Choice targets disparities in cost of streaming content in Australia

A new analysis by consumer advocacy group Choice claims Australian customers are being forced to pay much high rates for overseas drama content even when it is delivered online through streaming or on-demand services.

The Choice analysis highlights popular US series such as Orange is the New Black and the Walking Dead as examples of where Australian consumers are paying dramatically more than their American or British counterparts, driving people to overcome geo-blocking and access US websites like Netflix and Hulu.


Choice graphic

“Australians wanting to watch the upcoming season of Walking Dead will be paying up to 376 per cent more than people watching the same show in the United Kingdom,” says Choice Chief Executive Alan Kirkland.

He also accused the government of being “influenced by the local cable industry to bring in laws that prop up out-dated technology and business models at the expense of cheaper internet streaming services”.

Season 2 of popular Netflix series Orange is the New Black currently costs Australians a minimum of $27.26 through Google Play, 219 per cent more than US Netflix customers pay, with iTunes costing 261 per cent more. It claims consumers will pay up to 431 per cent more to access the show through Foxtel’s streaming service Play, calculating the cost per month based on a consumer not already having the service.

The cost disparity is also blamed for driving piracy, with Australia having one of the highest rates of content piracy in the world.

This afternoon Foxtel has hit back at the claims by Choice saying it has made “invalid” comparisons. See the full statement at the foot of this article.

“Time and again we are seeing consumers hit with the ‘Australia Tax’ on digital content. It’s clear the business models forced on consumers by local intermediaries are subjecting Australians to artificially high prices for overseas content.”

“Consumers are asking themselves why they have to pay a premium to Foxtel when they can access and pay a reasonable price for content through legitimate overseas services like Netflix. Despite what some local incumbents have said, accessing Netflix – which will spend $3bn this year paying for content from studios – is legal.

“The heart of this issue is about local middlemen wanting to clip the ticket on popular overseas content rather than respond to changing technology and deliver affordable content online.”

The debate comes on the same day future customers of pay-TV provider Foxtel’s planned broadband service are being warned it will take steps to ensure that its customers aren’t downloading copyright-infringing TV shows and films online.

The move comes amid ongoing debates about how to combat piracy, with the nation’s top teleco players calling on for advertisers to to ban advertising campaigns on websites that host pirated music and movies as part of a new offensive against provider. Earlier this year, Mumbrella revealed a number of major media agencies and clients were advertising on illegal hosting website

Choice however, argues part of the problem is content owners are not making shows freely enough available and cites the new Steven Soderbergh drama “The Knick” which is currently showing in the USA and Singapore but has no announced date for an Australian premier.

“We are concerned that the government is being influenced by the local cable industry to bring in laws that prop up out-dated technology and business models at the expense of cheaper internet streaming services,” said Kirkland.

“Piracy is a problem in Australia but we expect the Government to look to the market first for a solution. Australians struggle to pay a fair price to watch what they want at the same time as the rest of the world. The internet has made affordable content possible but Australian providers are not delivering.”

Nic Christensen 

Updated: Foxtel has this afternoon released a statement in which it says the comparisons made by Choice are “invalid”. Its statement in full:

“Choice have made invalid comparisons between completely different products to justify their claims,” said Bruce Meagher Group Director of Corporate Affairs at Foxtel.

“To compare Foxtel’s service with that of Netflix in the US is nonsensical. Netflix is essentially a library service which, due to its success, has been able to commission a few high quality and popular dramas. So while it is true that consumers can get access to Orange is the New Black and House of Cards as part of their Netflix subscription that’s basically where the new content offering ends.

“To acquire other new dramas US consumers have to sign up to different service providers, and given that drama lovers don’t just watch one show, this is what they inevitably do.

“As part of a Foxtel service consumers can get access to virtually every major new US drama produced, usually within hours of its American broadcast. They also get a huge range of UK dramas, Australian dramas especially commissioned by Foxtel, plus a host of other general entertainment, sport, documentary, news and kids programming.

“To acquire a similar cable or satellite subscription service in the US, consumers would pay a similar price and depending on the bundle structure offered by particular suppliers sometimes more,” Mr Meagher said.

“What’s more, given that Netflix doesn’t sell Orange is the New Black to other US broadcasters, they’d have to have Netflix on top of their cable account if they want to watch that show! They would almost certainly be paying more than Foxtel customers for the same service.

“Foxtel will become even more affordable when it introduces its new $25 entry level package on 3 November.

“Choice CEO Alan Kirkland claimed on ABC radio that Foxtel is protected by a regulatory regime that prevents competition; this is simply untrue. There are no regulations that protect Foxtel from competition and the speculation that Netflix will enter the Australian market shortly is stark evidence of that fact.

“Mr Kirkland objects to geographic licensing of content and claims that broadcasters like Foxtel are “local middle men wanting to clip the ticket.” Leaving aside the obvious point that the producers of content should be entitled to determine how it is distributed and monetised, there are profound implications for the Australian media in this proposal.

“If free to air or subscription broadcasters were not able to aggregate the best international content to attract eyeballs for advertisers or subscription revenues we would not have the resources to invest in Australian content and the TV production sector would largely collapse.

“Last year Foxtel alone broadcast around 70,000 hours of first run Australian content.

“What Choice propose would result in a massive loss of Australian jobs and the diminution of Australian cultural life. Given the interdependence between sectors, it would also have a profoundly negative effect on Australia’s film industry.

“In addition, it would impact our ability to pay significant sports broadcasting licensing fees, seriously undermining Australia’s sporting codes.

“Finally, Choice regularly claims that Foxtel’s bundle model is outdated and a cause of many of the problems they say exist. We would simply make the observation that Choice itself operates a bundle model both through its magazine and online.

“Many Choice reports can only be viewed by subscribers and many others are available at a one off charge equal to almost three months’ subscription, if you ask for one over the phone, the kindly Choice staff member will advise you that you’d be better off buying a subscription!

“Choice know as well as we do that the best way to operate a successful content creating business is to aggregate content and sell it in bundles to customers,” Mr Meagher concluded.


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