“OR How Networks & Content Creators Can Prevent Piracy and Grow Revenue Via Subscriptions”
Tym Lawrence
Senior Sales Engineer
I’m Australian. I like “Game of Thrones.” And I’m far from alone.
When the “Game of Thrones” season four finale came out in June, the massively popular HBO program was downloaded by my fellow citizens roughly 1.5 million times in the 12 hours after the show went to air, according to TorrentFreak.
As reported by the Australian Broadcasting Corporation (ABC), that makes it the most pirated program in our nation’s history.
The episode was available at a premium for Australian Foxtel subscribers hours after the program aired in the US (Foxtel is Australia’s largest cable television company). But clearly this wasn’t enough.
Foxtel itself says that about 500,000 Australians watch each episode via a paid subscription, while another half a million download it illegally.
Half a million people out of a total Australian population – between 15 and 65 years – of 15.5 million? That’s over 3% of the adult population breaking the law by doing exactly the same activity!
Although I’m not going to admit anything, if I did download this episode, I’d be in good company.
Who is to blame?
The ABC also quotes Erin Turner from Choice (an Australian consumer advocacy group) who says Foxtel “has an outdated business model” and can only blame itself. She points out “There are few choices. If you want to watch Game of Thrones for example, Foxtel is the only place to go.”
Turner continues that Foxtel “expects people to pay for a whole range of products when they may want [just] one. You’re getting Real Housewives of every city, rather than just Game of Thrones, which you want.”
She concludes: “Ultimately the problem is there are few competitors to Foxtel in Australia.”
This is probably why only around a quarter of Australian homes, 25 to 27 per cent, subscribe to cable television, according to the mUmbrella Australian media site.
This may change as a result of the forthcoming pricing decrease that is expected as part of Foxtel’s “triple play” launch (pay TV, broadband and telephone). But then again, it may not. After all in the United States, high-speed Internet connections have out-paced cable subscriptions for the first time – more evidence that consumers are growing increasingly weary of having to pay for hundreds of channels of content they don’t want to watch.
What’s the best way to address this?
As Gizmodo points out: prevention of piracy comes down to pricing and availability. “Make content cheap and available quickly on different devices and you quickly dissolve the reasons everyone illegally downloads content.”
Google Australia agrees. According to a previously unpublished letter to Communications Minister Malcolm Turnbull, Google acknowledges Australia’s piracy problem, and even suggests a solution:
“We believe there is significant, credible evidence emerging that online piracy is primarily an availability and pricing problem…We would encourage the Government to promote new business models and a free marketplace for legal purchasing of content.”
A marketplace for users to purchase or subscribe to specific content? Just take my money, please. Just recently, I’ve seen an article indicating that HBO could pocket up to $600 million more a year if the network figures out how to put its content online. This is according to a report from Barclays Capital released in July 2014.
The Barclay’s Capital report suggest that HBO could sell subscriptions to “windowed” content that would be available six months to a year after it first aired, but at $11 per month versus the $15 cable price. The other option would be to sell digital subscriptions that give immediate access to its shows, but charge an even higher price for the privilege—about $18.
An online subscription service where I can pick and choose my premium content? I’d love to see this happen – and so would the people who set up Take My Money HBO. Interestingly, an analysis of the #TakeMyMoneyHBO Tweets showed the average person would pay US $12 a month, or about $145 a year, for online-only access to HBO content.
Of course, there are channel conflict and licensing challenges to overcome. As Nick Ross, from the ABC, wrote:
“It would be an interesting test case for HBO to stream direct to Australia – cutting out Foxtel – to see what happens. Would HBO make more money from cheaper subscription downloads than it would from a fat Foxtel contract? We’re unlikely to find out anytime soon – the current business model evidently works very well so why undercut it and annoy your business partners? For now.”
As I see it, it’s going to have to happen sooner or later, and when it does I’m sure that Zuora, will be there to assist. After all, helping media companies grow revenue through subscriptions is what we’ve already done for companies such as Fairfax, Financial Times, News UK and RTL Netherlands.
Summer is coming.