Presto chango? Could free-to-air tie up help Foxtel counter Netflix?

Alex Hayes headshot 2014Celebrities and VIPs turned up in force for Foxtel’s upfronts last night, but while Chris Hemsworth and The Real Housewives of Melbourne were the star turns, it was a few of the other attendees who turned heads, writes Alex Hayes.

Lachlan Murdoch, Tim Worner and Hamish McLennan walked into a room. That’s not the start of a joke, it happened last night at the Foxtel upfronts, which has triggered speculation the Presto streaming service could be about to get seriously beefed up.

While there wasn’t much surprising in Foxtel’s announcements last night, it was more a case of what you could read between the lines and what was not talked about, Presto.

While the messaging from the execs was around the cut-priced deals coming to market next week, and a fairly decent looking slate of new programming, it was CEO Richard Freudenstein’s almost throwaway line about putting TV content onto Presto, before adding there will be more announcements next week, that grabbed my attention.

Lachlan Murdoch and wife Sarah at the Foxtel upfronts yesterday

Lachlan Murdoch and wife Sarah at the Foxtel upfronts yesterday

It’s no surprise News Corp co-chairman Lachlan Murdoch was in the audience given the company’s 50 per cent interest in the pay-TV platform and ownership of Fox Sports. But there was also Network Ten CEO Hamish McLennan and Seven West Media supremo Tim Worner. Quite the power trio in the realms of Australian media.

It might be that McLennan, a long-time favourite in News Corp, was there because of the Gogglebox co-production announcement, an interesting deal in itself, as well as the joint-deal for V8 Supercars which starts next year. And of course Worner’s presence could have been justified because of the AFL rights, as well as Foxtel commissioning the network for two more series of A Place to Call Home from its production arm.

But then where were David Gyngell or other senior Nine execs? After all they have a pretty significant deal with Fox Sports around the NRL as well.

Since Seven backed out, after initial talks with Nine Entertainment, of the StreamCo project, it has been widely speculated it would hop into bed with Foxtel on Presto. At its upfronts on Tuesday Seven’s programming boss Angus Ross did tell media post-event that there would be an announcement coming “soon”.

Meanwhile, the speculation Foxtel, or half-owner News Corp, would pick up Ten when the government eventually gets round to relaxing the media ownership laws, has been rife to the point of deafening, the sticking point being Ten’s inflated market valuation in the eyes of many. And Ten’s tech head Rebekah Horne has long been an advocate of a more joined-up approach to streaming services from Australia’s TV networks.

prestoSo, what’s in it for them?

Content, and a shedload of it. If the HBO deal extends across streaming services, as Freudenstein hinted it did, then Foxtel already has some pretty solid content to offer. So why not throw in the back catalogues of a lot of other favourite shows from Seven and Ten, and then fast-track the US shows those networks have to Presto as an added incentive to sign up. That’s a pretty powerful offering.

The likelihood is people won’t sign up for every streaming service going, and with Quickflix, Apple TV and soon StreamCo’s offering (whatever it will be called) in market, Australia’s 23 million residents have a lot of options to choose from, and that’s before you get to the likes of IPTV service FetchTV which is increasingly being offered as part of bundled telco offerings from the likes of Optus, iiNet and Dodo.

Add to that the likelihood of Netflix entering the market with its own suite of original programming, and that’s a pretty competitive environment.

And so far Foxtel’s performance has been fairly underwhelming, with rumours of a somewhat lacklustre subscriber takeup swirling after it halved its subscription price from $19.99 to $9.99. Coincidentally the cost of Netflix in the US.

So buddying up might be a way of protecting those revenue streams, at least in the short term, and creating the platform with the most content, both local and international, and if content is fast tracked it would cut piracy and tempt people to spend their cash with the service rather than paying for a VPN and then Netflix.

However, Foxtel will want to protect and grow its premium subscriber base, where the real money lies in the short term, and it made a big deal of the new Australian content it is commissioning to that end. Sports rights will also be an increasingly important part of the conversation, so we can expect to see more pressure piled on the government over the anti-siphoning list as well.

The new Box Sets channel offering which Foxtel was keen to trumpet last night, shows it understands the desire to binge on series, and if that can be made available to the masses online, it’s a lucrative opportunity.

The pay-TV giant showed last night it is going to get seriously aggressive in the market, and is looking to pioneer the kind of innovation the free-to-air channels are trying to hold back, like programmatic trading.

If this deal does come to pass then it’s an example of unprecedented collaboration between massive media companies. Of course there’s nothing like an unprecedented threat to your business model to sharpen the mind.

Alex Hayes is editor of Mumbrella


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