Netflix is dominating the Australian pay TV market

By Leith van Onselen

Roy Morgan Research has revealed that Netflix had lifted its Australian subscriber base to 11.3 million households after a 25% annual surge in subscribers. By contrast, Foxtel’s subscriber base slid by 2.7% to 4.9 million households:

With Foxtel losing its monopoly grip on the pay TV space, it has pivoted desperately to ward off  competition from online streaming services.

Foxtel began offering no contracts and equipment-free packages from December 2016 in a bid to attract price-sensitive customers (such as SVOD monthly packages starting from $15, such as the “Pop” pack and the “Drama” pack).

It has also recently launched its own live-sport streaming service, Kayo Sports, which already reaches over 150,000 Australians – a figure that will rise as the AFL and NFL seasons kick-off.

While it is good to see Foxtel competing harder for customers and offering a better deal for consumers, it is facing a losing battle against Netflix, which will continue to dominate the market and steal market share.

First, Netflix recently passed Disney as the largest media company in the world. It has a global reach of around 140 million paid subscribers, very deep pockets, and a wide variety of first party content that is unavailable elsewhere and appeals to a wide variety of tastes.

Second, Netflix’s cost base and price point is far lower. Unlike Foxtel, Netflix is unburdened by legacy hardware like set top boxes attached to traditional cable. This keeps its costs low and enables Netflix to offer Australian subscriptions for around $10. This is well below Foxtel’s cheapest offering and arguably provides deeper content.

Finally, Netflix’s technology is superior. Its App works seamlessly on most devices, allows content to be downloaded offline, time stamps progress, and rarely crashes. By comparison, Foxtel’s App is clunky, regularly crashes, and cannot download content for offline viewing.

Overall, Netflix represents a classic disruption of an entrenched monopoly by a new technology.  Barriers to entry have been smashed and costs lowered, with consumers the ultimate winners.

The best Foxtel can hope for is to stem the loss of subscribers through its sports offering. But ultimately, they can’t win against the internet.

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Comments

    • I’m sure it’s just a technical/admin issue. Just like the 50,000 Not Specified visa holders from Not Specified – just a technical glitch.

      They’ll fix it any moment now.

      • Mining BoganMEMBER

        I had nice things until a meme from a ‘right wing’ website took them away from me.

    • Let’s comment here – try again Scomo – needs to be sub 50k to make a difference. These guys are fiddling with themselves while the cities burn …

    • ErmingtonPlumbingMEMBER

      “Let’s comment here”

      Ok ,…but let me just give a “Trigger Warning” first,…some people may be offended by what I have to say.

      SoMo is crazy for cutting the Numbers!

      We clearly need to “Populate or Perish”.

      To really be able to call ourselves a leading Nation with a dynamic economy and the ability to defend ourselves,…We need at least 100 million People in Australia!

      We need to Jack up our immigration numbers today to save our Country from oblivion!
      And show the rest of the world how to really do Vibrancy.
      😘

  1. Sport the only hope, and I fear that we are only one contract away re the AFL / Cricket / NRL / Tennis rights where Netflix will make a huge play that destroys Foxtel and free to air TV in aus once and for all.

  2. Ironically, Netflix offered itself for sale to Blockbuster and Blockbuster said no!

    After James Dyson offered his bagless vacuum cleaner technology to Hoover and Hoover said no.

    A crucial difference between Netflix and Blockbuster is, Netflix produced its own shows. Ironically, House of Cards is available on DVD.

    • Netflix went through several ups and downs along the way, and made many courageous, innovative and at times controversial business decisions, before becoming profitable. Producing their own shows was certainly a masterstroke. They have also played a role in fundamentally changing the employer-employee relationship: “We are a team, not a family”.
      I feel terribly sad that Murdoch, for the sake of keeping a 19th Century business alive for just a few additional years, has doomed Australia to third-rate NBN for the the next two decades.

      • I want to take Murdoch out. But i know i would get caught. Ashamed to say i used to work for such slime.

      • You’ve gotta make it look like an accident. Maybe lure him into a construction site and then drop a pallet of roof tiles on him?

      • Mining BoganMEMBER

        ” Hey Rupes, you left your bottle of viagra pills out on the penthouse balcony……….”

    • After James Dyson offered his bagless vacuum cleaner technology to Hoover and Hoover said no.

      That sucks. I wonder if he retracted that offer.

      • he

        Who?

        James is charged up about cordless vacuum cleaners now. He blew me away with bladeless fans and people had a ball with his ballbarrow.

        I did not warm to his heatless hand dryer.

        Perhaps Hoover thought that profits are in the bag.

  3. Kayo – no Eurosport so no cycling

    laughable, comical

    I get Free AFL on my Telstra phone.

    It’s like Foxtel is run by teletubbies

    • I actually think it’s a good product. For me there’s AFL, cricket, UFC, darts, F1 and Moto GP. Run a home theatre PC into the TV and I’m all sorted. I’d been calling for a product like this for 5 years from Foxtel ie no contract, half the price of the base package, and no hardware. There are a few drop outs which would be good if they got their act together and this became zero. I also utilise Netflix and combined with a VPN gives me a larger catalogue.

  4. Leith – a minor point, north of the rio grande it’s NRL not NFL . :). I’m not sure how many hours a day people devote to “tv” watching as SBS Ondemand usually has two or three series running at a time and I struggle to make the time to keep up with just them. I tire of the US formula used in many / most of their shows. On SBS Ondemand they have Canadian, British, Icelandic, Nordic etc shows, true they also mostly attempt to be formulaic but come out quite distinct from US productions.

  5. Hill Billy 55MEMBER

    So even at 2.5 people per household, then Netflix has more than 100% of Aussie households subscribed to its channels. I acknowledge that some households may have more than one subscription, but they are taking a lend of the populace if they think we are that foolish!

    • Locus of ControlMEMBER

      RM refer to ‘household users’. Leith has incorrectly shortened it to ‘households’. There were only (approx.) 10 million dwellings in Aus at last Census: http://quickstats.censusdata.abs.gov.au/census_services/getproduct/census/2016/quickstat/036?opendocument So it defies reasoning to think, as you say, >100% of Aus h’holds have Netflix.

      I think it more likely about half the Australian adult population (11.3 million consumers) has Netflix. That number sounds about right to me.

    • I’m also struggling with that claim.
      I guess we’ll know for sure in a couple of years because if they keep claiming 25% pa sub growth they’ll quickly surpass the entire Aust population
      the sequence would look something like
      2020 13M
      2021 16.25M
      2022 20.3M
      2023 > 25M
      If they fail to grow than naturally the market will punish them…hmmm now what are the real numbers and how/when do we transition to the new real subs accounting method. Usually this sort of accounting realignment with reality requires some form of extraordinary purchase, you’d be surprised just how many corporate takeovers are actually driven by the need for an excuse to tidy up the inflated accounts. or continue to hide the real situation through some sort of Pro forma Accounting. (been there done that tick it off)

  6. Sport’s easily found for free if you know where to look. I’m astonished by the quality of the streams. Buggered if I’m paying Murdoch a cent.

    • darklydrawlMEMBER

      Too true. A quality VPN is a wonderful thing. It amazes me I can get just about any live ‘advert free’ sport in HD via a VPN and the local offering is only SD with commercials or on a small screen format.

      It is usually the Australian broastcast steam as well – excellent stuff.

      They wonder why people are leaving in droves. On a side note Netflix is usually rock solid, Foxtel / Telstra / et al less so.

  7. DefinitelyNotTheHorribleScottMorrisonPM

    This is fine. Netflix is for the poor masses who can’t afford proper cable TV. Everyone who’s anyone has cable so that they can enjoy a full day of televised property auction action each and every Saturday.

    • darklydrawlMEMBER

      and in 1980’s quality Standard Def with bonus commercials (unless you want to pony up more coin for HD). Still get the ‘bonus’ commmercials, but hey, they do look sharper in HD 🙂

  8. Foxtel is gone…why would someone pay to view adds every 15 min!!…also Netflix allows you to be the programmer…i got rid of “Nowtv” the equivalent of Foxtel in HK about 3 years ago…my TV enjoyment now is at its all time high as can watch whatevva i want whenevaa i want with out crashing, and faaaarrrking annoying adverts..Aust slowly waking up…..

      • Oh yeah, they sold it as “no adverts!”…then with in a year they cried poor and said we have to have them cause we cant compete with free to air…all a ploy…i hate them…aaaaaannnddd dont forget its was them whinging to the govt and making it hard for netflix to operate in aus, they were also the fcknuckles who made netflix crack down on the VPN use, so you couldnt watch other countries stuff..foxtel are cancer..are contantly trying to ruining progress so they can protect themselves….

      • darklydrawlMEMBER

        You can still VPN to netflix US, but you need to use a quality VPN provider. The easy DNS swaps and free VPN’s from a couple of years ago usually don’t work these days.

    • I think they only were ‘no adverts’ for a short time until their advertising license came through – but they got the people locked into the contracts and then came the adverts. Funnily enough, you could say it was false advertising that they were ‘no advertising’.

  9. Here’s an experiment, try unplugging your tv from free to air for a couple of weeks. It’ll be the best thing you do this year.

  10. I am a bit of a luddite so happy to keep my foxtel boxes (!!) for now. The kids know how to use it and they like nickelodeon and we don’t mind. That said if Netflix is so cheap we might have to give it a try – we have an apple tv purely to facilitate screen mirroring from the ipads when playing iview or sbs or even youtube to the TV.

    I also find we use the DVR feature of the foxtel box to “tape” free to air shows. There’s nothing like getting through the 60 minutes of channel 9 news in 15 minutes flat.

    • darklydrawlMEMBER

      We have the Foxtel DVR for free to air only (pretty much for the same reasons you do). It is about $10 a month and now you also get a handful of basic Foxtel packages as well. You have to ask for this deal, but you can get it.

  11. Netflix is pretty good but its first on my chopping block if I ever need to cut back. To be honest I watch it once a week so I’m sure I’m not getting the best value out of it.

  12. Australian Netflix only gets about 40% of the content of American Netflix – due to Foxtel and others having rights to tv shows first.

    • darklydrawlMEMBER

      True, but with a small investment in time and money you can get around this easily enough.

      • Mining BoganMEMBER

        With the rise of censorship in the current political environment that little effort expended will be extremely worthwhile.

      • Thanks for reminding me of Getflix. Bought a lifetime subscription yonks ago and forgot about it. Will
        Dust it off.

  13. For EPL and Champs League Optus TV is great. We watch it through Apple TV and the option of a game in 3 mins, 20 mins or full game is awesome – prob the only thing we watch as a whole family (unfortunately the kids have already dumped my team for more successful ones). When we were up for a new handset agreement the Optus deal was the same price as Telstra with Optus TV thrown in for free. Now if only they would add cycling…..

  14. Guess I’m the only one here that still buys dvd and blu rays then. I’d rather buy a box set when I want, then subscribe to a service that doesn’t have much I’m into and can remove their shows at any time they want.

    YouTube and my dvds have more than enough for me.

  15. Right now I’m finding SBS-on-demand to have the best streaming content for my taste. Das Boot, Counterpart, Berlin Station.