Exclusive Interview: FOXTEL’s Kim Williams

SYDNEY/NEW YORK: FOXTEL, the Australian pay-TV platform, has built its business on providing subscribers with the best programming from around the world. CEO Kim Williams talks about FOXTEL’s relationship with its subscribers, providing them content on multiple platforms, including the Xbox, and constantly offering innovative features.

Since its launch in 1995, FOXTEL has remained firmly committed to providing its subscribers choice and constant innovation. As a result, it has become the leading subscription television service in the country, offering linear channels via cable and satellite as well as mobile and online services. FOXTEL, owned by Telstra Corporation, News Corporation and Consolidated Media Holdings Limited, celebrates its 15th anniversary this year. 

WS: What have been the main strengths of FOXTEL’s offering?
WILLIAMS: We’ve always been a very resilient business, but we certainly had a very difficult establishment period. I think we learned during that time that the secret to any potential success in this area of media delivery is to be very attentive to consumers. We have to listen to them very, very carefully in order to shape our offering and to ensure that we have a relentless commitment to innovation and creative transformation. In our instance, we started with a 20-channel cable offering back in 1995 and today we have a little over 200 channels on cable and satellite. We also have 33 channels on mobile phones. We deliver 26 channels to Virgin Blue jet aircraft all across Australia and we offer very comprehensive services that support our personal video recorders (PVRs), so that from any smartphone or from the Internet, you can look at our electronic program guide and record any program that is there over the next 14 days by sending up an instruction for your PVR to remember it and record it.
All of this has come about through a huge amount of consistent devotion to innovation and investment. In the course of providing that innovation we’ve been very careful to ensure that all of our technical development is matched by a very close attention to the quality of content that we are offering. Consumers are primarily interested in what is unique about our service, and that is the content we provide and the manner in which we provide it. We have offered constant innovations in sports, drama, general entertainment, music, children’s, news, documentaries and other varieties of television, along with a lot of original Australian content. We have also developed many new fresh interactive applications that give our offering a real sense of differentiation to a FOXTEL subscriber.

WS: When you decide to roll out a new service, is that done because you want to keep a step ahead of your subscribers or is it in reaction to what you are hearing from them?
WILLIAMS: We are constantly processing information from our subscribers. First of all, we conduct several hundred thousand incoming phone calls with our customer base every month, which is a terrific learning opportunity. It allows us to find out what they like and what they would like to see improved. Secondly, we do very active outbound research with our customers so that we have clear objective information about what they think of our content delivery, our technology products and of simple things like the quality of the installation service that they receive, or the quality of any kind of technical support and care that we offer them. We run, as a matter of course, very disciplined follow-up with a whole series of questions [for] customers.
There is a delicate balance between the push from us and the pull from consumers in the way in which our products evolve and are shaped. We do not deploy anything without researching it with our customers, both our existing customers and prospective customers. We very carefully manage a body of research as to what channels might interest new customers, what channels might fill the perceived gaps in our existing offering and what kind of additional services customers might be seeking from us.

WS: Have products like HD or the PVR helped drive subscriptions?
WILLIAMS: Oh, very much so. Our PVR penetration—and we call our PVR the iQ—has now passed 65 percent of our customer base. So it has been a particularly important tool in expanding the quality of what we offer and in giving a transformative experience to what we offer our customers.
HD is another area that we have targeted for general leadership in the Australian market. We launched HD in June 2008 and now we have passed 20-percent penetration. It’s an area that we will continue to expand, so that during the course of the current financial year we will see our HD offering increase to about 22 24-hours-a-day HD channels and our first stand-alone 3D channel in addition to that.

WS: Tell us about the 3D channel.
WILLIAMS: We’re launching a 3D channel and also a push-to-disc 3D product in the early part of 2011. We’ve already done about 18 3D broadcasts of major sporting fixtures for Australia. We did a couple of major sports broadcasts in June with the last game of the Australian football team, the Socceroos, before they went to South Africa for the FIFA World Cup. That was a friendly game against New Zealand. We also broadcast the finals of the French Open [tennis tournament] in 3D. We then retransmitted from our colleagues at the Special Broadcasting Service in Australia all of their 3D transmissions from the World Cup. I think that involved 16 separate 3D broadcasts.
We have been doing legwork on 3D broadcasting since 2008. We did our first 3D transmission in our laboratory here in December of 2008. We continued those trials through 2009 and then in 2010 we presented the first mainstream 3D broadcasts to those of our subscribers who had already acquired 3D television sets. [Consumer-electronics] manufacturers are very committed to expanding 3D transmissions and we will partner with them in that process.

WS: Why was the decision to make channels available on Xbox Live an important step for FOXTEL?
WILLIAMS: In growing our company we’re always looking to opportunities where we can provide relevant services to market segments that we have not been particularly successful with. Two of our current priorities are, on the one hand, senior citizens and on the other hand, younger audiences. Younger audiences have a very different urban and itinerant lifestyle. They [get most of their entertainment and information from the Internet], they live in apartments and move every nine to 18 months, which is clearly not well suited to a subscription-television product in a traditional mode with a set-top unit installation. Instead their lifestyle is very well suited to a product like the Xbox Live, which not only travels easily but is also part of the domestic entertainment diet of the young consumer.
Therefore, we have been working with our colleagues at Microsoft to ensure that we deliver a relevant service that meets the lifestyle and general taste disposition of that younger audience. The first iteration of our Xbox Live product will have a slimmed down version of FOXTEL, which is very carefully profiled to meet the needs of this target audience that has emerged from many surveys with young adults who are in that early stage of their entertainment subscription journey.

WS: As viewers have clearly shown that they prefer watching “wherever and whenever,” in what ways are you satisfying that demand from your customers?
WILLIAMS: We certainly see the personalization of media as being quite fundamental to its future and to successful settings for the future. We are firmly committed to making available to consumers an experience in which they get to watch what they want, when they want, and increasingly, over the device of their choosing so it’s where they want. We’re doing that through the provision of a very large body of content on the Internet. For example, we make available, at no additional charge, around 600 hours of programming that consumers can use as a catch-up service and we refresh this every week for around 38 of the channels that we offer. We are also about to offer a VOD service which will provision initially about 1,500 separate movies and television programs that will be on-demand on an à la carte basis for our subscribers. That will rapidly grow to a library of somewhere between 5,000 and 10,000 individual movies and television programs at any one time.
We are also developing our mobile product along with some pretty sophisticated search and recommendation tools that use popular consumer ancillary devices such as the iPhone 4 and the iPad.
We are genuinely enthusiastic about pad- and slate-style devices. They offer a relevant related experience to a television screen and some great possibilities in really up-to-the-minute search and recommendation functionalities.

WS: The iPad was absolutely a stroke of pure genius.
WILLIAMS: Yes, we are great enthusiasts of it here!

WS: Despite this continued propensity to view wherever and whenever, how do you see the future of television?
WILLIAMS: After a colleague of mine read some articles that claimed the days of television are numbered, he said to me, “Goodness, it must be an unbelievably large number!” I’m in very great agreement with him! I think television has a very rich future because of all the media, television, particularly subscription television, has been the area where people have really adapted to a digital world and have been very responsive [to innovation]. Certainly I think most subscription television platforms have a very realistic understanding of what consumers are expecting. They understand the general trajectory of consumers as they move into a much more flexible and sophisticated operating environment. The challenge is to respond to it in a way that is really relevant and attuned to consumers’ notions of value, want and need.

WS: You mentioned that you are placing a lot of content on the Internet. Do you feel that the Internet is more of a friend or a foe to a service like FOXTEL?
WILLIAMS: I think successful engagement with digital media demands that you must see all technologies as opportunities, not as foes. It’s tremendously important to be technology-neutral and to be always looking [for ways to offer] relevant consumer experiences that have merit both from a consumption perspective and from a spending and purchase perspective. And apart from the prevailing concern that all people in the intellectual property endeavor must have for piracy and the enablement of theft, I think we must all look at new technologies as opportunities.

WS: Looking ahead 12 to 24 months, what growth opportunities do you see for FOXTEL?
WILLIAMS: I see many opportunities that will emerge with greater ranges of broadband applications. For example, there are many opportunities and challenges bringing the Internet to the television, so that a viewer can have an integrated experience with Internet-style search and recommendation functionality, but all the characteristics of broadcast-quality picture, sound and durable delivery. Clearly people bring a different mindset to computers than they do to broadcasting—they expect broadcasting to always work, whereas with computers, the audience is immensely forgiving of the computer regularly having some little glitch that requires you to reboot or to close out of something and then reopen it. People are quite unforgiving about any sort of glitch in broadcasting. So the trick will be in how we actually create that blended experience—a really agreeable and attractive customer world—that marries all of the tools that are available on the net with the quality of the picture, sound and delivery experience that one gets with broadcasting.

WS: That’s not too far off, is it?
WILLIAMS: No, I think it’s happening as we speak. We are currently trialing a product that we intend to launch [this month], which blends the two pretty effectively. But blending Internet protocol hierarchies with broadcasting hierarchies is not easy. It does require a lot of patience and a lot of technical ingenuity. I think that the reward will be loyal consumers and an even better relationship with them as we forge ahead.