Cash starved Foxtel eats itself

Foxtel’s new online streaming service ‘Binge’ will reportedly launch next week with an expected monthly price tag of $15.

The service will give subscribers access to over 10,000 hours of content, including curated local and international dramas and movies.

Foxtel is hoping that the new service will drive subscription growth by attracting new customers that are not already subscribed to its existing premium services.

I see three major problems with Foxtel’s ‘Binge’ strategy.

First, if Binge does indeed launch at $15 a month, it will remain relatively expensive against the entry-level packages offered by its main rivals Netflix ($10) , Stan ($10), Amazon ($7) and Disney ($9). Thus, it will remain at a significant price disadvantage.

Second, ‘Binge’ will compete directly with Foxtel Now, whose entry-level package is priced at $25 a month and arguably offers less because it does not include movies (but does include live television).

Accordingly, many existing Foxtel customers will likely downgrade to the cheaper Binge package, crushing the company’s profit margins.

Finally, Foxtel has arguably moved too late into the discount streaming space. The market is already packed with offerings and there are question marks over whether cash-strapped Australians will subscribe to another service in significant enough numbers to turn Foxtel’s fortunes around.

That said, more competition is always good for consumers, and they stand to win from Binge via cheaper access to exclusive content, like HBO.

Leith van Onselen
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Comments

  1. Sounds like Foxtel is entering its ‘Last Dance’, not the Michael Jordan version on Netflixs.

  2. Their offerings are now too confusing. They have 3 offerings that are sort of the same but at different price points and non of them hit the mark.

  3. I think you can bet your bottom dollar it will have limited app support at launch as well, which is just such a ridiculous own goal it isn’t funny. So you have that initial burst of interest, and when people go online to sign up they notice, oops, no LG TV’s, no Xbox One, no PS4, potentially no Apple TV’s…
    I’ve 3 of the above but still do not expect to be able to get on considering the app support they provide on their other services and comments I have seen made on initial availability of Binge. Streaming for my family is about us all getting around the tv for a family show sans ads.. the ability to watch on our laptops or iPad is not a draw for us. And we don’t have or want Chrome so…
    Every segment not covered means a smaller addressable market for their service.

    • adelaide_economistMEMBER

      Agree that apps have been a big weakness with Foxtel in all its forms. Even Kayo was a pain and the implementations of Foxtel Now (and its predecessor the name of which escape me) have been a disaster. The average person shouldn’t have to care what platform their TV is running – as long as it’s not really old or a yum cha brand running non-stock androidTV – then it should just be in the app store/app section downloads and just *work*. But so often doesn’t. Most of the demographic for foxtel content isn’t exactly the bright and young, which doesn’t help as expecting pensioners to sideload apps using all sorts of third-party trickery – on their TV of all things – is not a recipe for high market penetration.

  4. didrakebMEMBER

    Leith, I subscribe to Foxtel Now and think its good value and I mainly just watch live TV. You get Fox news, Sky News CNN, CNBC, Bloomberg TV, BBC. I like being able to see foreign news whenever I want. The little overseas news you get from the ABC is all one sided, its interesting to see another view. I am not interested in Netflix as it does not have any of this content. I doubt Murdoch would let Foxtel dissapear, didn’t he prop up the “The Australian” for years…