A Foxtel bundling offer. Photo: Foxtel

[Via Satellite 05-20-2015] Foxtel, a leading media company in Australia jointly owned by Telstra and The News Corporation is looking to keep pace with new trends in the video industry. The company provides content using the Optus C1 and D3 satellites, as well as cable and broadband. With consumer video behavior changing, Foxtel is vying to evolve as well.

The Top Trend

Mike Ivanchenko, director of product at Foxtel, told Via Satellite that the company sees the convergence of broadcast TV with Internet-delivered programing, subscription Video on Demand (VOD), and mobile options as the most significant trends shaping the broadcast industry today. Foxtel’s approach to meet these changes is the iQ3 set-top-box (STB), which launched two months ago. The STB combines Free-to-Air (FTA) with rentals, show recording, and Wi-Fi connectivity along with other features.

“We anticipate satellite delivery will continue to play a major role and have designed our cable and satellite service to take advantage of it for a large population of our subscribers. However, we’re conscious that the hybrid environment must be addressed, which is why we put so much effort into designing our iQ3 to take advantage of this new era in broadcast,” said Ivanchenko.

Foxtel has recently experienced a solid lift in subscriber activity across cable and satellite, as well as its Foxtel Play Internet service and Presto Subscription Video on Demand (SVOD) service. Ivanchenko said the cable and satellite increase has come during a period of great transformation for Foxtel following a significantly reduction in entry level pricing; the launch of a subscription TV, home phone and broadband bundle; and an increase in access to premium content.

“The pace of change in the video distribution has moved from glacial to explosive,” Sam Rosen, practice director of cloud content and Over the Top (OTT) video at ABI Research, told Via Satellite. “On the producer side, video service disaggregation — in which sports leagues, content providers, networks and third party OTT services can go direct to consumers — has enabled new offerings, including light Pay-TV offerings. On the consumer side, this has enabled a combination of existing services with newer, lighter, a-la-carte or auxiliary offerings. The net result is a bit of a video ‘farmer’s market’ complementing existing services, where the average transaction size drops while the number of transactions increases. This model is more accurate than that of cord cutting, which only looks at the challenge from one point in the ecosystem and fails to see the overall rising spending.”

Rosen added that the desire for convergent networks is a defining factor of large Merger and Acquisition (M&A) announcements in recent times, such as that of DirecTV and AT&T in the U.S. or the aggregation of France’s Orange into a conglomerate with multiple networks types including cable, satellite, fiber, copper and mobile. The challenge for operators today is to develop integrated services with the most cost effective and efficient delivery mechanisms while simultaneously paving the way for continued evolution of the viewing model, he said.

New Services

Ivanchenko said Foxtel has plenty of scope to grow services, which doesn’t necessarily require satellite technology. He said Foxtel is continuing to launch Standard Definition (SD) channels, and is now up to 36 channels in High Definition (HD). Many of the HD channels carry movies and sports content. According to Ivanchenko, Foxtel is Australia’s largest provider of HD channels, and will be looking to broaden its HD offering on an ongoing basis. The leap to 4K, he said, is still some time away for Foxtel.

“At the moment 4K is still being refined across the industry as evidenced by the lack of content being shot in 4K. That’s said, we are keeping an eye on developments in the space and if there is a demand for it, then it’s certainly something we’d explore; however, we don’t have any news on next steps,” he said.

Addressing Piracy

Ivanchenko said Foxtel is seeing progress in its efforts to curb piracy, which has been a major challenger for the company. Foxtel praised the Australian government’s decision in December 2014 to legislatively address the issue of online piracy and is taking steps of its own to discourage the practice.

“While piracy rates show increased numbers each year, the actual percentage of pirated vs. legitimate content viewed seems to be stabilizing as education of potential copyright infringers is starting to have an impact,” Ivanchenko said. “The growth of new, lower priced, easy to access sources of content, such as Presto, together with Foxtel’s policy of showing popular international shows day and date with their U.S. or U.K. broadcast, will encourage people to access content legitimately.”

Rosen noted that piracy also adapts based on technology changes, consumption methods and content availability. While control word sharing — or card sharing, where modified STBs granted access to content — was the historically favored method, now new methods have arisen.

“Today, the prevalence of broadband means that content redistribution is more common, in which the entire video is captured at some point in the video rendering chain, and redistributed as over the top video on the Internet via an authenticated service,” he said, adding that ways to address such practices are coming along as well. “All in all, there is also a transition from one-way content protection to two-way content protection, in which better control of the devices is available.”

Rosen said decreasing the content window from its premier and international distribution is an important way content providers and distributors can seek to decrease piracy.

“Making content available when consumers want/expect it can help decrease the demand window for those who are motivated based simply on popularity and being ‘in the know,’” he said.