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The future of Foxtel, but not as we know it
by Max Mason
For the first time in history on Sunday night, Australian television viewers had to pay to watch the national cricket side take to the field on home soil.
Having sealed a deal for every ball of Cricket Australia's broadcast rights for a cool $105 million annually, including exclusivity over limited overs internationals and some Big Bash League matches, it's been hard to miss Foxtel's latest advertising campaign, with the slogan, "It's cricket, but not as we know it".
For the past 40 years, Australians have switched on Nine's Wide World of Sports for all international cricket played in Australia. But, Nine dropped cricket in favour of tennis and Cricket Australia opted for a joint deal with Foxtel and Seven, taking a slice of its rights exclusively behind a paywall.
Without a doubt, Australia's summer of sport will be unlike any before it. Behind the scenes Foxtel is preparing massive changes to how it has done business since it launched in 1995. It's Foxtel, but not as we know it.
On the verge of launching its new direct to consumer sports streaming service, where consumers can for the first time buy sports content and nothing else, the Murdoch-controlled pay TV provider is at an inflection point.
While the new service was not ready for Australia's opening one-day international against South Africa in Perth, Foxtel hopes to launch in time for the Test match opener against India next month.
There are clear risks and rewards, as shown by existing Foxtel subscriber Patrick Conaghan and prospective new customer Christopher McClelland.
McClelland has never had Foxtel. He says the cost and make-up of the packages has always held him back. "I'm only really interested in the sport package and not the rest. I'm not really keen to pay $40 to $50 for sport," he tells The Australian Financial Review.
Foxtel's portfolio of local sporting rights, including the NRL, AFL, A-League, rugby union and now cricket are extremely valuable properties. Despite the huge array of sports rights, Foxtel's traditional cable service has struggled to push through a penetration rate of 30 per cent of Australian households.
'Netflix of sport'
The cable TV provider hopes to launch the new service to coincide with Australia's opening cricket Test match against India in December. It had been targeting it's first executive match – last night's one-day international against South Africa – but is stress-testing the product to avoid any embarrassing incidents, such as Optus' FIFA World Cup fiasco.
Chief executive Patrick Delany has outlined his vision to be the "Netflix of sport" and that statement naturally comes with its own connotations; a lot of content, smooth technology and a low price point.
"The other factor is understanding which sports are going to be covered; broadcasting rights move around over time. For me the cricket is going to be a big one. Knowing they're going to be doing all the cricket and high quality coverage is a pretty big attraction," McClelland says.
While McClelland is exactly the type of customer Foxtel is looking for with its new sports streaming product – a younger, more tech-savvy demographic which is used to watching what they want, when they want, at a low price – it carries its own risk.
McClelland has Netflix and Stan, which is 50 per cent owned by Fairfax Media, publisher of The Australian Financial Review, which he may switch off over summer because he'll only have a certain amount of time available to watch anything and he'll be focused on cricket.
But, the young engineer will to ready to switch those two services back on over summer and cut his sports streaming service. "I'll pick and choose based on what I think I'm going to watch the most," he says.
Conaghan presents a different kind of risk for Foxtel. Conaghan, a solicitor from the NSW mid north coast, pays close to $150 per month for Foxtel, largely for sport, but his children tune into the kids programming and he browses the range of news, documentaries and movies.
"I've tried to put together a package that I want, but they have their own packages," Conaghan says. The father-of-two also has Netflix, when coupled with ABC Kids and Google's YouTube, provides plenty of content.
Asked whether he'd keep his Foxtel subscription when the new sports streaming service, expected to carry all sports at between $19.95 and $25 per month, Conaghan, a rugby union, league and cricket fan, is clear.
"I wouldn't think twice about getting rid of it. If I get my sport, the kids they can stream Netflix, and half the time they're on the smart TV and YouTube."
Foxtel is in the process of remaking its identity. The new sports service will not have Foxtel branded – rumoured to be called Kayo Sports, reported by Fairfax Media last week.
It knows what it wants to be, but market forces make the road unclear of how to get there.
Delany wants to turn the traditional Foxtel product into the premium brand with bells and whistles like 4K, a new cricket channel, Fix Flicks to justify a higher price, but at the same time push into a new market that has not had the appetite spend a lot on content.
Foxtel customer research, obtained by the Financial Review, shows it is testing what pricing will be acceptable to traditional Foxtel subscribers that won't churn onto the new sports streaming service.
The potential packaging simplifies Foxtel's offering into four camps: Foxtel Black, which carries all the bells and whistles, Netflix, 4K, iQ4 and VIP customer service for $139 per month; an Ultimate package, which has all Foxtel content for $99 per month; a Sports package with all sports channels plus a mix of entertainment, documentaries, kids, lifestyle and news for $69 per month; and finally a Premium Movies and Drama pack with movies drama and the same ancillary non-sport content included in the Sports package. It also reveals plans to rebrand the Foxtel Now puck to Foxtel iQLite. It's believed the Foxtel Now brand will be phased out over time.
"Fox Sports is a great product but the cost of rights keeps going up," one media executive says.
"Theoretically, if being exclusive to Foxtel is not getting the growth, getting subscribers outside pay TV makes sense. But they have to calibrate it carefully to make sure it genuinely taps a new market. If it's too cheap and too rich, subscribers will substitute it for Foxtel but if it's to expensive or too thin, it won't sell. So it's a tough balancing act."
https://www.afr.com/business/media-...-foxtel-but-not-as-we-know-it-20181031-h17cy1
by Max Mason
For the first time in history on Sunday night, Australian television viewers had to pay to watch the national cricket side take to the field on home soil.
Having sealed a deal for every ball of Cricket Australia's broadcast rights for a cool $105 million annually, including exclusivity over limited overs internationals and some Big Bash League matches, it's been hard to miss Foxtel's latest advertising campaign, with the slogan, "It's cricket, but not as we know it".
For the past 40 years, Australians have switched on Nine's Wide World of Sports for all international cricket played in Australia. But, Nine dropped cricket in favour of tennis and Cricket Australia opted for a joint deal with Foxtel and Seven, taking a slice of its rights exclusively behind a paywall.
Without a doubt, Australia's summer of sport will be unlike any before it. Behind the scenes Foxtel is preparing massive changes to how it has done business since it launched in 1995. It's Foxtel, but not as we know it.
On the verge of launching its new direct to consumer sports streaming service, where consumers can for the first time buy sports content and nothing else, the Murdoch-controlled pay TV provider is at an inflection point.
While the new service was not ready for Australia's opening one-day international against South Africa in Perth, Foxtel hopes to launch in time for the Test match opener against India next month.
There are clear risks and rewards, as shown by existing Foxtel subscriber Patrick Conaghan and prospective new customer Christopher McClelland.
McClelland has never had Foxtel. He says the cost and make-up of the packages has always held him back. "I'm only really interested in the sport package and not the rest. I'm not really keen to pay $40 to $50 for sport," he tells The Australian Financial Review.
Foxtel's portfolio of local sporting rights, including the NRL, AFL, A-League, rugby union and now cricket are extremely valuable properties. Despite the huge array of sports rights, Foxtel's traditional cable service has struggled to push through a penetration rate of 30 per cent of Australian households.
'Netflix of sport'
The cable TV provider hopes to launch the new service to coincide with Australia's opening cricket Test match against India in December. It had been targeting it's first executive match – last night's one-day international against South Africa – but is stress-testing the product to avoid any embarrassing incidents, such as Optus' FIFA World Cup fiasco.
Chief executive Patrick Delany has outlined his vision to be the "Netflix of sport" and that statement naturally comes with its own connotations; a lot of content, smooth technology and a low price point.
"The other factor is understanding which sports are going to be covered; broadcasting rights move around over time. For me the cricket is going to be a big one. Knowing they're going to be doing all the cricket and high quality coverage is a pretty big attraction," McClelland says.
While McClelland is exactly the type of customer Foxtel is looking for with its new sports streaming product – a younger, more tech-savvy demographic which is used to watching what they want, when they want, at a low price – it carries its own risk.
McClelland has Netflix and Stan, which is 50 per cent owned by Fairfax Media, publisher of The Australian Financial Review, which he may switch off over summer because he'll only have a certain amount of time available to watch anything and he'll be focused on cricket.
But, the young engineer will to ready to switch those two services back on over summer and cut his sports streaming service. "I'll pick and choose based on what I think I'm going to watch the most," he says.
Conaghan presents a different kind of risk for Foxtel. Conaghan, a solicitor from the NSW mid north coast, pays close to $150 per month for Foxtel, largely for sport, but his children tune into the kids programming and he browses the range of news, documentaries and movies.
"I've tried to put together a package that I want, but they have their own packages," Conaghan says. The father-of-two also has Netflix, when coupled with ABC Kids and Google's YouTube, provides plenty of content.
Asked whether he'd keep his Foxtel subscription when the new sports streaming service, expected to carry all sports at between $19.95 and $25 per month, Conaghan, a rugby union, league and cricket fan, is clear.
"I wouldn't think twice about getting rid of it. If I get my sport, the kids they can stream Netflix, and half the time they're on the smart TV and YouTube."
Foxtel is in the process of remaking its identity. The new sports service will not have Foxtel branded – rumoured to be called Kayo Sports, reported by Fairfax Media last week.
It knows what it wants to be, but market forces make the road unclear of how to get there.
Delany wants to turn the traditional Foxtel product into the premium brand with bells and whistles like 4K, a new cricket channel, Fix Flicks to justify a higher price, but at the same time push into a new market that has not had the appetite spend a lot on content.
Foxtel customer research, obtained by the Financial Review, shows it is testing what pricing will be acceptable to traditional Foxtel subscribers that won't churn onto the new sports streaming service.
The potential packaging simplifies Foxtel's offering into four camps: Foxtel Black, which carries all the bells and whistles, Netflix, 4K, iQ4 and VIP customer service for $139 per month; an Ultimate package, which has all Foxtel content for $99 per month; a Sports package with all sports channels plus a mix of entertainment, documentaries, kids, lifestyle and news for $69 per month; and finally a Premium Movies and Drama pack with movies drama and the same ancillary non-sport content included in the Sports package. It also reveals plans to rebrand the Foxtel Now puck to Foxtel iQLite. It's believed the Foxtel Now brand will be phased out over time.
"Fox Sports is a great product but the cost of rights keeps going up," one media executive says.
"Theoretically, if being exclusive to Foxtel is not getting the growth, getting subscribers outside pay TV makes sense. But they have to calibrate it carefully to make sure it genuinely taps a new market. If it's too cheap and too rich, subscribers will substitute it for Foxtel but if it's to expensive or too thin, it won't sell. So it's a tough balancing act."
https://www.afr.com/business/media-...-foxtel-but-not-as-we-know-it-20181031-h17cy1
