Prime just one stumbling block for Australian player
ANALYSIS: We may not have quite hit ‘‘peak competition’’ in the television market, but we may not be far off it.
And with a plethora of traditional and internet television providers competing for viewers’ eyeballs and wallets, TV companies are starting to turn their minds to some of the challenges competition has created.
These include how to make it easier for consumers to find out about and easily access programmes now they are scattered across several competing freeto-air and pay-TV services.
Some in the industry believe there will be room for one or two more players to join Sky Television, Spark’s Lightbox, Netflix, Amazon Prime Video, free-to-air providers and movie services such as Stuff Pix in what has rapidly become a crowded market.
Australian low-cost pay-TV provider Fetch TV is the latest to express interest in joining the fray. But if people are hoping for a full-fledged rival to Sky they will likely be disappointed.
In Australia, Fetch sells a set-top recorder that is similar to a Freeview recorder and can access 49 lifestyle and news channels that are streamed over the internet, plus a variety of shows and movies available on demand.
The streaming channels include the likes of BBC First, CNN, The Disney Channel, ESPN and SyFy channel and are divided into four blocks, which cost A$6 (NZ$6.50) a month.
Fetch TV has about 600,000 customers in Australia. To put that in perspective, that gives it less than half the penetration of Spark’s Lightbox internet television service in New Zealand.
Fetch would face three challenges transporting its business model here.
One is that the rights to a lot of the content it has in Australia may already be tied up in New Zealand by Sky and others. Something Sky will confirm is whether it has exclusive rights to Disney’s content, which would put one big hole in Fetch’s line-up.
Another consideration is that Fetch’s business model in Australia has been to get its A$399 set-top boxes out to customers by partnering with internet providers that are rivals to Australian phone company Telstra.
In New Zealand, Fetch would presumably be hoping to work with midsized internet providers that compete with Spark and Vodafone, namely Vocus, 2degrees and Trustpower, which have only 22 per cent of the broadband market, according to IDC figures.
The final big snag is Fetch would need the agreement of free-to-air channel owners including Television New Zealand, MediaWorks and Sky to offer a full line-up of free-to-air channels through a set-top recorder.
Sky spokeswoman Melodie Robinson confirms Fetch would need Sky’s permission to offer Prime, and chief executive John Fellet is non-committal on whether Sky would grant that.
Sky has made Prime available on established platforms such as Freeview, and Fellet won’t want to come across as monopolist. But one industry source says there is simply no way Sky would help a low-cost rival like Fetch build up a viewership from scratch.
The viewing choices in front of consumers may still expand a little further, even if Fetch did find its path to New Zealand blocked.
Amazon Prime Video is available in New Zealand but may well become a stronger player and could compete for local sports rights once Amazon’s retail arm sets up a physical presence with fulfillment centres in the country.
Sky has made its big move cutting the entry price of its satellite-television service to $24.91 a month, by dividing Sky Basic into two services: Sky Starter and Sky Entertainment.
Fellet has signalled it could follow that by also splitting its Neon internet television service into two, one offering television shows and the other movies.
The number of conventional television channels is also growing, with MediaWorks launching a new lifestyle channel, Threelife, next month.
Freeview, Vodafone and Sky are responding to the dizzying fragmentation by positioning their set-top boxes as the ‘‘one box to rule them all’’, by entertaining the idea of integrating ‘‘rival’’ internet TV apps onto their hardware and potentially their electronic programming guides.
Fellet says Sky has talked to both Netflix and Amazon about putting their services on Sky boxes.
A $399 Freeview set-top box that launches next month will be integrated with Lightbox and Stuff Pix, and chief executive Jason Foden has signalled Freeview would have no qualms about doing the same with Netflix.
Fetch TV has the same strategy and is further ahead in Australia, having already integrated pay-TV apps Netflix, Stan and Hayu, as well as YouTube, onto the main menu of its set-top box.
Spark has eschewed set-top box hardware but isn’t missing out on cosying up either, having entered into a marketing and billing agreement that will let people pay for Netflix on their Spark bill.
The question that only TV viewers can answer is whether they really value such integration, or will be happy to search out apps and entertainment without feeling they are choosing from within a walled garden.