Catch-up app Foxtel Go appears set to herald changes that will allow users to download and store content on a tablet or mobile for a month.
At the ASTRA Conference this week CEO Peter Tonagh hinted at plans when he announced a new Foxtel Kids app, launching in December.
“This will provide access to a great range of content from trusted brands such as Disney, Discovery, BBC and Cartoon Network and all will be available both by channel and on demand,” he said.
“In a preview to the future of Foxtel Go, it will allow kids and their parents to download programs and store them on a tablet or mobile device for up to 31 days.
“By downloading the app and filtering content by their children’s ages, parents will know that their kids will only have access to age-appropriate programs. Parents will also be able to set limits on viewing time.”
Also during his speech Tonagh conceded errors with the iQ3 had plagued too many customers.
“It is no secret that there were problems with the launch of iQ3,” he said. “A significant number of customers did not have a positive experience. Addressing these issues has been a top priority for me since I started back at Foxtel and I am pleased to report that we have updated the software in the existing fleet.
“The new software code is being rolled out and is due to finish later this week. It eliminates 41 of 42 of our priority issues and the boxes are now stable and performing well.”
Meanwhile he also reiterated Foxtel as a major contributor to the Australian economy. This week the Pay TV sector announced a record $893 million invested in local television production over 2015 / 16.
“We employ 2700 Australians directly and thousands more indirectly. SKY News maintains a vital role in maintaining a healthy democracy. FOX Sports enables Australia and is to engage with the sport they love. And the broadcast fees that we pay help the sporting codes to thrive and develop the challenge of the future,” Tonagh continued.
“We directly support grassroots sports through the Tim Cahill Academies and through the Foxtel Viva sevens rugby union program. We provide an outlet for Australia’s creative communities and opportunities to develop new skills for the cast and crew of numerous original programs.
“In many different ways, they explore questions about what it means to be an Australian today. On Foxtel Arts, we promote performers, artists, companies and institutions throughout the nation.
“We support Actors Equity, writers and Directors Guild, like performance Australia and the Australian Film and Television Radio School to recognise great Australian talent and foster the talent of the future.”
Peter Tonagh, CEO Foxtel transcript courtesy of ASTRA (includes typos):
Good morning. I’d like to begin by acknowledging the traditional custodians of the land on which we meet today, Gadigal people of the Eora nation, and pay my respects to their Elders, past and present.
Bill Gates once famously said, “We always overestimate the change that will occur within the next two years and underestimate the change that will occur in the next 10.” And from my experience that is right.
It is certainly the approach we used to thinking about the future at Foxtel.
In short we must continue to fully understand the evolving needs of Australian consumers, we must continue to deliver the services that they want while building on the trends for the future and we must create the flexibility to rapidly adapt to those trends and business models that we currently can’t foresee.
Core to our response to today’s disruptive change is a return to the core DNA of our business, the characteristics on which we have built up our success, a commitment to our customers, a passion for great content and an obsession with innovation.
Today I want to outline for you the latest evolution of Foxtel’s strategy.
A strategy that will allow us to succeed in the short term by delivering our customers the television experience they’ve come to expect from us. But it is also a strategy that will enable us to excel in the longer term by adapting our business to meet and exceed the desires of customers of the future. First thing I’d like to emphasise is that at Foxtel we embrace, and thrive on competition and change.
When we began 21 years ago, we were the great disrupters of the TV industry, and from that moment forward we have been at our best when we are challenging, and being challenged, especially in times of dramatic change.
You might say, there has never been a more exciting time to be a provider of video entertainment.
Our viewers have more choice than ever before, and rightly, they are exercising that choice.
The competition between Foxtel and the recently arrived SVOD players is more nuanced than many would have you believe.
Sure we compete in some respects, but our services are fundamentally different in ways that make us quite unique.
The services do not compete for live and linear viewing, viewing that represents the vast majority of Australia’s current viewing habits. And of course, that live and linear viewing is especially significant in sport and news. For the genres in which our products compete more directly such as drama, our proposition is distinct.
More exciting for me, the emergence of SVOD services creates great opportunity for us.
Now, for the first time, many more Australians have shown they are willing to pay for the right television proposition, that can only be a good thing for Foxtel.
There continues to be a number of misconceptions about the relative strengths and capabilities of various players, this is by no means a complaint, clearly it is our job to better communicate the unique strength of our product. We need to, and we will, work harder at that.
But reading media reports about the services launched in Australia you could have been forgiven for thinking that on-demand viewing had been introduced to Australian consumers for the first time.
The truth is that Foxtel was then, and is now, a leader in on-demand content through Foxtel Go, Foxtel Play and Foxtel Anytime.
At Foxtel, we currently offer 99 of last year’s top 100 Australian box office movies. Our competitors, combined have around 30. What’s more we have available more first-run programs in a month than Netflix shows in a year.
More importantly, we have what they do not, an amazing and growing slate of award-winning original Australian drama productions.
And we provide our customers with more choices than anyone else.
Take the example the first episode of season six of Game of Thrones.
420,000 viewers watched at 11 AM on Monday morning, precisely the same time it went to air in the US.
A further 310,000 watched the prime-time screening on showcase that evening.
By the end of the series almost 500,000 additional viewers had watched that episode. Via encore screenings, time shifted on their iQ, catch up using Anytime, on a mobile device using Foxtel Go or streamed via IP on Foxtel Play.
This explosion of viewing choices resulted in an average audience of around 1.2 million viewers for every episode across the series. This was the largest audience for any Foxtel show in our history.
That is the power of great content. Despite this wide array of viewing options, Foxtel continues to be seen by many as a traditional linear broadcaster, with both customers and noncustomers alike unaware of the on-demand options that we have on offer for them.
For others, the on-demand service needs more work. One of the most frequent complaints to me from viewers is that this month they are no longer able to access Game of Thrones on our on-demand service or that they are unable to download it to their iPads to view on planes or out of home.
We clearly have more work to do both on the service and in changing perceptions. And rest assured, we are working hard on it.
To kickstart that effort, I am delighted to announce we have entered in a new long-term agreement with our partners at HBO. An agreement that will give us more extensive and exclusive access to the great library of HBO content.
We will have five times the number of hours of HBO that we currently have and every series we have will be there in full all the time. And, in time, every series will be available to download to tablets and smart phones.
Foxtel will continue to be the home of HBO in Australia. In addition to great HBO shows that a part of the Showcase channel, our customers will be able to catch up and stream their favourite HBO series, any time, anywhere.
Yes, Game of Thrones any time, 24 hours a day, 365 days of the year, across all devices. Along with the rest of the highly acclaimed HBO library.
Another initiative that highlights our responsiveness to consumer needs, I am delighted to announce that we will launch a dedicated Foxtel Kids app in December, just in time for the Christmas holidays.
This will provide access to a great range of content from trusted brands such as Disney, Discovery, BBC and Cartoon Network and all will be available both by channel and on demand.
In a preview to the future of Foxtel Go, it will allow kids and their parents to download programs and store them on a tablet or mobile device for up to 31 days.
By downloading the app and filtering content by their children’s ages, parents will know that their kids will only have access to age-appropriate programs. Parents will also be able to set limits on viewing time.
And all no extra charge to our Kids pack subscribers.
I’m confident there will be a huge hit with children and parents alike.
But let me step back and consider audience behaviour today.
There is no doubt that the buzz at the moment is about new modes of delivery and consumption ñ on demand viewing, binge consumption, viewing on mobile devices and the like. This phenomenon is real and exciting.
It is underpinned by technology but ultimately it is about putting consumers in control.
Let’s not lose sight of the fact that at least for today, consumers view the vast majority of video content live and linear on a television set in the lounge room of the family home.
That is via subscription and Free to Air television as we traditionally think of them.
In fact, according to OzTAM and Nielsen, around 77% of video is watched live, in home, on a television set. And that rises to over 84% if you include catch up within a seven-day period.
And even on Foxtel Go, 80% of our viewers on mobile devices is live, linear channels.
In the UK, Ofcom reports that the decline of live, linear viewing has been a little steep but there is some evidence that the rate of growth in on-demand viewing has slowed in the last two years.
The trends are real. Even among 18 to 24-year-olds in Australia, the only age demographic where there is really significant viewing of video on smart phones and tablets, viewing on those devices is still around half of that done live or catch-up on the television.
And of course the mix of viewing varies between genres.
Today, around 98% of sports viewing is what is live on a linear channel. The reason for this is simple ñ the best way to watch clear, live, high definition an interrupted sport now, and long into the future, is via broadcast television.
Just ask an EPL fan.
With drama, on the other hand, we are approaching 50% of viewing being time shifted or on demand with some shows being as high as 65%.
A big driver in the change patterns in drama is binge viewing. We have addressed this need with the successful launch of our Boxsets channel in 2015. The Boxsets channel and its accompanying on demand services have been hugely popular with our customers.
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Next month we will launch another channel, appropriately called Binge. Similarly, we have offered pop-up movie channels such as Harry Potter and Fast and Furious channels from earlier this year. That is just one reason that the movie’s audience is up 20% year-on-year.
On September 30 we will launch a phenomenal Star Wars pop-up channel which will carry all seven Star Wars movies in the lead up to the eighth film.
For many years to come, Foxtel will continue to do what we have done since day one, which is to deliver high quality, reliable media channels with the world’s best content and the world’s best brands. But we will continue to expand and improve our range of viewing for all subscribers across all devices.
And we will continue to innovate to anticipate and meet the changing needs of Australian consumers. As of today, Foxtel services are in around 3 million Australian homes and as of last year, the cable and satellite subscribers grew by nearly 5% through new sales and low levels of churn. We think that is sound evidence that the current strategy is working.
But our new strategy that will ensure we are set up to succeed in the new, highly competitive world of IP services, especially as the NBN rolls out.
So, let’s start with our purpose. Put simply, Foxtel’s goal is to effortlessly connect Australia to all the stories they love. The ‘story’ element is obvious ñ at Foxtel, we have always been passionate about content and we always will be.
We recently made a commitment to significantly increase spending on new Australian content across all genres. New dramas like ‘Secret City’ and ‘The Kettering Incident’ have joined our current powerhouses such as ‘Wentworth’ and ‘A Place to Call Home’.
You may have seen an announcement about a new drama feature called ‘Australia Day’, currently shooting in Queensland and starring Bryan Brown and Matt Le Nevez.
We also have six new drama projects in development and I’m pleased to announce we have just remit production on a major new event series for 2017. Foxtel, with Fremantle Media Australia will produce a reimagining of the historic Australian novel ‘Picnic at Hanging Rock’. It is another bold and ambitious project, another iconic Stratton story, and I’m sure it will captivate our subscribers when it premieres next year.
We also have a rich array of new and returning lifestyle and entertainment shows.
This year, Foxtel will spend over $125 million on local Australian productions, that is before taking into account the huge investment in news and sports.
We have an unrivalled sports offering which is what Fox Sports audiences are up 7% year-on-year with NRL double that. Last Saturday, the Sharks and Storm game created a new live audience record with an average audience of 480,000.
From now until at least 2022, we know we have every match of every round of AFL and NRL live and ad free during play. And two thirds of the matches are exclusive to Foxtel.
We have amazing coverage of motorsports, rugby union, golf and so much more.
By adding three new high-definition beIN Sports channels and three English club channels and three English club programming blocks to the existing A-League programming, we have the best football offering in the country. Delivered reliably on our world-class broadcast channels.
Our investment in sport means Australia is have access to thousands of hours of sport that otherwise would never be seen. The money that we in Fox Sports pay to sports rights holders goes to clubs around Australia to help them excel at the elite level, but it also goes to support grassroots development of young players and to build communities.
The ‘effortlessly connect’ part of our purpose is all about our customers. On one level when we talk about connecting, it is emotional, delivering our customers the content they are passionate about. I think we pass that test flying colours.
But if I’m being honest, recently we have not delivered on the ‘effortlessly’ part as well as we aspire to and that is where a lot of our future focus will be.
We continue to develop our technology and delivery platforms. We have a huge focus on improving service experiences for our customers, which frankly have not been up to scratch. And we are focused on being more flexible in the way we make our great content available to consumers.
Let me flesh out that last point. Millions more Australians are now willingly paying for content, but at the price that is right for them. If we want to take advantage of this opportunity, we need more flexible packages and more attractive entry prices. We need to let consumers experience for themselves the great value of more complete Foxtel service.
To open up the lower end, I can reveal that from December, for those customers who wish to bring their own device and bandwidth, Foxtel will launch an exciting new price model.
For customers that connect with an IP device such as a connected TV, Fox will offer a compelling new packaging line up with price point that can bet with those of SVOD players. Because we don’t have to provide or installer set-top box for those customers, there will be no need for subscribers to sign up to minimum term contract.
These new packages will create a new level of flexibility with five entry-level packages. There will be whether to drama and entertainment there is, +1 each for Lifestyle, Documentaries and Kids. Each will provide a strong library of on demand and catch up content with the benefits of the familiar linear channel services.
Customers will be able to add sports and movies. This means lower cost access to movies and significantly lower cost access to sports. It also means IP customers will be able to directly access series like Game of Thrones, through a significantly lower cost entry package.
This will be initially available to customers who bring their own device, but the intention is to increase customer choice to our new low-cost device, puck.
It will have better search and better recommendation and a more contemporary interface. We intend to bring this to market in 2017.
It is obvious that IP streaming services with their lower cost and contemporary interface are attractive to many customers but will not be attractive to all. As our EPL customers will attest, Australia’s broadband infrastructure is not suited to delivering traditional premium quality of the Foxtel iQ offering.
The millions of households without Foxtel iQ packages will continue to enjoy the superior quality of service that comes from having a Foxtel set-top box and the full Foxtel customer service experience.
Alongside the low-cost devices, we will continue to develop and enhance the iQ set-top boxes.
It is no secret that there were problems with the launch of iQ3. A significant number of customers did not have a positive experience. Addressing these issues has been a top priority for me since I started back at Foxtel and I am pleased to report that we have updated the software in the existing fleet. The new software code is being rolled out and is due to finish later this week. It eliminates 41 of 42 of our priority issues and the boxes are now stable and performing well.
The next iteration will deliver a new version of the iQ3, with the same software and functionality but more processing power. And we have begun work on the next generation of set-top box which I like to refer to, in the parlance of today, as the iQ6S.
It will have many features that set it apart from anything else on the market.
I have previously flagged their intention that both will be open platforms. We will also welcome SVOD and music streaming and free-to-air catch-up services. In many ways this is no different to our practice of carrying the ABC, SBS and other free to air channels. We don’t benefit commercially but it improves the experience of customers.
With powerful search engines and the linkages to content metadata, customers will be able to find whatever they want and seamlessly move between platforms to enjoy their favourite shows.
The final piece in the puzzle is the triple play offering of television, broadband and telephony. This enables customers to get great deals on all three services with the convenience of one bill.
But most importantly, our customers will also know that the devices and networks have been designed to optimise both broadcast and broadband viewing experiences. Our customers should expect nothing less from an entertainment company focused on delivering high-quality entertainment.
I am pleased to announce that from next month we will formally launch a service over the NBN and we have already begun rolling out some great new offers at competitive prices.
Foxtel Platinum customers from now can receive unlimited broadband and standard and national calls for only an additional $75 per month, while other Foxtel customers can get the same service for $85 per month.
Offers like these are a fantastic way to acknowledge and reward our most loyal and valued subscribers.
From its beginnings just over 20 years ago, Foxtel has developed into an amazing business. It has become a great success and I’m confident our strategy will guarantee our success into the future. And it is important that we do succeed.
Foxtel is a major contributor to the Australian economy and a major contributor to the cultural and creative life of our nation.
We employ 2700 Australians directly and thousands more indirectly. Sky News maintains a vital role in maintaining a healthy democracy. Fox Sports enables Australia and is to engage with the sport they love. And the broadcast fees that we pay help the sporting codes to thrive and develop the challenge of the future.
We directly support grassroots sports through the Tim Cahill Academies and through the Foxtel Viva sevens rugby union program. We provide an outlet for Australia’s creative communities and opportunities to develop new skills for the cast and crew of numerous original programs.
In many different ways, they explore questions about what it means to be an Australian today. On Foxtel Arts, we promote performers, artists, companies and institutions throughout the nation.
We support Actors Equity, writers and Directors Guild, like performance Australia and the Australian film and television radio School to recognise great Australian talent and foster the talent of the future.
We help children and young people through our support for the Murdoch Children’s Research Institute, fight Cancer Institute, Bell Shakespeare Education Program, Australian Indigenous Mentoring Experience and Street TV, which allows homeless young people to develop confidence and skills.
We honour Australia’s First Peoples through our Reconciliation Action Plan and support for a number of Aboriginal and Torres Strait Islander organisations and businesses.
We engage in debates about public policy and touching important issues such as piracy and copyright protections that support innovation and investment in the creative industries of the future. We do this because we care about Australia’s future.
A successful, prosperous and open and creative Australia is good for our business, so we must invest in people and cultural assets to keep the nation strong.
Most fundamentally, all of the individuals who make up Foxtel care about our present and about the legacy we leave to future generations.
We are thrilled to work with our content partners to bring the best of the worldís news, sport and entertainment to Australian. In a globalised world, our customers expect nothing less.
In such a globalised world, it is important that we are telling Australian stories, hearing Australian accents and sharing Australian perspectives. Our industry has many challenges, but with every challenge is an even greater opportunity.
Our team at Foxtel, together with our amazing industry partners, will embrace these opportunities and ensure that we thrive and grow as a great Australian company, supporting a great Australian industry. Thank you.