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channelnews Amazon Rattles Struggling TV Networks Who Are Desperate For Government Intervention



Samsung and LG who thought it was smart loading up their TVs with apps, from the likes of Amazon Prime, Netflix and Disney of which they are now taking a cut of the subscription revenue, are today watching with interest after Amazon told local free to air TV broadcasters that they want a 30% cut of the ad dollars when someone watches their programming through its Fire TV devices.

According to the Australian Financial Review the major television networks have accused the tech giant of a "cash grab" and "rent-seeking."

The new terms would force broadcasters to pay millions of dollars to have their content included on Fire TV - USB or set-top box devices that allow access to internet streaming software.

Fire TV is a very small player in the market.

Recently they launched a very smart 4K Fire TV streaming box, with the biggest sellers of the Fire TV devices, JB Hi Fi and Harvey Norman claiming that the Amazon devices have "very little market share" compared to TV's that are also running the free to air TV apps.

The issue for the CE industry is whether the move will set a precedent which if successful allows the likes of Samsung and LG, to ask for similar amounts.

Both Samsung and LG have millions of TVs in Australian homes, with tens of thousands of their customers, not even bothering to use over the air TV services via an arial anymore, instead they are using apps and streaming and the likes of Foxtel to get their entertainment and sports services.

The alternative for free to air TV stations is that they dump their apps from the Fire TV box.

Currently the free-to-air networks including Nine the owners of the AFR, as well as Seven, Ten and SBS who are struggling to grow revenue are now turning to the Labor Federal Government for protection similar to what Qantas did recently with the introduction of a ban on more Qatar flights into Australia.

What the free to air TV networks want is new laws which mandate that their apps are pre-downloaded and prominently positioned on new televisions and on plug-in streaming devices as well as Foxtel boxes and services. This is because Australians are migrating away from free to air TV to streaming apps and this is a last desperate play for them to have "skin in the game" as one observer said.

Bridget Fair, the chief executive of the industry's lobby group, Free TV, said that Amazon's latest move, amounted to a sudden "cash grab."

"It's simply outrageous that with so little notice, a player like Amazon can turn around to the local TV industry and demand a whopping 30 per cent of advertising revenue sold by broadcasters in their own apps," she said.

"This is money that otherwise goes to investing in local content like trusted news, entertainment, Australian drama, and live and free sport. We simply can't allow the greed of big multinational players to undermine our local TV industry.

Ironically, there was no mention of the fact that the free to air TV networks are also working to hurt or impede the likes of local streaming operation Foxtel, in an effort to prop up their ailing free to air services.

Foxtel also invests in local drama, tens of millions into local sport as well as news services.

One key industry executive claim that the Government should look carefully at the trouble they got into propping up Qantas before they start propping up TV stations that consumers are turning off.

"What we have is a bunch of TV stations whose business model is failing, now they want to Government to force competitors to help prop up their business despite the fact that their core customer base is turning off free to air TV viewing" said one executive.

Fair. claims "It's critical that the government quickly move to legislate its prominence framework to stop this form of revenue gouging."

SBS managing director James Taylor said that the change could undermine many Australians' ability to access free, local content.

The threat is that if the networks don't pay up, they will be de-listed or downgraded within the app stores for platforms like Fire TV.

Which is why free to air TV is now lobbying the Labor Federal Government, in an effort to use Government directives to force TV manufacturers and competitors to give free to air TV exposure on their set top boxes and TV's.

Legislated "prominence" would mean that free to air apps on devices would have to be displayed in a prominent position over other apps that consumers are choosing to watch.

Aerial TV audiences have been declining over the past decade, as streaming and other competition for consumers' attention grows.

Free-to-air networks have invested in competing against the likes of Netflix and YouTube, creating apps that stream content over the internet and tailor shows to the user's preferences.

As one key observer said, "Free to air wants revenue from their free to air business, and revenue from their apps, and they want their competitors to give them a leg up to take revenue from streaming operators, that research shows consumers prefer over free to air TV networks".

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