Telstra has announced it is to axe its BigPond Movies DVD rental business in September.
The decision, yet another sign of its growing confidence in the on-demand online movie business model, also involves Telstra signing a referral deal with Quickflix for customers who wish to continue hiring DVDs through the Web.
Under the terms of the deal Quickflix will make a variable payment to Telstra based on the number of customers who transfer to the company’s DVD rental service.
Quickflix will also acquire BigPond’s DVD and Blu-ray library and related equipment.
Last week Telstra’s director of IPVT, Ben Kinealy, said the company had experienced a period of strong uptake in Telstra’s on-demand video service, which the telco has sought to position as an alternative to bricks and mortar video stores.
According to Kinealy some 1.5 million movies had been purchased and downloaded via Telstra’s T-Box alone since the device was launched in July 2010. The latest reported figures for the number of T-Boxes sold was 120,000 as at February 2011.
“That number is impressive and it shows this is a real business,” he said.
Telstra has also launched a Foxtel-light service to its T-Box customers which offers a range of channels and on0demand content.
“What we realise is that Foxtel is in 30 per cent of homes in Australia and we need to find a way to help get to that other 70 per cent,” Kinealy said of the service.
“As a telco we obviously want to sell our telephony and bandwidth to everyone, where possible, in Australia, so we came up with this IPTV proposition knowing that it was coming anyway.”
In May rival IPTV provider FetchTV said it was optimistic it would new, after Telstra, by the end of the year.
The deals — Optus, iiNet, Internode and Adam Internet are already customers — would effectively form a competitive coalition against the incumbent telco’s popular T-Box service.
“I think the fact that we’ve been able to nab the number two, number three and number five providers in the country bodes very well for the rest of the others,” FetchTV chief executive, Scott Lorson, said in May.