Foxtel shuffles deckchairs on streaming Titanic

Foxtel has reshuffled its senior executive team in a bid to reset its operating model:

Foxtel has reshuffled its senior executive team, promoting Les Wigan and Lesley Portwain to newly created roles across its broadcast and streaming operations, reporting to chief executive Patrick Delany…

Mr Delany said the departure of Mr Smith gives Foxtel the opportunity to bring forward its plans to reset its operating model.

“This will involve bringing best-in-class digital technology, including that created for the Kayo Sports streaming platform, across the entire group with the aim of delivering a material improvement in efficiency and customer experience.”

Foxtel reminds me of Blockbuster. A dominant incumbent caught out by changing technology.

After holding a near monopoly over cable television, and fleecing consumers with exorbitantly expensive subscription packages, its profit margins are being crunched as cheaper video-on-demand (VOD) services like Netflix and Stan take over and force it to compete:

To make matters worse for Foxtel, the Australia’s VOD streaming market is becoming increasingly crowded and competitive, with incumbents Foxtel, Netflix, Stan, Amazon and Hayu being joined by offerings from Apple, Alphabet, Disney, Facebook, Hulu, HBO, CBS and NBC.

Foxtel will be the biggest loser as it is forced to pivot from high margin cable services to low margin online streaming.

Consider Netflix, which recently passed Disney as the largest media company in the world. It has a global reach of some 120 million subscribers, very deep pockets, lots of first party content that is unavailable elsewhere and appeals to a variety of tastes.

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

Netflix’s technology is also superior. Its App works seamlessly on most devices, allows content to be downloaded offline, time stamps progress, and rarely crashes.

Amazon, Disney, and Apple are also global behemoths with very deep pockets and expanding first party content.

With barriers to entry smashed, the best Foxtel can hope for is to stem the loss of subscribers through its sports offering. But ultimately, it cannot beat the internet.

Comments

  1. darklydrawlMEMBER

    “But ultimately, it cannot beat the internet.” – True, although Mr Murdoch tried hard to cripple it with the LNP’s NBN. If they cannot stop the streaming they can at least try to make it a sh!t as possible for as many people as they can.

  2. There is no doubt that sport is Foxtel’s only true differentiation to streaming alternatives, HBO’s content must be at risk of migrating to a Warner Media streaming platform. Kayo is currently at $25/month, which is pretty steep compared to the value from Disney+/Netflix etc. Can’t help but wonder if some of the streaming services would start to bid on live sports to improve their offering and get an advantage in an increasing competitive landscape. If for example Amazon was to take the next AFL, NRL and Cricket rights deals to improve the uptake of its Prime service I’d think that it would be the death knell for Foxtel.

    • We’ve only just gone streaming the last couple of months.

      We started with Disney+ given my son and I are Star Wars fans (Mandalorian was excellent) and my daughters love all the disney kid series which they can now manage by series rather than clogging the Foxtel box with taping them all of the disney channel.

      We also picked up Amazon prime and have enjoyed that so much we caved and also picked up Netflix. So with those 3 we are really set. That said, we have Foxtel still but with channels being pulled (Disney channel is leaving the kids package in March) we will look to reduce our package.

  3. I would happily pay $10/m for say 10 sports channels and HBO. No more

    Apple TV+ is literally the worst-designed front end I’ve ever seen. It was designed by drunken grandmas. I literally want to punch my own face in every time I need to use it

    • I don’t mind it! We run Disney+, Netflix, Amazon Prime plus all the free to air apps (SBS, ABC etc) from the Apple TV.

      Or are you talking about the free Apple TV when you buy the device. I agree we aren’t really using that one much.

  4. It’s a bit of an apples v pears comparison. I think Foxtel is way overpriced, but there is joy in being able to just surf through the channels (including news, etc) which is obviously something that a service like Netflix, etc can’t give you.

  5. We have disconnected our Foxtel service after so many years on their platinum package. We aren’t watching it much at all and the streaming options even all together are much cheaper. Kayo is pretty expensive but I may pick it up when the footy season starts. Again I’m not sure I’ll have time to watch it so may not even do that.

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