile VJs). But then, the radio uses less power and we are working on cutting back on that anyway.