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Should Foxtel Fear Free-To-Air HD?

Should Foxtel Fear Free-To-Air HD?Foxtel is currently facing competition from Netflix, which landed in the Australian market earlier this year and which has already built a substantial subscriber base, with the arrival of HD on free-to-air primary television services having the potential to create further challenges to navigate.

Roy Morgan Research data released earlier this month revealed that since its arrival Netflix has been successful in luring customers to the Australian subscription and pay TV market, with almost one in three Australian households now having some form of pay or subscription TV, up almost 30 per cent since the start of the year.

While Roy Morgan found that Foxtel has remained relatively stable in terms of customer base numbers, Foxtel has seen its market share drop from a 95 per cent share of homes with pay or subscription TV to 76 per cent since the arrival of Netflix, with Netflix effectively growing the market.

Now, following the introduction of legislation by Communications Minister Malcolm Turnbull yesterday to allow free-to-air broadcasters to deliver programming in HD on their primary television services, Foxtel may well be fighting a battle on a new front.

With the bill introduced to allow broadcasters the flexibility to broadcast upcoming events such as this year’s AFL and NRL grand finals in HD the challenge is imminent.

Free-to-air networks will be able to expand within the HD market, delivering enhanced services to viewers, and potentially providing competition to Foxtel, particularly within sports broadcasting.

Foxtel currently offers up to 37 channels in HD, including a selection of sports channels, and it remains to be seen if some viewers will jump ship following a free-to-air adoption of HD for primary television services.

Foxtel could well be facing increased competition on two fronts – from Netflix in entertainment and free-to-air in sports broadcasting.

As noted by Turnbull yesterday, HD is now “virtually ubiquitous in Australian homes”, with a Newspoll survey conducted in February 2014 finding that 96 per cent of all households had a main TV set or set-top box capable of receiving HD content.

“It is expected that this figure has grown, with high-definition capability standard in televisions and set-top boxes currently on the market,” Turnbull commented.

“With the completion of digital switch-over and the availability of a range of new television services, many Australians now expect premium free-to-air programming to be provided in high definition – especially events such as live sports.”

Meanwhile, Free TV Australia has welcomed the introduction of the legislation.

“This is a win for viewers, as it will give broadcasters the flexibility to screen more premium content in HD,” Free TV CEO Julie Flynn commented.

“In a digital environment, it doesn’t make sense to limit the primary service to standard definition. We welcome this as a first step to allowing free-to-air broadcasters to deliver more enhanced services to all Australians, for free.”