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.”