Price cuts boost Foxtel as Netflix surges

Price cuts introduced ahead of Netflix’s Australian launch earlier this year have helped Foxtel increase its subs base to a record level.

Richard FreudensteinThe News Corp and Telstra-backed pay TV operator reported strong subscriber numbers as profit decreased on the back of its November price cuts.

These were introduced ahead of Netflix’s Australian roll out in March, and the latest Foxtel numbers come as independent research puts Netflix’s Australian customer base at 1.89 million. That compares to Foxtel’s 2.8 million, an increase of 230,000, or 9%, year-on-year.

The numbers include subs to Presto service although specific numbers for the SVOD service are not known. Foxtel overall annual earnings were down 8% at A$981 million (US$719 million).

Research house Roy Morgan published the estimated Netflix numbers, noting an increase of 737,000 in July alone. The US-based streaming service now has an overall market share of 8%. It is not known, however, how many of these are on the free trial.

Roy Morgan said that as of July, 7.3% of Foxtel homes also subscribed to Netflix. “In July, 7.3% of Foxtel’s homes (171,000) were also subscribing to Netflix – a rate not much below the national Netflix take-up of 8.0% of households,” the firm said in a note. “The consistent number of Foxtel homes suggests that many of its customers are, for now at least, trialling Netflix as an add-on to their main pay TV provider.”

Foxtel boss Richard Freudenstein told local press that the introduction of Netflix in Australia has actually enlarged the overall pay TV market. The pay TV provider’s numbers were broken out in telco and media company Telstra’s annual report. It also revealed a sharp decline in the pay TV operator’s programming obligations.

Its current ‘other commitments’, which relate mainly to programming commitments and minimum subscriber guarantee clauses in large volume deals, total A$2.8 billion compared to A$4.7 billion a year earlier. “The reduction in commitments resulted mainly from new agreements for pay television programming signed by Foxtel during the period.”

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