Choose an Australian media organisation that you think faces big opportunities and/or challenges.
Foxtel is an Australian media company which has faced significant crossroads in the digital era. The company’s current ownership is split evenly between Telstra Corporation Ltd and The News Corporation Ltd (Foxtel, 2018). Foxtel’s partnership with Telstra results in a utilisation of broadcast television, broadband and telecommunication bundles across a large network, with services widely available across rural and metropolitan areas. Additionally, News Corp’s co-ownership of the media company allows Foxtel exclusive access to incredibly sought-after content including that of HBO, FX as well as movies distributed by 20th Century Fox (Mediaweek, 2016). Currently, Foxtel distributes a wide range of broadcast, digital and on-demand content including live sport, television, movies through cable, satellite and broadband. This includes original Australian media including shows such as Picnic at Hanging Rock, Wentworth and Top of the Lake. Foxtel’s payroll currently includes upwards of 2,800 staff (Foxtel, 2018), as well as reportedly committing to invest more into the Australian film industry as of 2016, cutting channels to allocate additional funding to original shows (Groves, 2017).
Foxtel was founded in 1995 following the success of AUSTAR, Optus TV and Australis, rapidly gaining subscribers and momentum. (ASTRA, 2006). The service remained as a broadcast cable subscription-based service until 2005 when Foxtel released their ‘IQ’ digital service. This move would reinforce Foxtel and Telstra’s prime positions as duopolies within the Australian subscription television market (Wiseman, 1998) whilst subordinate services such as Optus’ equivalent were declared insolvent or were absorbed by Foxtel. In 2012, Foxtel had adapted their subscription-based broadcast/digital model to include the Foxtel Go app, a mobile broadcasting service fit for the digital era available to their existing subscriber-base (PR Newswire, 2012). The app itself was a minor disappointment for subscribers, due to its non-user friendly interface and infrequent developer feedback. In 2014, Foxtel and the Seven Network entered joint venture Presto into Australia’s developing streaming/video-on-demand market (Taylor, 2014), subsequently fully acquiring the company after considerable financial losses in 2015 (Reichert, 2015). In 2016, Foxtel announced the closure of Presto as well as the release of Foxtel Now, a low-cost subscription streaming/video-on-demand service separate from the company’s original broadcast business model (Foxtel, 2017). In the latter half of 2017, the company also announced Foxtel Broadband which boasted the “recently expanded availability of NBN services” (Foxtel, 2017). This would include packages converging Telstra services as well as entertainment bundles with Foxtel Now, again taking full advantage of Foxtel’s ownership and product distribution schemes. Again proving some aptitude to adapt to digital-age trends, the company announced their Foxtel Now Box, connecting to both TV antenna as well as broadband networks (Yoo, 2017) as a competitor to Apple TV.
The marketplace which surrounds Foxtel as well as its streaming platform varies locally as opposed to globally. Prior to the release of Netflix Australia in 2015, the marketplace for SVOD subscription services was only in its preliminary stages with Australian content providers Stan and Quickflicks making their respective debuts (Roy Morgan, 2015). However, although Netflix’s Australian platform was unavailable prior to 2015, Australian consumers were able to pay for and access the service using VPN blockers in the years prior to the launch of the Australian glocal interface (Tan, 2015). However, prior to Netflix’s initiation to the Australian market, it was clear that Foxtel’s equivalent Presto would be entirely dominated by the presence of a globalised entity within a growing local market. As of more recent years, Australia’s streaming subscription service marketplace is dominated by four leading service providers, two of whom operate globally: Foxtel Now, Stan, Netflix and Amazon Prime respectively (Choros, 2018). Although each entity provides a divergence of content at varying prices, Foxtel’s the most expensive with a minimum of ten dollars per month. (SBS, 2017). Moreover, Netflix still maintains prime position as frontrunner with 7.6 million subscribers as of September 2017 (Roy Morgan, 2017). Additionally, the market also contains a number of free streaming services including companion services for major broadcasters as well as more notable examples such as SBS On-Demand and ABC iView. Thus summarises a diverse market which requires Foxtel to differentiate themselves and deliver a stellar user-interface in the face of insurmountable globalised competition.
However, in terms of position within the cable subscription market, Foxtel operates as a monopoly with no competitors. Thus, it is clear that the majority of Foxtel’s recent and potential growth lies within its expansion into digital spheres and SVOD services with lessening demand for Foxtel’s original business modes.
Foxtel’s major strengths as an Australian media company are evident through their leading position within the broadcast cable subscription market (Screen Australia, 2011). Moreover, their business model which operates at low-costs accessing a large subscriber network, ideally positions them to both extend their relationships with existing consumers, as well as expand their network through new product and service innovation. Moreover, this access to niche, specific audiences proves appealing to advertisers, with targeted, interactive advertising opportunities (McIntyre, 2004).
Foxtel also produces and distributes Australian content in partnership with Screen Australia, forging further relationships with international distribution entities. With commitment to “build its drama slate to at least five major series each year, up from the current average of two” (Foxtel, 2015), Foxtel currently funds upwards of seven ongoing Australian productions. Furthermore, taking full advantage of Foxtel’s conglomerate ownership by News Corp, Foxtel’s original Australian-grown content is distributed globally through avenues which include “British-based pay-television company Sky plc” (Greenhalgh, 2017) working to globalise Foxtel’s enterprises.
This year, Foxtel released Picnic at Hanging Rock, an adaptation of Joan Lindsay’s acclaimed novel and co-production between Fremantle Media, Foxtel and Screen Australia (Screen Australia, 2018). The show’s release was designed to burgeon interest in Foxtel Now, with the entire series made available to ‘binge watch’ on the day of release, in contrast to each episode being shown per week on the cable service. Additionally, the international release of the mini-series was strategically previewed at Berlin and Tribeca Film Festivals, creating buzz and discussion online prior to international release on Showcase and Amazon Prime. Furthermore, the bid to sell Picnic at Hanging Rock to U.S. distributors proved a notable move for Australian native production company Fremantle Media, marking “the largest U.S. commercial deal ever for [an Australian] television series” (Keast, 2017). The mini-series would be the third of Foxtel’s dramas to be sold to the U.S. market, presumably with more to follow.
Their biggest strength, however, lies within their licencing deals and distribution rights by virtue of their conglomerate ownership by News Corp, granting Foxtel exclusive access to HBO’s most successful television series Game of Thrones as well as a myriad of other exclusive film and television content. Additionally, Foxtel maintains further attested viewership through exclusive sports broadcasting deals, preserving consistency within their broadcast subscriber schemes.
However, whilst Foxtel’s native broadcast model as a subscription cable service has functioned proficiently with a large network of subscribers, for the most part, the media company has been slow to adapt to SVOD services as they became available in Australia. Especially with the broadcast model in demise, Foxtel’s only answers to Netflix’s Australian platform were companion catch-up app Foxtel Go and Presto, which would prove a notable financial disappointment for the company. Prior to the announcement of Foxtel’s dedicated streaming service Foxtel Now, the company had experienced sizeable subscriber losses, resulting in a net income of nil during the first quarter of 2017, compared to $32 million during the same period only one year prior (SBS News, 2017). Additionally, although Foxtel Now assumedly brought a slew of new subscribers to the SVOD interface prior to the premiere of the seventh season of Game of Thrones, customers experienced service interruptions and glitches, undermining their primarily new subscriber-base’s expectations of the service. Moreover, once premium content has run its course with specificity to Game of Thrones, it can be assumed that a significant challenge for Foxtel Now would be to maintain the interest of subscribers at a cost-effective rate. Foxtel’s clear main competitors lie within Netflix and Stan, the former of whom has set the standard for the streaming model globally. In 2017, one in three Australian consumers were paying for Netflix subscriptions, with Netflix’s budget for original content at “around $8 billion… in 2017 alone – or more than the entire valuation of Foxtel” (Levine, 2017). Furthermore, with Foxtel’s traditional model relying heavily on advertising, the SVOD model remains ad-free for the time being.
Finally, Foxtel’s apparent reluctance to enter the SVOD market is evident through their lateness to provide an equivalent option akin to Netflix. The company has been previously embroiled in a court action against piracy sites, intending to “[combat] online piracy, which continues to undermine Australia’s creative industry” (Foxtel, 2017). Much of the discussion surrounding online piracy in Australia had revolved around Foxtel’s initial reluctance to provide an alternative to their costly cable service, evidently forcing them to create a solution for customers in the form of Foxtel Now. Subsequent to the release of Foxtel Now, however, it seemed that the more cost-effective streaming service had proven too little too late, particularly after their servers crashed during the release of Game of Thrones season 7, arguably the main reason for their influx of new customers. Whilst it is true that the majority of Australian viewers who stream or download through illegal avenues will pay for access under the right circumstances, Foxtel Now’s users may have been left with no alternative option than to pirate the episodes that the service had failed to deliver (Simpson, 2017).
During the next three to five years, Foxtel has the clear opportunity to entirely digitise their operation, abandoning their traditional cable broadcast service to focus on growing the user-base of Foxtel Now. Although this would be a tough sell for Foxtel, especially due to their position as market leader in Australia’s cable-broadcast sector, their position can be disputed due to their outright lack of competition. Approaching Foxtel Now with closer similarities to Netflix’s long-tail economic business model may attend to keeping subscriber costs relatively low at varying tiers for more niche content packages. Thus, their product designers would have the opportunity to personalise their interfaces to their consumers, assimilating with the digital age’s convergence model to integrate between platforms for consumers on the go (Hamilton, 2017). Moreover, it should be stressed that Foxtel Now’s current subscriber rates are not competitively priced in comparison to their main competitors Netflix and Stan.
One of Foxtel’s undoubted strengths is their exclusive access to highly sought after content, which they have clearly been utilising as a selling point for new customers. Expressly during this ‘golden age’ of television, maintaining this access to some of the most rated and talked about content is indispensable to Foxtel going forward. In addition to decreasing its channels to focus on acquiring international content, Foxtel should double its efforts in creating new Australian subject matter (Groves, 2017). Although any of one Foxtel’s competitors have the ability to sign distribution deals, only Stan has demonstrated the ability to create original native content to a far lesser degree than Foxtel’s manifest capabilities. Thus, in order to set themselves apart from their competitors, it would be highly advantageous for Foxtel to persist in creating inventive Australian productions for local audiences in addition to international audiences via profitable distribution deals. Not only would this continue to bring local content to their own distribution services, but bring diversity to a mix of local and international content to their services. This also provides Foxtel with the opportunity to set the standard for streaming services (including global company Netflix) to set quotas for the Australian production of content. These strategic recommendations are likely to set Foxtel on course for approaching Netflix as a locally-grown globalised company with roots in the Australian film industry, rather than a subordinate service stuck between eras.
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