Foxtel and OTT – a tough balancing act…

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Foxtel and OTT – a tough balancing act…

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Foxtel and OTT – a tough balancing act…
Foxtel has made several attempts at building a successful OTT service, but the results have been mixed so far.
With Kayo and the potential launch of a ‘Netflix’ competitor, Foxtel is clearly aiming to increase household penetration beyond the 30% mark.
However, in a crowded SVOD market and the potential for further disruption from new entrants and other players, Foxtel faces a tough battle.
In the past 4 years, there has been perhaps no bigger topic in the media industry than the arrival of Netflix and other SVOD players. With Foxtel being the largest Pay-TV provider, it has been at the receiving end as Netflix has captured a substantial portion of the latent demand for SVOD services in Australia. In response to these competitive pressures, Foxtel cut prices in late 2014, taking the basic starter bundle from $49 to $25 a month. The effect of this price cut saw an uplift in subscriber numbers, driving marginal revenue growth in 2015. However, the nature of this growth (volume growth through price decrease) proved to be short lived and Foxtel continued to see both subscriber and revenue declines in subsequent years.
In the last few years, new platforms are threatening to disrupt the most important pillar of Foxtel’s product offering – Live Sports. In response, Foxtel has launched its standalone sports streaming service – Kayo Sports. In this report, we look at how Kayo is performing, the broader headwinds that Foxtel faces and the results from our survey on consumer preferences around video streaming.