Foxtel lowers pricing in a bid to grow its customer base

Foxtel announced today a whole new lineup of channel packages and pricing alongside plans for its new IQ3 set-top box and broadband internet offering which it hopes will drive more customers to subscribe in what is a challenging and ever-changing entertainment environment.

The problem for Foxtel

With such a significant announcement there is a lot to consider for both Foxtel viewers and the corporate outcomes that the business is trying to achieve here.  In the fast and furious world of subscription TV there’s two key figures that matter more than almost anything else; Churn rate and ARPU (Average Revenue Per User).

The Churn rate indicates how many people are leaving Foxtel, cancelling their subscription, while the ARPU helps understand just how much money is coming into the business.

This time last year, it is reported that the Churn rate was around 14.2 percent, while the ARPU sat above $100 ($103 according to one report).

With today’s announcement, it appears Foxtel is taking the “get less from more” approach, with prices dropping likely to cost them revenue on existing customers, while the low point of entry should encourage more to sign up.

The competitive market

In 2014, our homes are connected to faster broadband than ever, our mobile and portable devices are on super-fast internet, our TV’s are bigger, and our content delivery options have grown enormously.  From catch-up TV services, to dedicated streaming services (Such as Quickflix or the Channel 9/Fairfax venture StreamCo) as well as the illegal download and streaming options of torrenting and utilising VPN services to access content – consumers have a lot of options.

Foxtel has one of the best multi-platform offerings in the market.  It’s guide allows you on any device to check the schedule and record content on your home IQ box, the Foxtel Go application allows you to access your channels from anywhere, either live or on demand via a tablet or mobile – these are compelling options that add great value to a Foxtel subscription.  However, there’s still a high cost of entry.   It seems that is the issue Foxtel is looking to address

New Plans & Prices

The biggest ongoing shift for Foxtel is the base package.  At $25 it’s a pretty simple entry-level price and offer.

Six channels have been removed from the base package (FX, SoHo, Nickelodeon, Cartoon Network, Disney Channel, Lifestyle You), while seven channels move out of the options and into the base package (Disney Junior, Nick Junior, Boomerang, TVN, [V] Hits, MTV Music, MTV Dance.

Sport is now just $25 to add on (per month) with other packages at $10 or $20 a month to bolt on.

What this means is many people will be satisfied with their base package and can reduce their costs, while others may add on a few channels and pay the same amount.

In terms of the all important ARPU, it would seem unlikely Foxtel can maintain that high rate.  In reality a user paying $100 or more will rejoice in the incremental saving.  Personally, my $134 monthly cost will reduce to $90 for the same features.

Foxtel’s attempt to keep me paying that amount is to offer me the Showcase channel and new “Box Sets” offering as part of my plan.

Existing subscribers will all get some benefit, and that will be outlined in a letter to you in the next week.  However, like all things, the real value is in taking a good look at the channels in each pack and choosing what you really want to pay for.  In my family, just the idea of re-thinking the expense and channel use will likely result in a reduction of price down to $70 (Because I really don’t need the sports channels which I’m paying for)

All in all, it’s worthwhile all existing customers checking out what’s on offer from November onward.

Box Set programming

If you’re a fan of watching lots of a particular show, going back to back – then the Box Set option might appeal to you.

Offering a range of different programs, people with Foxtel Go installed on their device, or using an internet connected IQ Box can watch what they want when they want.

If you don’t have those internet options the Box Set channel will run the programs and seasons in continuous form.

Programs available will be:

Available live and in Anytime

• Game of Thrones – Seasons 1-4
• The Sopranos – Seasons 1-6
• Big Love – Seasons 1-5
• The Newsroom – Seasons 1-2
• Rome – Seasons 1-2
• Band of Brothers
• Entourage – Seasons 1-8
• Wentworth – Seasons 1-2

Available in Anytime (On-Demand)

• Getting On
• Looking – Season 1
• Girls – Seasons 1-3
• Angels in America

New IQ3 Set Top Box

Finally, Foxtel today announced more details about their soon to be released IQ3 set-top box.

Looking smaller than the current IQ boxes, the IQ3 is described by Foxtel as a “hybrid”, to seamlessly blend content from broadcast and IP.

What this will allow is a wider range of interactive apps (currently the “red button”) such as Foxtel Tunes, Fox Sports News Active Sky News Active and Multiview.

The box will have a brand new look TV guide, and offer features like start-over which allows you to go back to the start of  a show even if you’ve missed the beginning, The ability to record up to three shows at once while still watching other programs, as well as WiFI to finally break the TV box clear from a hard wired or power-line connected network.

All in all, a pretty significant day for Foxtel. Is it enough to stop the churn?  Only time will tell.