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Premiere sets new price structure from August
Premiere sets new price structure from August.
Germany's Premiere will change the pricing structure for its pay-TV offer from Aug. 1, it said on Tuesday, adding it did not expect the changes to have any substantial effect on average revenue per user (ARPU).
The changes offer price advantages to customers subscribing for two years, compared with those subscribing for one year.
"We are not talking about price cuts (across the board) ... but rather a fundamental new, differentiated model of offers with which we can react far more flexibly to the new competition circumstances," Premiere's Chief Executive Georg Kofler said in a statement.
He said the company expected ARPU to drop for its most expensive packages, but that this would be largely compensated by increased ARPU from its cheapest and mid-range offers.
The move is aimed at ensuring Premiere does not lose subscribers after it lost its main draw, the rights to German premier league Bundesliga soccer, to rival Arena.
Premiere shares have lost over 60 percent of their value since December, when the German soccer league announce Arena had won the TV rights to the next three seasons of Bundesliga soccer matches, starting this August.
Its shares were down 3.2 percent at 8.49 euros at 0853 GMT, and one trader said the announcement had failed to impress the financial markets.
"They are cutting prices less than expected. I am missing the outlook, how they intend to maintain subscribers," one dealer said, asking not to be named.
Premiere sets new price structure from August.
• Five newly structured packages starting from EUR 9.99 each per month.
• In future, all Premiere packages can be ordered and combined individually.
• Special treat for soccer fans: PREMIERE FUSSBALL INTERNATIONAL.
• 30 % off all five premium packages booked.
• Complete Premiere offering including PREMIERE HD and TV listings magazine for EUR 12 less.
• Kofler: “The differentiated packaging model allows Premiere to react flexibly to the new competitive environment – no across-the-board price cuts”.
Premiere will introduce a new pricing and packaging model starting from August 1, 2006. Five new premium subscriptions will then be available, starting from just EUR 9.99 per month each. These can be subscribed to directly, with no basic packages or other preconditions required. These new prices and packages will also enable Premiere to target new subscriber segments, addressing the future competitive environment. In the new subscriber business, Premiere sees particular potential in the EUR 10 to 20 price band, for which no appropriate offers have been available so far. The new packaging model also offers attractive alternatives for existing subscribers, and will make it easier for Premiere to retain price sensitive subscriber groups. The starter package PREMIERE START will no longer be offered from August 1, 2006.
The new packaging model: increased flexibility, lower starter prices for premium packages
Attractive starter prices and clear price benefits with larger subscription packages are the distinguishing features of the new pricing and packaging model. Access to premium Premiere packages is easier and more affordable than ever before. Five different premium packages are available from just EUR 9.99* each per month (*Price for a 24-month subscription; surcharge for a 12-month subscription: EUR 4.99 per month): PREMIERE BLOCKBUSTER, PREMIERE ENTERTAINMENT, PREMIERE THEMA, PREMIERE SPORT and PREMIERE FUSSBALL INTERNATIONAL. The complete premium packages subscribed to as a five-pack is available for just EUR 34.99* – a price benefit of 30 % in comparison to the price of the individual packages. For EUR 44.99*, subscribers can get all five premium packages plus the new top product PREMIERE HD with three HDTV channels and the listings magazine TV Digital. In comparison to today’s prices, subscribers save EUR 12 per month.
Kofler: “The new packages sharpen the individual profiles of Premiere’s subscription packages. The packages are more compact, and the contents are more thematically oriented. This makes it easier and faster to communicate the features of the individual packages in the sales pitch. Subscribers have much more leeway to tailor their choice of subscription to their individual interests or to combine them with the interests of other family members. The more targeted the choice, the more our subscribers feel that they only pay for the channels which they really want to see. In other words, it means greater subscriber satisfaction all round. The new packages also offer a range of options for existing subscribers wishing to change the focus of their subscription. Our call center staff will start incorporating the new offers in the advice they give in the coming days. With the new model, we are clearly positioning Premiere as the premium provider. The reduced starter package PREMIERE START, which is not sufficiently differentiated from the competition and offers traditional television, will therefore be withdrawn.”
Prices will come into effect from August 1 for all new subscribers – existing subscribers can choose
The new prices and offers from Premiere apply to new subscribers as of August 2006. Existing subscribers may extend their subscription according to the new terms when their original subscription runs out. Existing subscribers whose present subscription included FUSSBALL LIVE can change their contract to the new prices from August 1. In all events, Premiere will guarantee its contractual obligations, which in many cases may be even more attractive for subscribers whose subscription was cheaper as a result of a loyalty rebate or special offers, for example.
Premiere’s new pricing and packaging model applies equally to all transmission modes: cable, satellite or broadband. Kofler: “We are deliberately treating all transmission modes as equal to avoid putting subscribers who change from one to another at a disadvantage. While the new competitor Arena is adding an annual access connection charge of EUR 60 for satellite transmission, Premiere will continue not to discriminate against any mode of transmission.”
PREMIERE START withdrawn / Attractive new starter price
PREMIERE START will no longer be offered as a subscription. The PREMIERE START channel will stay on air for a transitional period, currently planned until the first quarter of 2007. Premiere will use this period to persuade START subscribers to change to the new offers. In the past, around 30 % of PREMIERE START subscribers decided to upgrade to a higher-value subscription in the first year of their contract – even though the next highest subscription (PREMIERE THEMA or PREMIERE SPORT) cost EUR 19.90 under the old pricing model. The new packages offer far more attractive alternatives for PREMIERE START subscribers as well. Premiere therefore expects a substantial improvement in the upgrading quota of PREMIERE START subscribers.
Once the starter package PREMIERE START has been dropped, there will no longer be a EUR 5 package. The new EUR 9.99 subscriptions allow Premiere to almost double its revenues per user when subscribers opt for a new contract. The most recent market research shows that there is almost no price sensitivity for subscription fees between EUR 5 and EUR 10. And EUR 9.99 for a premium package with five or more channels is very attractive in subscriber ratings of cost/performance ratios.
Great movies to watch at home on four film channels plus the DISNEY CHANNEL
PREMIERE BLOCKBUSTER is the subscription for movie-lovers. The concept: a Premiere home movie theater with four cinema screens. 300 premieres a year with all the top movies from Hollywood and Europe. Premiere has secured an exclusive film supply through long-term contracts with all the major studios and independent producers. PREMIERE BLOCKBUSTER screens the films at different times to ensure viewers will not miss the best a private home movie theater has to offer. PREMIERE 1 is the channel for film premieres; the same film is screened one hour later on PREMIERE 2, while PREMIERE 3 offers a daily selection of current movie hits. PREMIERE 4 is re-positioned as the movie event channel with theme nights for particular genres, double features and a lot of movie specials. PREMIERE BLOCKBUSTER is the ideal package for home movie theater fans: 16:9 format films, super Dolby Digital 5.1 sound, and most films in both the original language version and the German dubbed version. The PREMIERE BLOCKBUSTER package also includes the DISNEY CHANNEL, the premium TV offering from Disney with the well-known children’s and family programming as well as the TV premieres of Disney’s big cartoon feature films.
PREMIERE ENTERTAINMENT: five channels with current top series and the biggest TV hit movies and series
The new PREMIERE ENTERTAINMENT subscription includes five channels. In PREMIERE SERIE, a completely re-designed channel, Premiere has put together a package of current hit series. These include the popular series “Desperate Housewives,” “Lost”, “Medium”, and new episodes of “The Sopranos.” PREMIERE SERIE also includes international cult series and German family series. Fans of suspense can track down criminals together with the best German TV detectives 24 hours a day on PREMIERE KRIMI. The new channel PREMIERE FILMCLASSICS focuses on the most popular movies of the past 25 years. PREMIERE FILMFEST, the new art-house movie theater from Premiere, presents award-winning masterpieces and extraordinary independent productions, while PREMIERE NOSTALGIE brings back unforgettable movie highlights from the 1930s to the 1970s.
PREMIERE THEMA: 14 TV channels for a wide variety of interests and 21 digital audio channels
PREMIERE THEMA offers 14 TV channels for a wide variety of interests with a clear focus on the areas of documentaries, children’s programming and music. New additions to PREMIERE THEMA are GOLDSTAR TV and HEIMATKANAL. This means that for the first time, all the top TV brands from Premiere partner channels are available in a single subscription. The channels DISCOVERY CHANNEL, DISCOVERY GESCHICHTE, ANIMAL PLANET and FOCUS GESUNDHEIT provide the documentary focus. The children’s channels JUNIOR and JETIX are guaranteed fun for our younger viewers. Music can be found on HIT24, GOLDSTAR TV and CLASSIC – from pop through easy listening to classical. And with its 21 audio channels, the PREMIERE MUSIC STUDIO turns the TV into a juke-box. The PREMIERE THEMA package is rounded off with a quintet of attractive special-interest fiction channels: 13TH STREET, SCI FI, MGM, HEIMATKANAL and BEATE-UHSE.TV. Subscribers only interested in certain channels in the PREMIERE THEMA portfolio are free to choose what they want: all channels can be also be booked individually in combination with other Premiere subscriptions starting from EUR 1 per month.
PREMIERE SPORT: from Formula 1 to golf, from ice hockey to basketball – top sports beyond the soccer pitch
PREMIERE SPORT is the subscription for top sports beyond soccer: motor sports with Formula 1, F3 Euro Series, NASCAR, the Indy Racing League and the high-profile branded motor sport trophy races in Germany. Over 1,000 hours of live coverage of the world’s most important golf tournaments. Exclusive live coverage of the German Ice Hockey League (the DEL), and the German Basketball Bundesliga (the BBL), plus American sports and wrestling. A new feature of PREMIERE SPORT is extensive live coverage of Wimbledon as well as the exciting Golden League athletics meetings with all the top stars. PREMIERE SPORT subscribers can find updates on sports results and programming information at any time on the dedicated Infokanal information channel.
PREMIERE FUSSBALL INTERNATIONAL:
The best soccer and the biggest stars outside Germany
PREMIERE FUSSBALL INTERNATIONAL offers soccer fans everything they could want to see alongside the German Bundesliga: all 125 games of the UEFA Champions League, whose top games will in future be exclusively shown on Premiere. The package also features Premiere Euroliga with the top matches of the major European leagues such as England, Italy and France, live, both individually and in conference mode. Those who want to watch Michael Ballack and Jens Lehmann in the coming season can look forward to the exclusive Premier League broadcasts. All the major international stars of this World Cup will share a stage once again in August: PREMIERE FUSSBALL INTERNATIONAL. New on Premiere are the club magazine channels: Chelsea TV, ManU TV and Barca TV.
Attractive combination options – also for subscribers of other Pay-TV operators
The simpler modular packaging model doesn’t just make it easier to combine Premiere subscriptions. It also makes Premiere really interesting for subscribers of other pay-TV operators such as KDG, Kabel BW, Ish or Iesy. Kofler: “Their subscribers usually already have a basic pay-TV package. Many were annoyed that they could not order a supplementary premium subscription for a good price directly from Premiere. This is set to change from August 1. The fact that packages can be booked individually is an important strategic decision. Our new offerings will therefore have a direct basic reach of over four million households from the very beginning. Here, Premiere offerings can be activated in a few seconds, with no need for receivers or smartcards to be sent out.”
A further attractive target group is the over one million former Premiere subscribers, who churned for price reasons but still have a suitable receiver at home. If they are interested, all they need is a new smartcard.
Innovations for an enhanced television experience:
New receivers for rent at low prices
Premiere will soon be actively offering the latest generation of innovative digital receivers for lease. Kofler: “We want to enable broad subscriber groups to enter a new dimension of television convenience in an easy and affordable way.” The monthly fee to lease a Premiere ready HD receiver, which costs over EUR 300 in shops, is EUR 9.99. The Premiere digital recorder is also available for a monthly fee of EUR 9.99. Complete with all advantages of a digital video recorder, its 160 gigabyte hard-disk capacity also makes it suitable for the video-on-demand offering PREMIERE DIREKT+. New on offer from September are the interactive hybrid receivers, which can receive television both in IPTV and in the DVB standard. And much more importantly: they finally enable interactive television via the remote control. The new interactive hybrid receivers are available for sale and lease. Existing Premiere subscribers will be offered the new interactive hybrid receivers for lease from EUR 3.99 per month, depending on their package and term of contract. As a rule, new subscribers will buy the receivers, as they can select different subscription and receiver combinations in shops and direct sales, as has been the case so far.
No substantial effects expected on ARPU
The new packaging strategy offers smaller, more compact premium packages at lower prices. Individual choice and the tailoring of packages to suit different interests are catered for, as well as facilitating the sales pitch. The new system also provides considerable incentives to opt for longer term subscriptions and larger subscription combinations. Kofler: “We are definitely not talking about across-the-board price cuts, but about a fundamentally new, differentiated packaging model that allows us to react to the new competitive conditions in a much more flexible way.”
In the mix of all subscriptions, Premiere is not expecting any dramatic changes in the monthly revenue per user (ARPU). Kofler: “We are expecting an upward trend in the ARPU for the lower price segment between EUR 5 and EUR 20 due to the withdrawal of the PREMIERE START subscription and the new prices starting from EUR 9.99. We also anticipate considerable new sales potential in this segment. In the medium ARPU band between EUR 20 and 35 we are expecting a slight improvement due to the attractive combination options – such as the new five-pack combination for EUR 34.99. In the upper ARPU range of over EUR 35 we are expecting a moderate decrease, which will be largely compensated for by growth in the lower and medium price segments.”
Premiere (PRE.XE) -5.2% at EUR8.32, dropping to the bottom of the MDAX after news the company plans to launch a cheaper and more flexible subscription structure, say traders. "The move was overdue and is correct in principal; but how the company will be able to maintain its ARPU is unclear," he says.
Now that customers can opt for individual products, customers probably won't sign up for the full subscription package, says another. After Premiere lost the rights to Bundesliga soccer games, customers won't want to sign up for the package including sports, he says.
German broadcaster Premiere AG set new prices for its pay-TV offer in an effort to stop it losing subscribers, but the move failed to impress the markets and its shares dropped over 5 percent.
Premiere has lost the TV rights to its main draw, live German premier Bundesliga soccer matches, causing its shares to lose over 60 percent of their value since December when it was announced that the rights would go to rival Arena.
Premiere said on Tuesday it did not expect the new prices, which take effect on Aug. 1, would have a substantial effect on average revenue per user (ARPU), but added it would give a new forecast for 2006 when it presents its third-quarter results on Nov. 7.
Shares in Premiere fell on the news, but later recovered and were trading down 4.7 percent at 8.36 euros at 1044 GMT.
"We are not talking about price cuts (across the board) ... but rather a fundamental new, differentiated model of offers with which we can react far more flexibly to the new competition circumstances," Premiere Chief Executive Georg Kofler said in a statement.
He added that while ARPU could drop for the most expensive package, this would be compensated for by Premiere's cheapest and mid-range offers.
But analysts contested this, saying ARPU was bound to fall as Premiere had cut its most expensive offer by 22 percent to 34.99 euros ($44.06) and that about 30 percent of its subscribers in the past had signed up to the more expensive packages on offer.
The ARPU will significantly come down with this pricing structure," said Peter-Thilo Hasler at HVB Group.
Analysts also said the new pricing structure enabled subscribers to cherry pick the programming they wanted rather than encourage them to sign up to the most expensive package.
Under the new structure, subscribers pay 9.99 euros a month for one of five premium subscriptions for international soccer or movies.
Premiere Thema, which includes documentaries, childrens' programmes and erotic movies, is on offer for just 1 euro a month in combination with another Premium subscription.
"You can get soccer and porn for just 10.99 euros, so why bother with the rest?" asked one analyst, who asked not to be named.
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