Foxtel’s newest threat to free TV

Foxtel's newest threat to free TV

Pay TV operator to launch internet TV and movies

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published March 14, 2013 12:09 pm AEDT

Foxtel will launch a new service this year that will allow users to watch TV shows and movies on demand through their broadband connections. Consumers will be able to access more than 40 channels and over 200 video –on-demand titles from start up.

Richard Freudenstein, CEO of Foxtel made the announcement today, which will allow consumers to access Foxtel services without the need for a Foxtel set-top box and dedicated connection. The Foxtel On service will relaunch in June as Foxtel Play and consumers will be able to subscribe by the month, with no lock-in contracts.

Packages of Foxtel channels will be available from as low as $25 a month – less than the current basic Foxtel product through a set-top box. A stand-alone subscription movie service is also expected later this year.

While Foxtel's cable and satellite delivery channels will remain the cornerstone of its business, viewing content on other devices is becoming increasingly more common. The Foxtel GO service allows subscribers to view a selection of channels, via Ipads, anywhere they want. Mr Freundenstein said that the app had been downloaded to more than 500,000 devices and an Android version was coming in June with PC and Mac versions shortly thereafter.

For free-to-air broadcasters, like Ten Network Holdings (ASX: TEN) and Seven West Media (ASX: SWM) this represents an enormous threat. With internet-capable TVs already available, consumers will be able to watch what they want when they want, as well as having a vast variety of choice, in a similar way to which they watch free-to-air TV now.

For some time, another company, Quickflix Limited (ASX: QFX) has been trying to establish a business modelled on Netflix in the US, by providing streaming shows and movies to subscribers. Foxtel's latest move could swamp Quickflix and the company will be lucky to survive.

Foolish takeaway

Foxtel's joint owners, Telstra Corporation (ASX: TLS) and News Corporation (ASX: NWS) will likely be cheering the move to internet TV (IPTV), but it could be another nail in the free-to-air coffin.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

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