Digital Nerd

Friday, May 27, 2005

Movie downloads one to watch - in Australia

The Australian reports:
JUST as the pay-television business is gaining momentum, a new threat looms: telcos delivering movies and other entertainment programming via broadband.

Telstra plans to start offering Hollywood movies via its BigPond Movies service in June, in direct competition with Foxtel Box Office.

A Telstra spokesman declined to reveal the launch date, pricing or content but said: "There will be a variety of programming." The spokesman asserts this video-on-demand service won't compete with Foxtel Box Office (or Austar's Box Office), pointing to the distinction between watching movies at will on pay TV and downloading films to consumers' PCs.

"This won't be instant gratification," he says, conceding it will take up to 10 hours to download a two-hour film, depending on the speed of the customer's broadband connection. "We think it will be a product that people will warm to; it won't start out as a major thing."

Austar chief executive John Porter points to the paradox of Telstra competing with itself, as the telco owns 50 per cent of Foxtel.

Nonetheless, he identifies broadband as "the biggest competitive threat to our core business in the medium-term".

"It remains to be seen how aggressive Telstra will be in upgrading their network to accommodate multi-channel video, especially in regional Australia [where most of Austar's 502,000 subscribers live]," Porter says.

He questions the ability of giant telcos such as Telstra to source and market programming as effectively as Austar and Foxtel.

"Telcos are technology companies," he says. "We are programmers, product managers and marketers."

If and when broadband does become a viable way to deliver movies and other content, expect the pay-TV platforms to enter that business.

"We're keenly interested in all delivery technologies if they make financial sense," Foxtel chief executive Kim Williams says. "There is a lot of fairly extravagant and exaggerated talk about the speed at which these changes will happen. But if it becomes a business, who's to say we won't be in it?"

Pay-TV customers have demonstrated a remarkable appetite for buying movies on the Box Office services offered by Foxtel and Austar, although these films are available on the platforms' movie channels just three months after their pay-per-view premieres.

Foxtel Digital subscribers have watched more than five million movies since Box Office was launched last year. At $5.95 per viewing, that's a nice little earner, although the company won't say how many of those transactions were from its platinum subscribers, who get two free movies per month.

Since last June, Austar has clocked more than one million movie buys, also at $5.95 apiece, and that's all jam, as its top package doesn't include any Box Office viewings.

Optus provides content such as English Premier League match highlights for its mobile phone customers and has similar deals with Lonely Planet, the Wiggles and the Teletubbies.

"Optus does not see mobile content as replacing TV content," says a spokesperson. "Rather, mobile content provides customers with the ability to personalise content on their mobile phones so that it suits their individual interests and needs for information while they are on the move. New technology, such as the 3G mobile network and broadband internet access, opens new possibilities for how the content can be offered."

The downloading of movies and TV series is a growing fad in the US, but there's no evidence that the Australian free-TV networks are losing audiences as a result.

David Mott, Ten's general manager of network programming, says: "The OC is cited as one of the most frequently downloaded shows [in the US], but Ten's average OC audience continues to grow and the show routinely attracts more than 60 per cent of viewers aged 16 to 24 in its timeslot. It is a real water-cooler show. Fans want to watch it and talk about it together.

"That said, we are keeping an eye on this issue and urging the US studios to clamp down on these sites. As the file downloads are happening in the US, there's not much Australian networks can directly do about it. Increasingly, though, our program supply agreements require us to take steps to prevent illegal copying or distribution of programs and we are working with the US studios to minimise the scope for copyright infringement."

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