Foxtel Is Putting Up A Huge Fight In The Netflix World

Foxtel's total subscribers have risen from 2.6 million to nearly 2.9 million in the first half of 2016, a rise of 8.1%, despite analysts believing the entry of Netflix and its estimated 1 million Australian customers would spell hard times for the company.

The numbers outlined in Telstra's half yearly results also show that Telstra, who owns 50% of Foxtel, had a 5.5% growth in revenue from their share in the company, bringing in $1.66 billion.

Customer sign ups through Telstra itself are up 17.9%, with the telco alone signing up 100,000 more customers in the half year.

More importantly though is that Foxtel's churn rate is down 1.2 percentage points from 11.4%, meaning more subscribers are happy with the service and are sticking with it.

Telstra says this is a result of an increased investment in quality TV content.

Their IPTV subscriber number, which includes Foxtel on T-Box, Bigpond movies and Foxtel Presto is also up 17.9%, from 190,000 to 224,000. They don't break up Presto from the rest, although it's safe to assume it makes up the majority of the growth.

The growth in subscribers flows on from pricing and package changes that were introduced in November 2014. Effectively, the cost of subscribing to Foxtel was halved, with the base package adding more channels and dropping its price from $50 per month to $25 per month. A big investment in sporting content has also contributed.

These latest Foxtel results back up Citibank's theory that it's not Foxtel that will suffer from the introduction of streaming services, but rather the bottom line of free-to-air networks.

Roy Morgan has been running surveys to estimate Netflix's impact on the market since it launch in Australia last March. In April 2015 it estimated Netflix had 286,000 subscribers, jumping to over 1 million by the end of 2015. But that growth in customers has mostly come from those who didn't have Foxtel to begin with, with 1 in 7 Australian's now believed to watch no free-to-air TV.


Comments

    In fairness they have made their packages and plans more flexible in response to Netflix and other streaming services, so much so that when I was offered a free 3 month trial when I upgraded my phones last month I nearly accepted, but ultimately opted not to as I know I'm too lazy to cancel it.

    Foxtel certainly has content I want too. Speaking of, I should make sure my father-in-law's password still works on my iPad before season 6 of Game of Thrones.

    The numbers are bogus. As mentioned briefly in the article, yet again they are including subscribers to the Presto streaming service - which they refer to as "Foxtel Presto" even though the actual service contains no Foxtel branding at all - in the numbers.

    It's pretty safe to say, with all the free months of Presto that they've been doling out through promos, shop-a-dockets and directly via email, that a large percentage of "subscribers" to Presto don't pay a cent and never have. Myself, I've been a Presto "subscriber" for 8 months now. First the free 30 days, then a 6-month free sub from a promo code, and now into a 3-month freebie from one of FIVE 3-month codes they emailed me as "a gift from Presto", timed neatly to coincide with the collection of these numbers ("give these codes to your friends or use them yourself!")
    So even though I haven't had Foxtel since its first year of operation two decades ago, according to the numbers I am a "Foxtel subscriber".

    It's pretty clear now that Presto exists only as a foil to buffer Foxtel numbers against subscriber defections to Netflix/Stan. Presto itself is now removing more content than it's adding, in the last two months adding almost zero TV content while removing half the HBO library that helps make them unique.

    The fact that they refuse to break out the numbers attributed to Presto tells you all you need to know.

      If people are going to leave Foxtel it's not going to be because they are going to Netflix or Stan instead. Most people don't decide that they no longer like Game of Thrones and will watch Orange is the New Black instead. With each company having their own exclusive content, real fans of television just have to get all of the services in order to watch everything.

      And the real winner for Foxtel is all their sports rights. The biggest (and possibly only) threat to them is if others continue to chip away at their sports catalogue, given the vast majority of Foxtel subscribers probably only justify their subscription because of access to sport. If they are able to get it elsewhere Foxtel is doomed.

        Agreed. Sport is the only legitimate reason Foxtel can survive. Remove their massive live sport rights and they are no longer so attractive to people.

          Yep, sports are the only things really keeping Foxtel afloat right now.

          They've just signed new deals with the NRL and AFL for the next 5 years but I can't wait until those contracts are up and the likes of streaming services have the chance to bid for them. Foxtel will be walking on very thin ice. They didn't bid this time around because they said the technology isn't there to support large scale live streaming of sporting events yet - but in 5 years time it certainly will be.

          And despite the price reductions it's still $50 a month minimum if you want to watch sports, because they insist on their archaic pricing model and plans, making you sign up for the base $25 a month package that has 40 channels you don't want then add the $25 sports package on top of it, instead of just allowing you to, you know, sign up for the channels you want. Add on another fee if you want to watch Game of Thrones and anything else that's actually decent.

          No thanks, I'll keeping paying $12 a month to watch whatever I want whenever I want to.

      I've been a registered Presto user since it was first introduced, and haven't paid them a single cent so far. I don't watch it much, but it's nice to have options when you're looking for something interesting.

      Presto is a rubbish service compared to both Netflix or Stan - but it's free, and I can keep watching for free, I'll keep subscribing.

    When we moved house recently, we all but decided to disconnect Foxtel for good. When they halved the price of the plans, there was nothing coming back for being loyal customers. No upgrades to the current plan, reduction in fees etc. Anything would have been better than nothing and being ignored.

    When we called the cancel, we basically said the above to the salesperson. Surprise Surprise, "For being loyal customers' we'd receive free install etc. all free free free, and upgrade in plan for less per month etc.

    Being on the new plans now, I can see how many people are happy to become contract customers. More flexibility, better pricing. Sports and GoT etc has everyone covered.

      I'm sure I'm not the only one who gets irritated by the frequency with which companies "reward" their "loyal" customers only at the point where said customer has indicated that they're sick of being treated like a commodity and are ready to jump ship.

      I've seen the same thing happen with Internet plans, where you're stuck on a plan with a low bandwidth cap unless you call to ask for an increase (via a new plan with a better cap that costs the same.)

      yes, I'd be interested to know if this counts free trials that never start paying.

      I often set up a Foxtel Play two week trial on a burner email address when I need to watch a particular rugby or cricket match and then cancel it (I tried watching the rest of their channels but they repeat content so much I couldn't see the point)

      If they include people like me it must dramatically inflate the numbers

    For now. The shift to IP TV is a massive cultural change and change doesn't happen overnight. Especially when we have the internet service of 3rd world countries and so little compeition in the market. That is, Global distribution.

    Foxtel's overpriced content is exactly that, and when their is actual competition in the market foxtel will decline. Netflix library is terrible and has no same day release content excerpt for netflix originals..boring small catalogue. Foxtel still wins, for now.

    Last edited 19/02/16 9:52 am

    What Foxtel has that Netflix is lacking here in Australia is fast tracked shows. Yeah, some stuff on Foxtel is a few months old once it aires. But by the time it shows up on Netflix the season is close to a year old. And just because people have Netflix or Stan does not mean they won't get or have Foxtel.

      "months old" try years! Some early seasons are just missing altogether. The netflix content library is utter trash. Not comparable to FTA or payTV, it lacks too much content. At least FTA has more up to date content.

      Last edited 22/02/16 4:55 pm

    I just resubscribed a week ago (probably going to cancel it before the end of the month) to see what Foxtel was like now, and I was hit with some immediate and hard disappointments. Foxtel Go was a selling point, but the video quality is horrible. Standard definition only, in the year 2016! And one big thing that struck me is that the "Anytime" library is incredibly and arbitrarily restricted outside of big-name series for catchups like Game of Thrones. For example, I went to watch South Park on Anytime, and for some reason it only has season 3. I don't understand why the previous seasons aren't there, why the later seasons aren't there, or why any episodes or seasons that are even remotely recent aren't there. Even Netflix doesn't pull that kind of crap for most shows!

    As for the actual live TV component, it's just not convenient for me at all. Perhaps Netflix has spoiled me in this regard, but I want to schedule when I watch a show around the rest of my life, not vice versa. And recording shows (which I'm not entirely sure is even possible via Foxtel Go - I have to check) is a wholly inconvenient and unnecessary system when they already have some web streaming set up.

    Honestly, I think even less of Foxtel now that I've tried it again. The sooner that the traditional cable TV model shrivels and dies, the better.

    Last edited 19/02/16 10:24 am

    These latest Foxtel results back up Citibank’s theory that it’s not Foxtel that will suffer from the introduction of streaming services, but rather the bottom line of free-to-air networks.

    That's not Netflix though, that's 15 years of over investing in low budget low quality TV shows and removing any diversity from what they play. I'll admit with the switch to digital and the new channels they tried to repair a little of the damage, but with a dead zone of 10-15 years where almost nothing worth repeating was produced it's not a battle they're going to win.
    They were always going to struggle in a post-internet world where viewers are flooded with alternative entertainment options, but for at least a decade TV has been more or less irrelevant to anyone who doesn't enjoy semi-scripted game shows. Even in a pre-internet world 4+ hours of Big Brother per day seven days a week would have pushed viewers away.
    This isn't Netflix, piracy, Foxtel, the internet, smartphones, positive attitudes towards health and fitness or anything else. This is free to air putting all it's eggs in one basket. This is pandering to one or two demographics and then having those demographic lose interest. All Netflix is doing is picking up people who free to air spent the past 15 years pushing aside.

      Free ad-based revenue entertainment will be around forever. It is only going to increase in competition. After all, it's Google's entire business model.

    Current customer of Netflix, Stan & Foxtel platinum, and am happy with all of them. Netflix Australia isn't anywhere close to being a replacement for Foxtel just yet, there reaches a time when you have literally scrolled through the same menus time after time yearning for something to watch. Sometimes I just want someone else to make the decision for me, and Foxtel is the best at this.

    Not to mention the abysmal range of movies on streaming services, and being a big sports fan I shan't be disconnecting any time soon.

    Their revenues increased $86m (5.5%), but their expenses increased $122m (11%).
    Depending on their accounting methods, they may book "free X month subs" as revenue but issue the discount as an expense. You get the same net result as profit, but your revenue (& expenses) are increased.

    I'd wager that they've done something like that, and that would wipe out most (if not all) of the "growth" in revenue.

    It's always funny reading Foxtel articles. They must be Australia's most hated Brand. I wonder why....?

      Because people love to bitch and moan about how expensive it is. That really is the extent of it.

        Isn't more of a value and pricing issue?
        Imagine if there was only one shop in Australia selling socks. And if you wanted to buy socks you were forced to get them in a bundle with a t shirt, undies and a tie!
        That's why Aussies hate Foxtel isn't it?

    well if you have foxtel your an idiot moron bogan aussi3...just like u whimps think afl is better than football go jump off a bridge lol..foxtel is a waste of money just to see some repeated gaye sports mainly cricket afl and nrl..snoozefest $50 for crap..i thought aussies could only afford kfc and collecting taxpayers money? how they affording foxtel lol..

    Hahahaha man i hope thats a troll, i seriously worry about you if it isnt. Foxtel is what it is, their sports coverage is awesome, not just ball sports like afl but also motorsports, like F1, and some of the more obscure stuff u wouldnt find elsewhere. If people desir to see this coverage enough to pay foxtel the money, then power to them, the passion is worth it!!

    Hang on, isn't this because of subscribers to Stan, their Netflix like spin off?

      Presto is the Foxtel thing. Stan is owned by Nine and Fairfax.

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