The Optus example: Brands should use content rights to avert media costs
In this guest post, Henry Innis counters Mumbrella editor Alex Hayes’ opinion that by forcing EPL fans to subscribe Optus has damaged its reputation. But it should have chosen marketing over money.
Optus have gotten a hell of a lot of flak (possibly unfairly) for their handling of the EPL rights. Alex Hayes at Mumbrella pointed out that the whole concept of using content rights to force consumers into a choice between their telcos has essentially damaged Optus’ reputation, perhaps significantly.
This isn’t necessarily true – Foxtel’s basic package sits at around $26 and its sports package is a $25 add-on, with another optional $10 to get them in HD – the cost of a phone package in itself. For watchers of the EPL a Netflix subscription ($10) and an EPL Optus customer add-on ($15) will likely service most of the same needs.
But Hayes has a point that’s pretty critical: by not giving EPL fans an option to engage at least a little with the content they love, the emotional feeling they’ve been given is one of a gun to the head. No one really likes a gun to the head.
Astute commenters have pointed out that Optus needs to do this. It paid over $60 million to secure the rights, after all. How else could it recoup its investment other than in hard, conversion dollars?
Your Foxtel prices are incorrect. $26 basic. $25 sport.
Well said Henry, my 2 c is that this optus deal smells a little like the Game of thrones / foxtel deal that is leading so many subscribers into alternative services, vpns and outright stealing the content from the internet. Australia has a distribution problem. As a telco they have the right to charge what they want, but if they just outright charged 15 a month in an on demand or application platform for Australian based ip addresses, I think that they would make their 60M back and more easily. 500k – 1 million subs at 15 dollars per month is equivalent to 7.5- 15M a month. You could event sell it at half the cost and still make money without holding a proverbial gun to your consumers head.
@Alice fair, my mistake. Point still holds. $51 is pretty much the price of a low-tier phone plan in and of itself.
Definitely. Instead of making a return on the investment , Optus should just build a list of people to send emails to… emails that would never get opened. Free media isn;t really media if no one sees it.
The point is more that Optus is excluding anyone who just wants EPL and not to switch mobile or broadband plans, or who can’t because they are locked into contracts as we are. From what was explained to me by Optus on the FB page, the cheapest option for me is to buy a basic mobile service of around $55 a month and then I can add EPL to my subscription but only watch it on a mobile phone or tablet……sorry but I want to watch it on my LED TV!!! This is so going to backfire on them…..
Basic foxtel is only $25. plus sport $25. = $50 a month.
Im not switching over to Optus. No way
I agree with the author – owning premium content is a great way for Optus to acquire Fetch set-top box customers, which could be done at a much lower cost (to the customer) than forcing a customer to take up a telecommunications package. The data extractable from that new Fetch audience would have a long term value in that it can be translated back into premium advertising options for agencies and advertisers. Basically what Foxtel and Telstra do through MCN. Maybe I’m missing a trick but that seems a more customer-friendly outcome that still allows Optus a way to realise revenue outcomes off the back of EPL.
Great article Henry. Optus overshot by paying too much in the first place. They’re smart enough to run the numbers and recalibrate their pricing and packaging strategy accordingly until it returns dividends. That’s how ‘test & learn’ works in reality. Some win, some lose. Some people will get pissed off along the way.