FOXTEL, the Australian pay-TV operator, is set to launch its digital TV service within the next three months, heralding a new era of digital television in Australia. Patrick Delany, director of digital services at FOXTEL, said that the upcoming launch will be “a revolution in television … Australia is not dissimilar to other markets in that the traditional choice is between four to five terrestrial broadcasters, and we are redefining that world with all the choice that our platform has. We are marketing that as a quantum leap.”

The cable and satellite TV operator is going to be bringing a plethora of new services and channels to the Australian market. There will be 130 channels at launch, a number of time-shifted channels, as well 30 audio music channels, 30 channels providing video-on-demand (VOD) with 300 movie screenings per day. It will also include new interactive features such as Sky News Active, an interactive news service; FOXTEL Gamesworld, a new games service; and Sports Active, an interactive sports service enabling consumers to enjoy different features when watching their favorite sports. FOXTEL believes the new set of services will give it a competitive edge.

“We are very much pushing the extra channels, FOXTEL Box Office, Sports Active and Sky News Active as things Australians have never seen before. But, what is inherent in all of that is that the combination gives consumers a new level of choice,” Delany commented.

FOXTEL has not yet announced a pricing strategy for the new service, but Delany expects that it will be announced in the next week or so. The current basic satellite package costs A$48.95 ($37.30) a month and FOXTEL Digital has promised that the entry price will not exceed this mark. Consumers will have flexibility in terms of how they structure their packages.

In terms of growth for the new service, Delany predicted: “Our industry is currently at around 23 percent penetration of our market, and our goals are fairly modest in the sense that the industry wants to reach 35-40 percent by the end of 2008. We haven’t gone into specific numbers but we want to almost double our penetration. You also have to remember that when you go digital there is a phase of converting everyone over. We think there will be a huge growth from the start, but we will also be concentrating on getting existing customers over. All of the indications are that there is huge demand from our subscribers for this product.”

Reinvention

The company, which has close to 900,000 subscribers, believes the digital launch is crucial in terms of reinventing itself. It is significantly expanding the service by more than doubling the number of channels. “For FOXTEL, digital technology is an opportunity for us to reinvent our product. Being able to use bandwidth and return path the way digital enables a subscription service, means that it gives a new breath of fresh air to our category,” noted Delany.

The big challenge for the company will be to make the digital service profitable. With a number of new channels and services, costs are inevitably going to rise. In terms of the main challenges, Delany said: “Australia is a very small market. We have about seven million households. FOXTEL operates in the metropolitan areas. So, our market is a little smaller. The more channels you put on, the higher your costs become. Our big challenge was finding good quality channels at reasonable costs. All of the channel partners we have gone with have come to the party on that and entered into all of our deals in the spirit of partnership where we have shared risk and upside. I think that is a major thing.”

Content Deals

Delany expects that the new digital offer will make it easier to negotiate content deals on more favorable terms. “Like all start-up businesses, we have also been burdened with some pretty high costs from deals that were done a long time ago that we would like to improve over time. We are always in discussions with the studios and a number of the deals are long-term.”

With the launch of the digital service imminent, FOXTEL is reaching a key point in its history as it has the opportunity to bring all the benefits of digital television to Australian consumers. In terms of what the operator would like to achieve in 2004 and beyond, Delany commented: “By the end of the year we will have launched and put in significant marketing dollars, so there will be no one in Australia who does not know about FOXTEL Digital. I hope our major problem will be meeting demand. In terms of the next year, our goal is to have established FOXTEL Digital as the fastest growing category in home entertainment.”

–Mark Holmes

(Mark Furness, FOXTEL, e-mail: [email protected] )

FOXTEL Digital’s channel line-up will give viewers:

• 10 movie services (including FOXTEL Box Office);
• 27 FOXTEL Box Office channels;
• Eight sports channels (including the Main Event channel featuring pay-per-view boxing, wrestling and special events);
• Five kids channels;
• Seven news channels;
• Six music video channels and 30 audio music channels;
• 11 documentary channels;
• Eight lifestyle channels;
• 14 general entertainment channels;
• Three adult services including pay-per-view channels;
• Two ethnic a la carte channels;
• Two Games channels;
• One Digital Help Channel.

Source: FOXTEL