Foxtel CEO Patrick Delany has defended the pay-TV group’s Kayo Sports streaming service, after its subscriber base declined in the December quarter. Delaney argues that four of the five major sports in Australia end their seasons in September, thus Kayo can expect to have fewer subscribers in a period when cricket is the only major sport. He claims the media group’s sports subscriber base has risen to a record level when measured across its traditional broadcast, Foxtel Now and Kayo services:
“What we’re finding is probably any subs we’re losing for sports, probably they should never have been on Foxtel. If you’ve got to install a set top box, do all the marketing, everything, Kayo is a fabulous zero cost installation type thing,” Mr Delany told the Future of TV Advertising conference on Thursday.
“The company now has more sports subscribers than we’ve ever had in the history of the company.”
Foxtel has three separate services subscribers can use to access its sports content: traditional broadcast Foxtel, sports streaming service Kayo and Foxtel Now, which provides a similar product to broadcast but via streaming…
Foxtel revealed Kayo had more than 370,000 paying subscribers as of February 5. This compared with more than 402,000 as of November 5, 2019. It had 42,000 paying subscribers at the end of December 2018…
Foxtel’s broadcast and commercial subscriber base sat at 2.268 million as of December 31, down from 2.326 million in the September quarter…
“Kayo is the most successful media business to have been launched in Australia in the last 25 years, including Foxtel, and it’s owned by Australians. Netflix is pretty good, but to have 400,000 paying customers for sports alone, at a premium price of $25 with no tricks, no bells, no whistles, is one hell of an achievement. It is a big business already and it has grown very very well.”
While Delaney is putting a positive spin on the situation, the fact remains that Foxtel is fighting a losing battle with the internet.
Sure, Kayo might in isolation be performing well, but it is really just cannabilising Foxtel’s other subscriptions offerings and is likely reducing the company’s average revenue per user.
Subscriptions in Foxtel’s high-margin cable television services are collapsing as viewers ‘cut the cord’ and shift to cheaper video-on-demand (VOD) services like Netflix, Stan and Amazon.
This has left Foxtel with only one area of advantage – sports – which it offers via Kayo at a reduced rate of just $25 per month – well below what subscribers used to pay.
However, even with sports Foxtel is struggling. A few years ago, it lost the broadcasting rights for the English Premier League to Optus. And now it has lost the rugby broadcasting rights.
Slowly but surely, Foxtel is losing the subscription war and faces going the way of Blockbuster – a once dominant incumbent destroyed by changing technology and consumer preferences.
