What is going on with Foxtel reducing their retail prices? The exhibition rights holders for showing movies in Australia (known as Distributors) demand minimum revenue guarantees from cinemas, payTV operators and free to air TV networks which mean effectively guaranteeing a share of wallet or minimum number of a la carte subscribers. The minimums are set very high to deter new entrants. Its effectively a way to achieve price fixing without the ACCC having a smoking gun that allows them to take action against anyone. The rights to show USA movies outside the USA are usually sold to a global distributor for a fixed price. This cost isnt exactly falling. Foxtel recently announcing lower retail prices which given the minimum guarantee structure says that the distributors are facing a cut in revenue because Foxtel have enough market power to say we are seeing less revenue from movie subscription channels because customers would prefer to pay per view or steal your movies This says to me the distributors have all just taken a massive haircut for Australian payTV revenue. But perhaps this is Foxtel priming the pump for the contract renewal with Village Roadshow which I think is probably up for renewal by the end of this year. Foxtel announce price reductions now for NOVEMBER? In the IT industry thats pulling an Osborne named for the company who announced their second model just after releasing the first, saying it would be smaller, faster and cheaper that the first model. People stopped buying the first model and the company went broke. Foxtel have announced a better (new set top box), cheaper (half the price more or less) service available in November which is a couple of months away. No one in their right mind would sign a 24 month contract with Foxtel right now. Village and the other distributors are getting a share of the zero growth in revenue of zero. Village are trying to push the pay per view agenda by agitating for Copyright Law changes to drive up demand. Foxtel are making their Linear Channel content less attractive by attempting to win the right to insert 20 minutes per hour of ads. Looks like a trend is emerging. Interesting times.
Posted on: Fri, 12 Sep 2014 07:55:46 +0000
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