Australian SVOD service Presto, has become the first major casualty of Australia’s streaming wars with shareholders Foxtel and Seven West Media calling it quits on the business amid a highly competitive market.
Foxtel will instead slash the price and revamp the packages of its internet protocol service, Foxtel Play, which will include sport and movies at much lower prices, to take on the likes of global subscription video on-demand (SVOD) service Netflix and local player Stan, which is 50-50 owned by Nine Entertainment and Fairfax Media, publisher of The Australian Financial Review.
Seven West Media, on Tuesday, confirmed the sale of its half of Presto to Foxtel after it failed to meet expectations of the two major shareholders, who launched the joint venture in late 2014.
Foxtel chief executive Peter Tonagh said the pay giant wants to rethink the way it targets the bottom end of the market rather than through a “me too SVOD service”.
“Our view was that rather than keep pursuing a standalone product, in what’s a highly competitive market … that it would be better for us to capitalise on our brand, capitalise on the platforms we have in place and in particular capitalise on the content rights we have,” Mr Tonagh said.
“It’s probably partly a view of ‘Hey, let’s not just try and be a me too. But equally, let’s play to Seven’s strengths’ … Seven is very good at producing great content.”
Mr Tonagh said that research the pay business had undertaken, suggests that consumers who want a cheaper IP-only product, and those who want the premium cable and satellite service, are different, but that’s not to say there will be zero cannibalisation.
New Foxtel Play subscribers may “dip in and dip out” when they want content, cancel when they go on holidays and resubscribe later, or add and subtract packages constantly.
“We’re comfortable that we will get additional growth from having a lower price proposition.”
Foxtel Play will launch in December, with Presto set cease on January 31st, 2017.
