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.