Foxtel’s price drop is not a defensive move, it’s an attack

Ian Perrin PhotoIn this guest post ZenithOptimedia boss Ian Perrin argues Foxtel’s recent move to halve its basic package prices is not just to defend it from the threat of new streaming services.

There has been much made of the substantial reductions in Foxtel pricing announced recently. It appears that most of the sentiment suggests that this is a defensive move, designed to take on the multiple streaming services ready to hit our shores. This may well be the case, but my belief is that it’s the opposite.

It’s actually a bold, offensive play designed to actively target the free-to-air networks.

Click to enlarge

Click to enlarge

Foxtel is smart enough to realise that hiding brilliant content behind paywalls and expecting people to pay exorbitant fees for it these days is suicide. The less accessible their delivery, the more likely consumers are to pirate it. And we all know that Australia has one of the highest rates of illegal downloading in the world, which the NBN will only exaggerate.

They are also smart enough to know that the business model of content broadcasting is rapidly changing. What started off as a model designed to deliver mass content that appealed to everyone has moved towards delivering niche content to targetable segments. The next iteration is personalised content in an on-demand fashion.

In this addressable world, advertisers are increasingly expecting to not only reach their audiences, but not pay for those who aren’t. In fact they will set their own prices, sometimes higher, for the right impression. Trading desks have revolutionised how we think about personalised targeting, and while currently confined to the digital world, TV has to be, and will be next.

To do this you need customer data, and right now subscription TV is the only broadcaster who has access to it. Free-to-air networks are hoping the launch of HbbTV will change this, but it’s a large expectation. YouTube rightly argues that it already has more data than either party, but until it delivers high-end content to Australian TVs, they won’t be able to match Foxtel.

Hence why the Foxtel/MCN deal with Quantium is a further step in the right direction.

So the space race has certainly begun. Foxtel is in a unique position of strength, but it may not last long. Its first step is a positive one, but it has to move quickly to deliver advertisers more personalised solutions using its data.

While they understand this, there is still work to be done on execution. I have been a Foxtel subscriber for 13 years now, and yet I am still served retail banners asking me to sign up. Ironically, this is the sort of wasteful advertising that it is uniquely positioning to eradicate.

Ian Perrin is CEO of ZenithOptimedia

Disclaimer: ZenithOptimedia held the Foxtel media account until 2012


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