Telstra TV: why no built-in tuner dooms streaming device in 'battle for HMDI 1'
Date
August 19, 2015 - 8:50AM
Andrew Colley
When Telstra moved to phase out its T-Box it made a cardinal error which will leave its upcoming replacement Telstra TV device struggling not to be left to rot in cupboards and landfill.
That's not to say that the devices won't make their way into households potentially hundreds of thousands will be included free in bundling deals.
However, whether customers will use them is another question. It's not the quality of the Roku 2 device that Telstra has chosen that's the problem Roku has a good reputation for its slick and intuitive interface.
It's also not the quality of the content given Telstra's decision to allow Netflix​ onto the device.
The problem is that it won't win the battle to be the default device on living room TVs. Industry insiders refer to it as "the battle for HDMI 1" in referring to the first video input source on modern TVs.
And that's because big T made one flawed decision in selecting the Roku 2: it doesn't have a built-in tuner. It may seem a stretch to argue, but a short(ish) history lesson on Australia's internet TV market bears it out.
Early attempts to establish streaming services in Australia were largely financial disasters that landed in the hands of administrators or, if they were backed by established entertainment brands, were aborted.
Who can forget ReelTime​ Media, which went into voluntary administration in 2008, owing its creditors millions of dollars? Or Macquarie Bank-backed video download service Anytime, which struggled to get more than a few thousand subscribers despite contra deals with iiNet​ and then independent cable operator TransACT?
Arguably the most successful of these early pioneers, Quickflix, which celebrated its foray into digital streaming with an expensive bash at a Sydney nightclub, has constantly struggled to stay solvent in spite of leadership from the likes of former Telstra media chief Justin Milne.
High rates of TV and movie piracy in Australia hurt everyone in the local pay TV business but none more so than cash-strapped homegrown digital streaming services competing for customers with low bandwidth quotas.
Netflix​, which could have given Australia's streaming video business a much needed credibility boost, held off launching here as long as possible it already had paying Australian customers using VPNs to circumvent its regional controls without having to pay a cent for content rights in the region, so why the rush?
Seven Network-backed Hybrid TV was the first credible internet TV service offered in Australia, and its TiVo​ set-top box was a top-selling appliance in its early days. Seven has since effectively withdrawn all its support for the business in favour of the FreeView​ Plus platform and the TiVo is no longer distributed.
It's not clear why Seven withdrew its marketing support for the TiVo​. Perhaps because iiNet​ and Optus threw their support behind Fetch TV's rival set-top box? But a cynical person might point out that FreeView doesn't allow viewers to skip commercials.
Indeed, the launch of Fetch TV's set-top box and Telstra's T-Box signalled that Australia's internet TV industry had reached a point of maturity where it could challenge Foxtel's dominance in the pay TV market.
Since then smartphones, tablet computers and, to a lesser extent, smart TVs have spread competition for eyeballs to multiple screens and devices. However, set-top boxes have continued to dominate the living room in most Australians households.
Foxtel had about 2.6 million pay TV subscribers as of last August 2014, Telstra has sold 760,000 T-Box units and Fetch TV is rumoured to be closing in on 200,000. (It's hard to know precisely how many iQ subscribers Foxtel has as it included Presto subscribers in total subscriber numbers it reported last week and, in a worrying sign, declined to break them down further.)
The reason
The reason set-top boxes have endured in the living room is pretty clear, according to pay TV industry insiders: most consumers are lazy and don't want to have to plug in a secondary device and constantly switch away from the source they use to get free-to-air to view content.
The secondary device tends to get forgotten and be used only on weekends or holidays rather than being part of the consumer's daily viewing digest. Furthermore, the technically savvy consumers that might have a fondness for such a gadget would likely know that they can already get the services on the Roku 2 via their smart TV interface, their gaming console or by using a smartphone with Google's Chromecast​.
And while we're touching on that topic, if Foxtel and its 50 per cent owner Telstra are hoping that Presto's brand has the credibility to compete with Netflix​ they need to address problems with the Presto app urgently. On both Google Play and iTunes stores the vast majority of ratings give the Presto app one star and the reviews are, to say they least, eye-watering.
"Crash central. Worst app ever. Keeps crashing and [the] odd time it does work streams sound but no picture just black screen," wrote one reviewer.
"NEVER WORKED E.V.E.R!!!!! I have installed and used a lot of apps over the years and this 'app' for presto is certainly different from all the rest, and here's why: It has NEVER EVER NOT ONE SINGLE TIME EVER IN THE WORLD TODAY WORKED!!!!!!!!!," wrote another.
And in that vein they continue, with nary a positive word from any reviewer.
Sources close to the tender process through which Telstra eventually sourced the Roku 2 have told Fairfax Media that the T-Box was discontinued to give Foxtel's iQ box a clearer run at the middle segment of the market.
The idea was to keep the replacement device as cheap as possible hence no tuner and then secure the best possible content bundling deals for it to target lower-end consumers.
Optus is rumoured to be launching a similar "puck-like" set-top device with Fetch TV in the coming months and you can be sure it will have a tuner.
Clearly, with a device that's starting from behind, getting the bundling right for Telstra TV could make all the difference as to whether its customers even bother opening the box.
