Australia’s Movie Network Channels (MNC) has lost its battle to survive and, while there is a lot of uncertainty around the impact, it is going to mean lower prices being paid in Australia for both studio and independent films.

“It will make it much more difficult because there will be no competition in that sector (pay TV),” said Hopscotch Group managing director Troy Lum. “We expect downward pressure on prices.”

Another independent distributor, who preferred not to be identified, said he would be taking a conservative approach to the number of titles he bought and for how much because pay TV sales are no longer assured. Distributors buy up to two years in advance and have not budgeted for a product bottleneck so will feel the pinch, he added.

Most of the 40 staff at MNC were formally given the news yesterday that they would be out of a job by December 31 because the FOXTEL pay TV platform would not be renewing its carriage and supply contracts despite MNC trying to make its offering more attractive. Warner Bros, Disney and MGM and Australia’s Village Roadshow own MNC.

Five weeks ago, FOXTEL chief executive Richard Freudenstein told staff that the company had acquired the assets of the Premium Movie Partnership (PMP), and that exclusive distribution arrangements had been finalized with each of PMP’s four studio owners – Fox, Paramount, Sony and NBC Universal. Sources say those studios have accepted less money for their product.

This year’s $1.9 billion merger between Austar and FOXTEL – and the removal of MNC – means FOXTEL has achieved its ambition of owning and operating it’s own movie channels for the first time. (FOXTEL is 50:50 owned by News Ltd and telecommunications company Telstra and is now the only pay TV operator in Australia.) The nature of FOXTEL’s new movie channels could be announced by next week.

“There will be fewer channels but the ultimate objective is to have the same content as we currently have, and more consistent and better quality,” corporate affairs director Bruce Meagher told Screendaily, “assuming we can do deals with all the MNC studios.”

Movies did not necessarily drive people to sign up to FOXTEL in the same way as sport, he said, but they were an important part of programming choice and depth and encouraged subscribers to retain the service. The company is also developing various on demand offerings.

Paul Wiegard, joint managing director of Madman, said the outlook for movies would depend on FOXTEL’s film budget, spending priorities and how much it values movies, including arthouse and alternative product.

“It will certainly simplify the offering … (but) will it be an enhanced service that makes more people opt in and grow the size of the pie or will it be reduced?” he asks. “It will be of great concern if FOXTEL is not dedicated to movies and the whole industry will suffer if it becomes about sport and reality television.”

Wiegard sold about 20 titles annually to MNC, which was headed by Tony Forrest: “They were a dedicated team of people who worked very hard to experiment with their programming, promote their films and help grow the market.”

Before taking over PMP, FOXTEL signed undertakings with the Australian Competition & Consumer Commission preventing exclusive content deals with more than half the major studios and half of Australia’s key independent distributors. It is understood that FOXTEL is negotiating exclusive terms with Hopscotch, Hoyts, Icon and Transmission.

“There is a perception that the market is getting more competitive and has more players but the reality is that we’ve seen an unprecedented contraction in the last two years down to three credible players, FOXTEL/Telstra, ourselves and Apple,” said Scott Lorson, chief executive of IPTV player Fetch TV. “There are fewer options and greater concentration of buying power today than any time in the last 10 years.”

He will have to replicate the SVOD service he takes from MNC through his direct relationships with the studios. He said MNC had done a “wonderful” job.

Some think FOXTEL’s dominance could put pressure on traditional windows and strengthen iTunes and Google+.

On a positive note for independent film sellers, one distributor said he was counting on a competitor in the SVOD space within two years, “which should restore some market balance”.

MNC will be missed as a supporter of new talent and initiatives such as DigiSPAA and the Australian version of Project Greenlight.

“They represent that small proportion of the marketplace that will give things a crack,” said Rob Carlton, who wrote and starred in the MNC-supported comedy series Chandon Pictures. “There is a real reluctance to engage with untested talent, because you have to have a lot of conversations with people that do not know much. But the unique nature of the individuals meant they would.”