Opinion
This morning on ABC News Breakfast, a nationwide TV program broadcast on ABC News 24 (Foxtel Channel 202), Choice CEO Alan Kirkland leveled a number of damaging accusations against subscription television provider Foxtel. Among these allegations were accusations of monopoly-inspired price fixing, protection from competition via regulation and anti-competitive practices.
Kirkland compared Foxtel pricing to Netflix pricing, despite the latter not being available directly in Australia, and he defended the practice of accessing the US-based Netflix via a virtual private network, which essentially tricks the all-you-can-eat content streamer into allowing an Australian to access the service. Various sources claim 200,000 Australians are currently access Netflix this way.
Kirkland’s accusations were spurious at best and, most pernicious of all, were laced with a smug invective. Choice is a consumer advocacy publication so it has a remit to weed out dodgy practices, like mislabeled refrigerators and the extended warranty scam, but it has no right to question the pricing structure of a legitimate business such as Foxtel and to demand some sort of communist approach to content distribution.
Organisations like Choice have fueled the insane hatred of Foxtel espoused by the technology blogs, forums and online commenters, which have chosen to point the pitchfork at Foxtel as a scapegoat so they can self-justify their illegal content piracy and geoblocking circumvention (which is of nebulous legality but appears to be fair enough).
“Foxtel is too expensive, so I should be allowed to pirate Game of Thrones.”
“Netflix isn’t available in Australia so I should be able to pirate House of Cards.”
“Foxtel goes and buys up all the content and then refuses to sell it piecemeal so I should be able to pirate The Walking Dead.”
“Foxtel packages up its Showcase premium channel with channels showing movies in French and Polish so I should be able to pirate Orange is the New Black.”
This is the crazy logorrhea of the pirating class. A collection of elitist, tech-savvy youngsters who believe they should have all the content they want, all the time, at a price they will choose. The inescapable truth is that all these ‘reasons’ for piracy are just excuses thrown into the wind to self-justify their nefarious activities. Unfortunately for Foxtel, these seeds have been pollinated and developed and are now multiplying across the populist news sites and social media.
Foxtel is the only broadcaster that shows any interest in securing the rights to these shows, which are phenomenally expensive to produce and require a packaged, pay as-you-go business model in order to fund them all collectively. Those with long memories will recall the abysmal contempt the free-to-air networks showed for the viewing public back in the days of Channel Nine broadcasting The Sopranos, Channel Ten showing Dexter and Channel Seven holding the rights to Six Feet Under.
Episodes start-times vacillated from week-to-week, they were littered with commercial breaks despite being intentionally produced for seamless consumption, you were constantly at the capricious whim of of the network and one year, Channel Nine promoted the beginning of The Sopranos‘ third season only to welsh at the last and show a replay of the second season in its stead.
It was an atrocious milieu and Foxtel saved us consumers of premium content from this quagmire. And its reward for this has been the constant derision of self-appointed bastions of broadcasting socialists, always demanding more, more and more for less, less and less.
Foxtel respects content by showing it in high definition, often within hours of its local broadcasting, commercial-free and with on-demand access via its brilliant Foxtel Go desktop, smartphone and tablet app. It charges a fair fee for this product in order to fund broadcasting deals, innovation and profitability. If you don’t want to pay for Foxtel or wait for the Blu-ray box set or for sale through iTunes then, please, go ahead and pirate it — I actually don’t care about piracy one bit — just don’t try to fool us into thinking you are doing that for any reason other than you are too cheap to pay for the content you want.
There is nothing worse than self-justification because it proves you are trying to deceive yourself.
This author is on Twitter: @Patrickavenell
Choice media release regarding Foxtel pricing (9 September 2014)
Latest analysis from consumer advocacy group Choice has found Australian consumers are forced to pay staggeringly high premiums for repackaged content even when it is delivered online through streaming or on-demand services.
“Australians wanting to watch the upcoming season of Walking Dead will be paying up to 376 per cent more than people watching the same show in the United Kingdom,” says Choice Chief Executive Alan Kirkland.
Season 2 of the popular Netflix series Orange is the New Black currently costs Australians a minimum of $27.26 through Google Play, 219 per cent more than what US Netflix customers pay. Consumers will pay up to 431 per cent more to access the show through Foxtel.
“Time and again we are seeing consumers hit with the ‘Australia Tax’ on digital content. It’s clear the business models forced on consumers by local intermediaries are subjecting Australians to artificially high prices for overseas content.”
“Consumers are asking themselves why they have to pay a premium to Foxtel when they can access and pay a reasonable price for content through legitimate overseas services like Netflix. Despite what some local incumbents have said, accessing Netflix — which will spend $3 billion this year paying for content from studios — is legal”
“The heart of this issue is about local middlemen wanting to clip the ticket on popular overseas content rather than respond to changing technology and deliver affordable content online.”
In some cases, consumers simply can’t access shows they want to watch from an Australian provider. New Steven Soderbergh drama The Knick is currently showing in the USA and Singapore with no announcement for local release in Australia.
The Government has proposed introducing an industry-run internet filter and making internet service providers responsible for policing downloads to curb illegal downloading. Choice is instead calling for competition and market delivery issues to be addressed to allow consumers to easily pay a fair price for online content.
“We are concerned that the government is being influenced by the local cable industry to bring in laws that prop up out-dated technology and business models at the expense of cheaper internet streaming services.”
“Piracy is a problem in Australia but we expect the Government to look to the market first for a solution. Australians struggle to pay a fair price to watch what they want at the same time as the rest of the world. The internet has made affordable content possible but Australian providers are not delivering.”
Foxtel group director of Corporate Affairs Bruce Meagher responds to Choice (9 September 2014):
Choice has made invalid comparisons between completely different products to justify their claims.
To compare Foxtel’s service with that of Netflix in the US is nonsensical. Netflix is essentially a library service which, due to its success, has been able to commission a few high quality and popular dramas. So while it is true that consumers can get access to Orange is the New Black and House of Cards as part of their Netflix subscription that’s basically where the new content offering ends.
To acquire other new dramas US consumers have to sign up to different service providers, and given that drama lovers don’t just watch one show, this is what they inevitably do.
As part of a Foxtel service consumers can get access to virtually every major new US drama produced, usually within hours of its American broadcast. They also get a huge range of UK dramas, Australian dramas especially commissioned by Foxtel, plus a host of other general entertainment, sport, documentary, news and kids programming.
To acquire a similar cable or satellite subscription service in the US, consumers would pay a similar price and depending on the bundle structure offered by particular suppliers sometimes more,” Mr Meagher said.
What’s more, given that Netflix doesn’t sell Orange is the New Black to other US broadcasters, they’d have to have Netflix on top of their cable account if they want to watch that show! They would almost certainly be paying more than Foxtel customers for the same service.
Foxtel will become even more affordable when it introduces its new $25 entry level package on 3 November.
Choice CEO Alan Kirkland claimed on ABC radio that Foxtel is protected by a regulatory regime that prevents competition; this is simply untrue. There are no regulations that protect Foxtel from competition and the speculation that Netflix will enter the Australian market shortly is stark evidence of that fact.
Mr Kirkland objects to geographic licensing of content and claims that broadcasters like Foxtel are ‘local middle men wanting to clip the ticket’. Leaving aside the obvious point that the producers of content should be entitled to determine how it is distributed and monetised, there are profound implications for the Australian media in this proposal.
If free-to-air or subscription broadcasters were not able to aggregate the best international content to attract eyeballs for advertisers or subscription revenues we would not have the resources to invest in Australian content and the TV production sector would largely collapse.
Last year Foxtel alone broadcast around 70,000 hours of first run Australian content.
What Choice propose would result in a massive loss of Australian jobs and the diminution of Australian cultural life. Given the interdependence between sectors, it would also have a profoundly negative effect on Australia’s film industry.
In addition, it would impact our ability to pay significant sports broadcasting licensing fees, seriously undermining Australia’s sporting codes.
Finally, Choice regularly claims that Foxtel’s bundle model is outdated and a cause of many of the problems they say exist. We would simply make the observation that Choice itself operates a bundle model both through its magazine and online.
Many Choice reports can only be viewed by subscribers and many others are available at a one off charge equal to almost three months’ subscription, if you ask for one over the phone, the kindly Choice staff member will advise you that you’d be better off buying a subscription!
Choice knows as well as we do that the best way to operate a successful content creating business is to aggregate content and sell it in bundles to customers.