Market Watch

M7 Group, ORF to Launch Austrian Pay Satellite Service

September 17, 2010

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Luxembourg-based satellite pay TV operator M7 Group and public broadcaster ORF are to launch a new satellite pay TV service in Austria. The joint venture, called AustriaSat, will be available from October 2010. At launch, AustriaSat will offer a package of 19 channels provided by Sony (AXN, Animax), Viacom (MTV Music, MTV Rocks, MTV Dance, MTV Hits, VH1), NBC Universal (KidsCo), ProSiebenSat.1 (Kabel1, Sat1 Comedy), RTL (RTL Living) and three adult-themed channels.

Households equipped to receive ORF Digital - a free package of channels launched in 2008 including HD versions of ORF1 and ORF2 - will be able to access the AustriaSat service without changing their hardware, as it will use ORF Digital's set-top boxes and encryption. As a promotional measure, a one-month free trial to the AustriaSat service will be given to all ORF Digital households.

Services will be priced at €7.90 per month with a 12-month contract, and €9.90 per month without a contract.

Although AustriaSat's channel lineup is sparse at launch, with just 14 basic pay channels, the project's sub-€10 pricing tiers are not intended to compete with pay satellite services offered by Sky Austria, or with UPC Austria's cable service. Instead, AustriaSat will be aiming at converting the nation's 1.8m free satellite homes, or at least a portion of them, to basic pay.

Free TV homes, be they terrestrial or satellite, largely comprise pay-averse households. As a result, pay-TV operators (mainly DTT) have had to resort to offering 'pay-lite' services - basic pay-TV services at lower than average prices, consisting mainly of basic low-tier pay TV channels. The M7 Group, which operates pay-lite satellite services Telesat and TV Vlaanderen in Belgium, will look at leveraging the expertise gained in its home markets and applying it to the Austrian context.

The biggest advantage that AustriaSat will have at launch is the large free satellite market. Not only does free satellite have a significant penetration of TV households (approximately 46 per cent), but the fact that ORF Digital customers will be able to access the AustriaSat services without any hardware upgrades or changes is the key selling point, removing one of the biggest, and often most expensive, barriers to getting households to join the pay-TV bandwagon. Secondly, although large parts of Austria (over 80%) have already had their analogue services switched off, a few areas remain, and AustriaSat will be keen to introduce a cheaper pay option to this remaining bastion of analogue terrestrial households.

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