This site has gone to great lengths explaining how Foxtel’s subscriber base is in a “death spiral”, which has been accelerated by the coronavirus lock down.
Even before this lock down came into effect mid last month, Foxtel’s subscriber base was declining while its streaming rivals recorded strong growth:
The above charts from Roy Morgan Research tell the story. Foxtel suffered a 10.7% decline in subscription numbers over the two years to February 2020. Over the same period, Netflix (+36%), Stan (+105%) and Amazon (+462%) all experienced strong subscriber growth.
The situation facing Foxtel has since turned critical with many thousands of customers reportedly seeking to cancel their subscriptions following the global postponement of sporting events across the globe, including the NRL and AFL seasons.
Foxtel’s strength has always been in live sports. Therefore, with the sporting calendar now empty, there is far less incentive to subscribe to Foxtel over cheaper streaming options like Netflix, Stan, Amazon or Disney.
While the decline in residential subscriptions has been well documented, Foxtel is also facing a collapse in lucrative commercial subscriptions and Pay-Per-View revenues. Pubs and clubs, gyms and hotel accommodation have all been severely impacted by the coronavirus lockdown.
Yesterday, News Corp explicitly warned of further decline across both its residential and commercial subscriber base:
“[News Corp] expects the cancellation or postponement of sports events for which it has broadcast rights to adversely affect subscription revenue from broadcast and Kayo subscribers and, together with adverse economic conditions, to negatively impact advertising revenue,” News Corp said in a statement to the US Securities Exchange Commission.
“In addition, closures of pubs and clubs and lower occupancy at hotels throughout Australia are expected to adversely impact commercial subscription revenues.”
While much lower in number, commercial subscriptions typically cost several thousands of dollars and are a major earner for Foxtel. Thus, the coronavirus lock down is hitting the company especially hard across all areas.
This helps to explain why Foxtel last week announced 200 redundancies as well as placed a further 140 staff on furlough.
With revenues collapsing across the board, Foxtel is facing a fight for survival.