This essay will focus on Foxtel’s more recent ventures in terms offering new pay-TV initiatives and their own SVOD service to rival with Netflix. It will also focus on how they position themselves despite being in the Australian market which has the lowest pay-TV penetration rate in the world (Duke, 2018).
Earning around $1 billion in profits (White & McIntyre, 2015).
The introduction of Subscription Video on Demand (SVOD) platforms such as Stan and Netflix disrupted the space of online content consumption and threatened the companies that have monopolized the industry for decades (Scarlata, 2015). As a result, many believed that the television era was coming to an end (Given, 2016). However, the differing landscape does not necessarily mean it is ending, but rather, embracing its potential of becoming a hybrid media form (Bennett, Strange, Spigel, Turner, & Thomas, 2011). TV is altered due to changing technologies, industry competitors, and socio-cultural norms relating to consumption habits (Given, 2016). Companies such as Foxtel adapted and implemented strategies that differed greatly from their previous approach in order to retain their numbers.
Introduction of Netflix and 300k VPN users prior to Aus launch
In the realm of pay-TV, when Netflix first arrived in Australia, Foxtel halved their starter pack prices. This managed to increase their subscriber count by 7% (Screen Australia, 2019).
Despite the cord-cutting epidemic where pay-TV consumers seem to be declining, the reality is that Foxtel’s pay-TV penetration rates have remained consistent at 30%, and their annual subscription numbers have fallen by just 1% despite the introduction of SVOD (Turner, 2017).
Pay-TV also holds its place as the “most valued media content subscription for almost all age groups, with sport being the key factor for retaining customers (Deloitte, 2018).
SVOD succeeded largely due to the control users have over the content they watch and the lack of advertisements which TV could not compete against. Between 2014 and 2015, the total hours Australians spent watching TV fell three and a half hours (Given, 2016).
Half of Australia’s internet users and two-thirds of Australia’s pay-TV subscribers also pay for at least one SVOD service (Turner, 2017). These two services are able to co-exist and don’t necessarily have to be independent of each other in today’s age of audience fragmentation and media convergence.
Foxtel is taking advantage of audience fragmentation (White & McIntyre, 2015)
Foxtel initially responded by offering Foxtel Play before Netflix’s launch, but faced challenges due to high subscription costs and lack of content (J. M. Duke Jennifer, 2018). It was followed by Presto which was discontinued in 2017 due to low subscriber count (Battersby, 2017).
They then rebranded and introduced Foxtel Now as a step towards increasing their penetration rate which has stayed stagnant for years. By removing more than $200 of extra charges for the installation fee and iQ set-top box previously required by their pay-TV alternative, they had a contract-free streaming service. Netflix is priced from $10-18 per month, while Foxtel Now starts at $25 per month. However, Foxtel’s service operates on the basis of channel packs, meaning that for additional content, the user would have to pay an additional sum every month. This hikes up the price to $104 per month for all additional packs, making it less attractive compared to Netflix’ pricing strategies (Choros, 2019a).
Alongside low subscription costs, Netflix is commercial-free and available throughout most countries. Although, Foxtel airs content Netflix is not planning to venture into, namely, news and sports. Once VPN access was terminated, many customers lost access to the content that was usually immediately available on the US platform (Given, 2016). In this case, Netflix has a seemingly narrow set of genres compared to its competitor.
This acts as a drawcard for Foxtel Now as they are able to provide users with access to more first-run shows. For instance, they air more than 50 different local and international sports programs such as AFL, NFL and Super Rugby (Foxtel, 2019). They also bought the rights to air popular shows such as Game of Thrones, which is included in their starter pack (Choros, 2019b). This makes it the only service that offers access to top sports and HBO programs in Australia (Choice, 2018). This poses a huge advantage coupled with their Live TV offering, allowing audiences to watch programs at the same time they are aired in the US or for watching sports events live. These strategies have positioned them away from being the traditional SVOD provider and could provide incentive for consumers who value these advantages to pay more for the service.
Foxtel also announced a new SVOD service set to launch in late 2019, titled “Project Jupiter”. Learning from their previous launches, there will be more planning and thought put into this launch to ensure service runs smoothly and nothing is overlooked (Mason, 2019). Moving forward, they should aim to appeal to customers in terms of having the most unique content, while also sustaining their premium pay-TV subscribers.
In conclusion, convergence saw the structural shift of media in how it is consumed, regulated and categorized, challenging long-established norms (Scarlata, 2015) All in all, the television sector in Australia will not end with services like Netflix or Foxtel Now, yet it no longer maps perfectly onto its traditional definition either (Wolff, 2015).
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