This Media Trends report explores the current environment in which the subscription television sectors of Australia, the United Kingdom and the United States are operating.

1. The growth of innovative and alternative distribution methods continues to offer content producers
avenues to not only reach new audiences across multiple devices, but also to interact with audiences;
enhancing the viewing experience in new and exciting ways.
We can see that media companies continue to diversify through product development, via mergers
and acquisitions and by adapting product offerings to acknowledge current market conditions. The
growing popularity of applications used for the distribution of and interaction with content is also
extending the content producer/distributor/consumer relationship.
In this report we examine not only current industry developments, but also the regulatory trends that
ultimately influence the outcomes of the sector. What we can see is that the popularity of television
continues to parallel the take-up of new products and services. At the same time Governments and
regulators are grappling with issues associated with convergence, the protection of intellectual
property in a digital environment, spectrum re-distribution issues and online distribution trends.
reported its findings into the deal in December
2010 and recommended that it be referred to
the Competition Commission. The Culture
The media and communications industry Secretary, Jeremy Hunt has yet to take up this
continues to embrace technology and diversify option. The European Commission approved
through the delivery of content across multiple the acquisition under the EU Merger
devices in a digital environment. Growth also Regulations in December 2010.
remains tied to access to quality content and
acknowledgement of economic influences. Virgin Media TV powered by TiVo
UNITED KINGDOM Virgin Media has teamed up with TiVo to
launch a converged television and broadband
BSkyB surpasses the 10 million subscriber interactive set top box with DVR functionality.
milestone but still no decision on takeover Virgin reports that the new box will be
available early in 2011.
BSkyB has reported strong growth in revenue,
profit and cash flow for the half year to 31
UNITED STATES
December 2010. Revenue was up 15% to
£3.2bn, operating profit was up 26% to £520m
On-going economic woes result in cuts to
and the take-up of HD services increased by
entry level cable packages
68% year on year. Over the period BSkyB
recorded 140,000 net additions surpassing the With the US economy still struggling and
i
10 million subscriber milestone. unemployment sitting at around 9%, a number
of cable companies have recently taken steps
BSkyB is predicting increased subscriber to meet the needs of cash strapped
uptake following the launch of Sky Atlantic consumers by cutting the price of their entry
which last year obtained exclusive UK rights to level packages. Comcast has cut the cost of
HBO’s entire archive, new HBO programming its entry level package by 25% and Time
and co-production opportunities. Warner has rolled out a TV Essentials
package that has been discounted from
ii
News Corporation is still awaiting approval of $49.95 to $29.99 across various states.
its bid to take full control of BSkyB. OFCOM
Media Trends Q1 2011 February 2011
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2. NBCUniversal, LLC – a vision of the future? HD services under a non-exclusive satellite
iv
agency agreement.
The Comcast NBC-Universal merger that was
approved by the FCC and the Justice FOXTEL available on Telstra T-Box in May
Department on 18 January 2011 creates a
2011
$30BN media company that combines the
largest cable operator and ISP in the US with Telstra will offer 30 FOXTEL channels streamed
NBC Universal, owner of some of some of the to the T-Box from May 2011. The channels will
most valuable television and film content. be streamed unmetered via a BigPond ADSL or
cable broadband service in metropolitan areas
While the deal comes with several where FOXTEL subscription services are already
undertakings, it sets the foundations for available. Some of the channels on offer will
Comcast to fulfil its stated objective to reinvent include FOX8, Discovery, FOX SPORTS Play,
how customers interact with their Movie One and Showtime Premiere. Telstra
entertainment on TV, online and on mobile reported that there are currently about 120,000
devices. An updated Comcast Xfinity iPad app Australian households with a T-Box. As well
allows on-demand viewing and access to live as the 30 channels from FOXTEL,T-Box will
content with an android app planned for launch soon include on-demand television and catch-
v
later in the year. up movies and TV programs.
Broadcasting safe from OTT services for the STV continues to assist Digital TV
next ten years Switchover
A new report from Moody’s Investors Services The latest digital tracker survey reports that
looking at US television competition has 75% of Australians were watching digital
predicted that the main reasons that a new channels in Q3 2010. Free to Air (FTA)
online model won’t be embraced by the Channel 11 launched in January 2011. STV
networks or content producers this decade is continues to assist with the digital take-up in
because of the strength of the economics metropolitan and regional areas throughout
associated with mass market TV advertising Australia by offering access to 200 digital
and carriage-fee models. The 2020 Vision: channels in SD and HD.
U.S. Telecom, Media and Technology report
predicts that lack of access to programming
and costs associated with sports rights will be
the main barriers to Google and Apple’s
success in the OTT area as well as the fact
that the distribution of content in a broadcast
sense is out of their traditional area of Over the top set top box devices are offering
expertise.
iii consumers new ways to receive content and
the gaming consoles are also ramping up
AUSTRALIA functionality.
New supply deal for Optus and FOXTEL FOXTEL Available Via Broadband
Optus and FOXTEL announced a new supply FOXTEL on Xbox360 launched in November
deal that replaces the previous Content Supply 2010. Australian consumers are now able to
Agreement. From February Optus customers watch live TV, catch up TV and order
will be able to get FOXTEL’s iQHD boxes and individual movies and TV episodes to rent
HD channels. Optus will be able to offer without the need for installation or a long term
customers outside its cable area FOXTEL’s contract via their Xbox360. In addition,
Media Trends Q1 2011 February 2011
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3. FOXTEL movie and television content is now
available to over 800,000 iQ boxes. The report notes that alternatives to the Apple
App Store are gaining popularity. These
Boxee Set Top Box stores include: Android Market, Nokia's Ovi
Store, Research In Motion's (RIM's) App
At the recent Consumer Electronics Show in World, Microsoft Marketplace and Samsung
vii
the US, Boxee announced a partnership with Apps.
CBS to sell TV episodes through its software
platform. In the UK Boxee has commenced One of the first app stores made for TV is the
tests with VOD website SeeSaw to offer a Samsung Apps store which recently reported
range of ad-funded and premium content from that it has reached its two millionth TV
the BBC, Chanel 4 and Five via the STB rather application download globally.
than over the web.
Samsung has reported that the most popular
Gaming consoles becoming SmartTV apps downloaded include YouTube,
entertainment hubs Hulu Plus, ESPN Next Level, AccuWeather,
Google Maps and Texas Holdem.
Nielsen research shows while US consumers
still predominantly use their devices for playing The Daily – the reinvention of newspapers?
games there is a trend that non-gaming TV
and video activities are on the rise, meaning News Corporation launched its first digital only
that devices are beginning to be considered as newspaper The Daily, a news application
‘entertainment hubs’. designed for iPads. While The Daily is
available through the Australian iTunes store,
Figures indicate that 20% of Wii owners’ time it is a US publication. In the US The Daily
is spent watching VOD and streaming services costs subscribers 99 cents a week and in
such as Netflix, MLB Network and ESPN 3, Australia it costs just over a dollar a week.
10% of Xbox owners’ time is spent streaming
subscription services with 9% downloading TV Aussie Channel Apps give viewers more
content and movies. 9% of PlayStation3
owners’ time is spent using the on-demand The Lifestyle FOOD Channel has launched a
vi
facility and 4% on downloading TV content. Summer Entertaining BlackBerry app that is
filled with over 100 recipes and inspiring ideas
from some of Australia’s top chefs. The app
also includes video, a facility to save shopping
viii
list ingredients and ‘invite to dinner’ button.
From the online launch of the Apple app store BBC Worldwide has recently released an
in July 2008 to the announcement last month updated BBC News app, a Top Gear app, a
that Apple’s App store had achieved its 10 Teletubbies game app and a Doctor Who
billionth download some two and a half years game app to cater for a diverse audience and
later, the popularity and advancement of the to extend the viewing experience.
app continues at apace.
National Geographic has recently launched the
The Rise of Apps World Atlas app and the Ultimate Dinopedia
app through the iTunes store.
Research firm Gartner has predicted that
mobile store app downloads will increase In January 2011 FOX SPORTS launched a
117% in 2011 and by more than 1000% from new iPad app that streams FOX SPORTS
2010 to 2014 with app store revenue for 2011 News 24/7 live, offers on-demand FOX
expected to exceed $15bn. SPORTS news clips, episodes of FOX
Media Trends Q1 2011 February 2011
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4. SPORTS magazine shows, a ‘staff picks’ video Australia’s First 3D Doco to premiere on
catalogue and extended highlight packages. National Geographic Channel
The app (available through iTunes) has full
screen optimised video display and a ‘watch Australia’s first 3D documentary to air on
ix
later’ function for bookmarking content. television: The Eye 3D will premiere on
FOXTEL’s dedicated 3D channel on 22
The BBC has launched an iPlayer app for iPad February 2011. National Geographic’s award
and Android devices that allows viewers to winning documentary will take viewers inside
watch live TV, listen to radio and watch catch- the world of the Very Large Telescope (VLT),
x
up TV. the most powerful telescope in the world,
which is situated on the summit of Cerro
xii
Paranal in Chile’s Atacama Desert.
Super Bowl XLV most watched TV program
of all time in US
Original production and exclusive content
drives programming decisions on STV which
The Nielsen Company reported that this year’s
will attract viewers to various channels across
Super Bowl broke US broadcasting history
the 200 channel offering.
when over 100 million people tuned in to watch
the Green Bay Packers triumph over the
Top 10 STV channels based on share of xiii
Pittsburgh Steelers .
viewing are FOX8, TV1, The LifeStyle
Channel, FOX SPORTS 2, FOX SPORTS 1,
Disney Channel, UKTV, Arena, Crime &
Investigation Network, and SKY NEWS.
Governments continue to grapple with the
The Top 10 channels (combined with their
regulatory issues associated with a converged
plus2 channels if existing) receive
media and communications environment.
approximately 20% share of viewing. FTA
While reviews in the UK and Australia will
digital multi-channels on average individually
xi address the issues associated with
receive a .4% share of viewing.
convergence the increasing importance of
managing online distribution and spectrum
Programming continues to develop and
shortages are being tackled in the US.
embrace social media to further enhance the
viewer’s relationship with content. At the same
UNITED KINGDOM
time technology continues to offer unique
experiences in programming. UK to conduct Communications Act
review and publish Green Paper by end of
SpongeBob premieres on Facebook just 2011
for fans
The UK Culture Secretary, Jeremy Hunt
In the US, the new season of the perennial recently announced the Government’s
children’s favourite, SpongeBob SquarePants, intention to conduct a full review of the media
premiered on Facebook in the US in January. and communications environment, ultimately
SpongeBob’s 16 million Facebook fans were leading to a new Communications Act. The
able to catch the first episode titled review will be conducted throughout the year
‘Trenchbillies’ the day before it appeared on and will result in the Government publishing a
television on the Nickelodeon channel. Green Paper at the end of 2011, setting out
xiv
the full scope of a new Bill.
Media Trends Q1 2011 February 2011
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5. Dedicated network channel for local news AUSTRALIA
and content
Convergence Review draft terms of
Hunt also launched a new Action Plan for reference
Local Media that proposes a new dedicated
network channel for the provision of local news Submissions for the draft terms of reference
and content to sit alongside existing public for the DBCDE Convergence Review closed
service broadcasters. on January 28, 2011. The review will be
undertaken by a committee of independent
experts and the final terms of reference will be
OFCOM sets goals for 2011 that focus on
released in the first quarter of 2011.
convergence
Classification Reviews
OFCOM Chief Ed Richards recently
highlighted a number of areas of regulatory
A Senate committee is currently conducting an
focus in 2011. Richards said that OFCOM
inquiry into the Australian film and literature
had a number of short term goals related to
classification scheme with a report due 30
three areas, which were copyright in a xviii
June 2011.
converged on line environment, net neutrality
and the re-definition of content regulation in
xv The Australian Law Reform Commission has
the IP video world.
been asked to conduct a review of
classification taking into consideration changes
UNITED STATES
in technology, media convergence and the
global availability of media content. Proposed
Controversial Net Neutrality rules xix
terms of reference have been released.
approved
In the US the FCC approved the controversial
Net Neutrality rules in December 2010. The
rules address the broad principles of Connected TV’s offering new revenue
transparency, where fixed and mobile models for advertisers
broadband providers must disclose network
management practises, not block lawful Connected TV’s are offering new streams for
content, applications or services and not advertisers. In the US Adap.tv is working with
unreasonably discriminate in the transmission TV applications company Flingo on a number
xvi
of lawful network traffic. of new advertising strategies. Flingo has
developed an application with Warner Bros.
Broadcasters encouraged to give up offering consumers with connected TV’s
spectrum for wireless services through access to TV series each with a pre-roll ad
voluntary revenue sharing auctions attached. Another app is a TV Guide that has
videos that are supported by direct-response
The rise in wireless application take-up in the advertisements, where consumers can use the
US is putting pressure on the FCC to free up remote to contact the advertiser by email
xx
spectrum for those services. In January 2011, rather than remembering phone numbers.
Senator John Rockefeller re-introduced a bill
to give the FCC power to conduct voluntary Australian advertisers tip 6% growth in 2011
spectrum auctions of broadcast spectrum.
The bill proposes that broadcasters who The annual Starcom MediaVest Group Media
voluntarily give up spectrum for auction will in Futures survey has revealed that national
turn share the revenue from the sale of that advertisers predict growth in main media
xvii advertising expenditure of 6% for 2011. The
spectrum.
Media Trends Q1 2011 February 2011
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6. report highlighted a second consecutive year • Facebook has launched a new Sponsored
of strong growth following the grim outlook of Stories feature that will notify friends when
2009. The report also shows national people check into a store on Facebook
advertisers predicting that all digital TV Places.
xxi
advertising will increase by a total of 9.8%. • DVD rental and video streaming service
Netflix passed 20 million US subscribers in
2010.
• Ericsson has predicted that mobile
• Since its launch in October 2010 BSkyB broadband subscriptions globally are on
has announced that 3DTV take up has track to surpass 1 billion in 2011.
exceeded expectations with 70,000 3DTV • Research firm companiesandmarkets.com
subscribers now taking up the service. reported that the US and South Korea
• US ecommerce consulting firm Elastic accounted for 66% of total worldwide
Path Software has revealed that 75% of 3DTV sales in 2010.
online video viewers are willing to pay for
certain content with 40% having paid to
access content online in the last year.
ENDNOTES
i
BskyB, http://corporate.sky.com/documents/pdf/latest_results/Interim_Press_Release_1011
ii
Comcast cuts cost of entry level package by 25 per cent, http://articles.philly.com/2011-01-09/business/27018560_1_cable-industry-comcast-customers-
cable-subscribers, 18 November 2010
iii
Moody's sees broadcast TV safe for the next decade, http://www.rbr.com/media-news/research/moody-s-sees-broadcast-tv-safe-for-the-next-decade.html,
3 January 2011
iviv
Optus and FOXTEL sign new subscription agreements, http://www.foxtel.com.au/about-foxtel/communications/optus-and-foxtel-sign-new-subsciption-
agreements-107192.htm, 21 December, 2010
v
Telstra to Offer Foxtel on T-Box in May 2011, http://www.foxtel.com.au/about-foxtel/communications/telstra-to-offer-foxtel-on-t-box-in-may-2011-
114397.htm, 8 February 2011
vi
Gaming Consoles edge closer to serving as entertainment hubs, Nielsenwire, http://blog.nielsen.com/nielsenwire/online_mobile/game-consoles-edge-
closer-to-serving-as-entertainment-hubs/ 15 Dec, 2011
vii
Gartner says worldwide mobile application store revenue forecast to surpass $15bn by 2011, http://www.gartner.com/it/page.jsp?id=1529214, 26 January
2011
viii
Our Summer Entertaining App is here, http://www.lifestylefood.com.au/quickbites/lifestyle-food-launches-summer-entertaining-mobile-app-for-
blackberry, 22 December 2010
ix
Fox Sports View, a game-changing application for iPad, available at the iTunes store from January 6, http://www.foxsports.com.au/other-sports/fox-sports-
view-a-game-changing-application-for-ipad-available-at-the-itunes-store/story-e6frf56c-1225982514551, 5 January 2011
x
BBC iPlayer app for iPad - review, http://www.guardian.co.uk/media/pda/2011/feb/10/bbc-iplayer-app-ipad-review, 10 February 2011
xi
OzTAM National, Surveys 1-10 2010 (ex Easter), Total People, STV Channels and FTA DTT channels (Includes Plus2 Channels)
xii
National Geographic Channel Puts Universe in Focus with Australia’s First 3D Documentary Premiere, http://www.foxtel.com.au/whats-on/foxtel-
insider/national-geographic-channel-with-australias-first-3d-documen-114278.htm, 4 Feb 2011
xiii
Super Bowl XLV Most viewed telecast in US broadcast history, http://blog.nielsen.com/nielsenwire/media_entertainment/super-bowl-xlv-most-viewed-
telecast-in-broadcast-history/, 7 February 2011
xiv
Jeremy Hunt, Oxford Media Convention, http://www.culture.gov.uk/news/ministers_speeches/7726.aspx, 19 January 2011
xv
Oxford Media Convention, Speech by Ed Richards OFCOM, http://media.ofcom.org.uk/2011/01/24/oxford-media-convention-speech-by-ed-richards/, 24
January 2011
xvi
FCC Net Neutrality http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db1223/FCC-10-201A1.pdf
xvii
Sen Rockefeller introduces bill on spectrum auctions public safety network, http://technology.greenpromote.biz/sen-rockefeller-introduces-bill-on-
spectrum-auctions-public-safety-network/
xviii
Parliament of Australia, Review into the Australian Film and Literature Classification Scheme,
http://www.aph.gov.au/senate/committee/legcon_ctte/classification_board/info.htm
xix
Australian Law Reform Commission, National Classification Review, http://www.alrc.gov.au/inquiries/national-classification-review, 11 January 2011
xx
Media Post, Adap.TV Strikes Flingo Deal to Better Monetize TV,
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=143423&nid=122929, 24 January 2011
xxi
Advertisers predict main media expenditure to grow by 6 per cent in 2011,
http://accesspr.com.au/index.php/news/673/56/Advertisers-predict-main-media-expenditure-to-grow-by-6-per-cent-in-2011, 7 February
2011
Media Trends Q1 2011 is created by Infodec www.infodec.com.au for ASTRA www.astra.org.au
Media Trends Q1 2011 February 2011
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