This week Telstra relinquished their digital streaming rights for the AFL, handing them to Kayo, the sport-based streaming service owned by Foxtel:
This development is interesting for several reasons.
Foxtel itself is owned by News Corp (65%) and Telstra (35%), so before handing the rights to Kayo, Telstra was effectively competing against itself, as it had a stake in both Kayo and AFL Live Pass, where Telstra streamed their digital rights. So by handing these rights to Kayo, Telstra drives the audience towards a purpose built streaming service, which aggregates the potential audience and makes sense from a business perspective.
For example, if a consumer only wants AFL, the Live Pass option could prevent them from getting Kayo. However, with the Live Pass option removed, the Kayo subscriber base will increase.
However, if you only want AFL and not all the other sports, you are now left with no option but to get Kayo, and this involves an additional cost for many people, as the Live Pass came free if you were a Telstra customer. An important difference here however, is that Live Pass only worked on screens 7-inches or less, while Kayo is available on screens of any size.
To soften the impact of having to pay more to get AFL, Foxtel have made the kayo subscription available to Telstra customers for only $5 per month, which is a significant reduction from the base subscription of $25. However, this discount only lasts for 12-months, after which time it reverts to the basic $25 per month.
However, I'm a Telstra customer, and I like AFL, meaning I was eligible for the $5 discount subscription. However, I was also a Kayo subscriber paying $25 per month. Accordingly, I cancelled my existing $25 per month Kayo subscription and waited for it to lapse. Then, I signed up for the $5 discount subscription through my Telstra account, and hey presto, I'm now saving $20 per month for the next 12 months on my Kayo subscription.
This is important because it shows how consumers will act according to commercial self-interest to get the content they want.
The news also suggests Telstra are moving out of sports rights as part of their media strategy. They have already moved away from NRL, and they will no longer stream Netball after 2021. Foxtel has also just acquired the rights to Netball, and they will offer two games a week in front of the paywall for free on Kayo. I think the only rights Telstra have left are the A-League.
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