It is clear to all and sundry that Foxtel has plunged into a subscription death spiral.
Already facing debts of $2.5 billion, and with customers cancelling subscriptions en masse following the shuttering of live sporting events across the globe, Foxtel was forced to axe 200 jobs last month and another 70 jobs this month in order to cut its cost base and keep the company financially solvent.
However, Foxtel’s executive director of TV, Brian Walsh, is doing his best to put on a brave face. Walsh claims the COVID-19 pandemic could usher in several positives for Foxtel:
[Brian Walsh is] confident its low-cost entertainment streaming service, a sibling to Kayo Sports, which is due to launch in four or five weeks, will appeal to the 70 per cent of the population that doesn’t subscribe to Foxtel or who aren’t willing to pay for its premium product.
And he hopes that giving Fox Sports’ customers free access to the drama, movies and lifestyle tiers will reinforce to sports fans the value of the platform’s scripted and non-scripted content.
In addition, with most of the population in lockdown, Foxtel has seen a 105 per cent spike in viewing for its movie channels and uplifts for the drama and lifestyle channels and for pay-per-view movies such as The Invisible Man and The Hunt.
Foxtel’s new “low-cost entertainment streaming service” is rumoured to be called Binge and will offer subscription box sets to shows like Game of Thrones, Secession, Big Little Lies, and so on. It is basically a cut-down version of Foxtel Now’s streaming service (currently $25 a month), but will reportedly be priced at $10 to $12 a month to compete head-to-head with Netflix, Stan, Amazon and Disney.
While Binge should be successful in providing Foxtel with growth in subscription numbers, it is also likely to crush the company’s margins. This is because subscribers to Foxtel’s higher-priced tiers, including its traditional cable broadcast service, will be incentivised to downgrade to Binge.
Indeed, Foxtel has experienced this very margin compression over recent years as it has progressively introduced lower-priced offerings, including Foxtel Now and Kayo, in a bid to compete with lower-priced online streaming competitors. These have driven customers away from Foxtel’s cable service.
This time around will be no different.
