It comes as FetchTV’s first major distributor, the internet service provider iiNet, prepares to kick off a marketing campaign promoting the pay TV service, and others such as Sony Playstation, Microsoft’s Xbox and Foxtel ramp up their video on demand activity. NEWS CORPORATION has snubbed Telstra by handing the rights to show 20th Century Fox movies to a rival, FetchTV, as competition among a new breed of pay TV services heats up. FetchTV, which is backed by the Malaysian billionaire T. Ananda Krishnan, will be able to show new release movies from Fox from the beginning of next month, despite the fact that Telstra is a joint shareholder with News Corp in the pay TV company Foxtel.

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Sony is gearing up to offer more pay per view content on its PlayStation 3 gaming console. Since May Sony’s 1 million PS3 customers have been able to rent or buy new releases without any continuing subscription fees. Next month it is adding arthouse and independent movies. T-Box customers then have to pay $11 a month over that period for the T-Box, compared to iiNet’s $29.95 monthly fee. Users of the gaming console will pay less than $20 a month for 11 channels and an extra $10 for access to some movies. At its annual results, Telstra said it had sold 40,000 T-Box units since its launch in June and it says the number of movies downloaded has rocketed to 90,000 in the past month off the back of sales of set top boxes. But he admitted that it was hard to communicate the fact that FetchTV’s content is broadcast quality and delivered over the internet but not streamed from the internet which can experience buffering. ”Education is going to be a tough ask,” he said, but that word of mouth was key to driving up take of the service. Greg Bader, the chief technology officer at iiNet, said marketing to its 630,000 broadband customers, which will begin next week, would talk about the size of the box’s hard drive and the features such as channels and films. The parity in Hollywood output puts the focus for future marketing back on the price of subscriptions and quality of delivery between Telstra and iiNet, which has confirmed it is waiving the $99 up-front installation fee for FetchTV’s set top box. This puts pressure on Telstra, which charges a $35 upfront fee for its internet-enabled digital video recorder, T-Box, over a 24-month contract. Sony Pictures is the last remaining studio not to sign with FetchTV. A Telstra spokesman, Craig Middleton, said : ”We are in talks with a number of studios but we cannot discuss that without their approval.”

  The Fox deal puts FetchTV and Telstra’s BigPond on an equal footing in terms of the output deals with the Hollywood studios. A PlayStation spokeswoman said the number of movie downloads was ”exceeding our preliminary targets”. There is mounting speculation that Foxtel will release a ”lite” package of limited channels on T-Box, similar to the one it outlined earlier this week on the Microsoft Xbox 360 console.