Telstra to ban Netflix from T-Box replacement?


Presto Streaming TV and Movies

Telstra are reported to now be moving ahead with replacing their axed T-Box set-top box device with a brand new low-cost unit that could ban streaming from Netflix.

Last September came the news that T-Box – an internet television device and personal video recorder – would be scrapped, but The Australian Financial Review now claims that Telstra has sourced a replacement which would have a primary function of carrying on-demand streaming services.

Hoping to keep the price of the new unit low, there will be no internal hard drive and limited to no ability to store other services such as Bigpond Movies.

Understood to in fact carry free-to-air content as well as BigPond Movies and Foxtel and subscription service Presto, subscribers to Telstra’s new T-Box will be able to access Foxtel’s range of sport channels and premium television and movies for $50/month.

Foxtel offers its own 90 channels, premium TV and movies as a full package delivered in high-definition on its own set-top-box IQ for $120/month on an annual contract.

Presto customers however remain contract-free on a $9.99 monthly subscription service that sees them granted access to a limited range of Foxtel and Seven’s television and movie content, streamed to desktops and tablet devices.

It’s believed that because of this relationship between Telstra and Foxtel, big rivals such as Netflix’s much-anticipated forthcoming Australian service will be excluded from the new device.

A new plan is to see Telstra upsell Foxtel’s IQ3 boxes to their customers who seek more variety in channels, giving the pay TV provider a way to get into the middle market where their older T-Box units have seen success in the past.

Telstra will also be hoping to ease pressure on their copper broadband network by giving Foxtel’s content a push over NBN Co’ coaxial cable infrastructure after they secured the rights to do so following government negotiations over the sale of its copper assets.

The company recently admitted that they were planning on offering tiered IPTV services after being questioned by The Financial Review surrounding their set-top box strategy.

Not giving much else away due to ‘commercial confidentiality’, a spokesperson said: “We’ve been clear that we will continue to invest in media across IPTV, in terms of how we bundle to differentiate our products and services and our continued investment in new growth areas.”

They added: “We want to continue to give our customers access to great content at a variety of price points and on a variety of devices that suits their needs. To this point we envision that we may have multiple devices in the future in addition to our current offerings.”

Foad Fadaghi, Telsyte analyst said that research conducted by his company had found only around a third of consumers are willing to shell out the cash for TV and movie content, with a strong overlap in those who buy pay TV and online streaming services.

Stating that whilst T-Box had seen some moderate success, it hadn’t demonstrated that a sizeable market would exist for cut-down Foxtel equivalents.

He explained: “Perhaps Telstra is recognising that the market for something that isn’t Foxtel doesn’t really exist. It’s not a cut-down version of IQ that works in the market, it is actually something else altogether – web-delivered content such as Netflix. Maybe the new set-top box is a reflection of that”.

With their main entry challenge being alternative online streaming services such as the upcoming Netflix and Stan platforms, they could take note of two previous challengers – FetchTV and TiVo – and learn from any mistakes they may have made.

The TiVo unit’s sales were stopped by its most promising distribution partner over a year ago now in 2013, but FetchTV has made a worthy start with around 130,000 pay TV subscribers, despite that being way behind Telstra’s potential market of 2.6 million subscribers and 760,000 households, reported last August by Foxtel.

At least four vendors have been invited to participate in the RFI for the T-Box replacement by Telstra, and it’s understood that PACE is the preferred option over rivals that include Google and Netgem.

Remaining stock of their current T-Box units will continue to be sold with supply expected to run out some time next year, and Telstra state that all technical support for existing customers is to remain in place.

A company spokesman explained: “The T-Box continues to be central to our entertainment offerings and we’ve added value in several areas such as the launch of Catch Up TV services like SBS On Demand and Yahoo7’s PLUS7 service.”

PACE have not responded to requests for comment.

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