How will Foxtel survive after Game of Thrones finale?

By Leith van Onselen

Roy Morgan’s latest survey on Pay TV Subscription services 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 Game of Thrones airing its final episode yesterday, to which Foxtel had exclusive rights, the company has resorted to offering customers $10 a month discounts in a desperate bid to maintain its market share:

Embattled pay TV provider Foxtel has offered some customers aggressive discounts as it scrambles to halt an exodus of subscribers following the end of hit series Game of Thrones.

The pay TV provider emailed selected customers on Monday following the final episode of the show  offering discounts of $10 a month for the next 12 months…

Earlier this month, it was revealed News Corp gave the pay TV provider a $300 million shareholder loan to cover debts maturing in April.  And News Corp revealed in its most recent quarterly earnings its traditional service lost about 100,000 subscribers in the first three months of the year.

While it is good to see Foxtel 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, 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, the company cannot win against the internet.

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Comments

    • Actually don’t mind paying for something I enjoy watching and which costs money to produce.
      I presume if Clive doesn’t pay his workers that is OK? He just pirates their labour.

  1. >But ultimately, the company cannot win against the internet.
    They have fought a very good rearguard action though. The hobbled NBN created by Rupert’s Liberal party have delayed the roll-out of high speed Internet in Australia by a decade, earning Fox a few extra billion.

    • I think that’s a myth. You can run Netflix HD on a 5mbps ADSL connection – FTTN 25mbps is fine. Compression is pretty good these days.

      The biggest threat is probably that new TVs come with a Netflix button, and not a Foxtel button.

    • Same – and I’m a two STB platinum package subscriber as well.

      It will be Netflix and Kayo for now on – now that decent (and reliable) internet speeds have finally become available in our neighbourhood – will be easily $100pm better off.

    • With a little bit too much time on one’s hands, one can run out of decent things to watch on Netflix rather quickly.

      • SBS Movies is pretty good. I know I talk about getting rid of SBS, but may as well use it since I’m, in part, paying for it as a taxpayer.

      • Mining BoganMEMBER

        Lovey says that. Never anything new.

        I’ve saved all sorts of things to watch and haven’t looked at any of them. Still, keeps Lovey out of my hair.

      • @ Prometheus
        “…one can run out of decent things to watch on Netflix rather quickly”

        My Sony TV came with Netflix button… got the subscription, 4 month later cancelled for the very exact reason you said. Seen a few good programmes, started watching [email protected] because it was full season and nothing better to watch.

        What is Foxtel?

  2. HadronCollision

    Christ on a stick, people were paying Foxtel to watch?

    Anyway, if they did $10 a month for streamed Eurosport/cycling (and I mean all teh fecking cycling, I want RTBF, I want the crazy Belgian and German channels, Dutch channels, I want La Fleche, Amstel, like Eddie Mercury, I want it all) and golf, MLB, NHL and NBA I’d pay.

    • ALBTV app.
      US$60 p.a.
      High def
      130 sports channels plus a shed load of other things.

      Works a treat, except there’s no programme guide. Have to surf around but once you know the rugby’s on Sky Sports Action (UK) and there’s EPL plus golf plus plus plus

  3. I watched GoT at the pub one week. By the following week Foxtel had shut them down. (Can show sport but not GoT). bastards! No wonder everyone pirates tv from uncle Torrence.

    • Most people I know are hooked on Channel BT, with enough content to last for decades even if the internet is shut down.

      • Indeed.
        What makes folks subscribe to it is choice of programme and no programme hype

  4. DingwallMEMBER

    I jumped in with a 10 day free trial and then paid $25 for a month and cancelled it with a week left. So pretty happy with the series for $25.
    When the trial finished i then saw what my $25 would get me ….. absolute trash …. some live fox channels and what looked to be endless reality tv options. What you get for your money is embarrassing compared to the likes of Netflix and FTA.

  5. ^done the same as many of you above, did the 10 day free trial then paid for $25 for a month. Having watched the finale twice now, I cancelled my sub today.
    Unless they remake GoT or something similar, Foxtel can kiss my wide pie eating arse.
    Back to Netflix and STAN and iView…

  6. I’ve got Kayo which craps on Foxtel’s UI so I’m cancelling my foxtel tonight.

  7. between sbs on demand and i-view, how the fck does anyone have time to pay for additional content LOL … go outside and play in the sun FFS!

    • Go outside and play? Where? In streets filled with traffic or parked cars (most people don’t use their garages).
      The denisity of most (if not all) suburbs within 20klms of the Melbourne CBD has increased.
      Most back yards have shunk considerably.
      Also, Melbourne weather is quickly approaching its June to mid- September shitty period.

      • Most suburbs will have a dozen of parks within 10 min drive. I took my kid to every new park I can find on the map and I often calculate a stop over when travelling someplace. I always carry a tennis set, a football (for foot-only kicking) and sometimes a skateboard in the boot.
        It is an effort, but minute, to make a kid love outdoor.
        And no tablets and phones…

        Did you mean Mel shittu weather season from July to June? 😉

    • Mining BoganMEMBER

      Only because of the prices Rupes charges. If he made it affordable he’d have everyone in. You know, like Netflix.

  8. ErmingtonPlumbingMEMBER

    My Optus box shyted itself recently, about 2 mths ago, and with our new 55 inch Internet TV haven’t even missed it.
    We were on the verge of getting a second box …but not now.
    Probably get rid of the pay TV subscription now it just isn’t doesn’t seem worth it
    As for Game of Thrones I hate waiting for new episodes and seasons so I just wait until the whole things completed.
    I gave up on Game of Thrones about halfway through but we’ll watch the lot from start to finish once I’ve got it all on a single hard drive

  9. Game of Thrones should have been on SBS since before the Government had a sook regarding the global news about Australia being the worst online piracy offenders.

  10. run to the hillsMEMBER

    Foxtel rang me out of the blue a couple of months back, been a subscriber for decades, told me how would you like free movies and drama for 12 months and a new HD box? Sure I do. Absolutely reeked of desperation to stop the bleeding of subscribers. I’ll keep it as long as they have the footy.

  11. Foxtel is for people who will happily pay a premium for sports – all NRL, European club rugby, more obscure European football leagues, Six Nations, Wallabies. Plus HBO stuff. Netflix is awful. Very limited content. But people who are a bit hard up are trying too hard to convince themselves it’s great, because it’s all they can afford.

  12. Foxtel’s high price is killing it, but Netflix is too cheap to be sustainable. At its present trajectory, it’s taking on $3-5 billion debt each year to fund content and that spend isn’t going down when Disney+ enters the market. It looks like one of those tech disrupters which depends on continued debt or equity raising to stay afloat – although not nearly as bad as, say, Uber. Something will have to give eventually.