Latest figures show that Australians are spending millions of dollars on digital streaming services.
All up we spent $143 million on services such as Quickflix and iTunes last year, up from $117 million during 2012, a jump of 22%.
Those figures make Australian the second biggest market for such services on a per-capita basis.
And that means that Foxtel needs to act quickly if it wants to remain competitive.
Foxtel enjoys a cosy monopoly in Australia, meaning it has only ever had to compete with free-to-air networks.
But high-speed broadband has become more common, and will be getting faster and even more widespread in the coming decade.
As a business model under threat, free-to-air networks in Australia have been relatively quick to adapt.
The networks are facing falling revenue, a shrinking ad market, and viewers shifting to digital. Channel Seven, Nine and Ten all have catch-up or streaming services, as do SBS and ABC.
In the US competition has been even fiercer. There, free-to-air networks aren’t just competing with hundreds of cable television providers, but a huge number of popular streaming services too.
Because they’ve had to compete in a tight market place, they’ve innovated and have jumped into streaming.
Foxtel on the other hand, is only just getting skin in the game.
They’ve launched a new service called Presto, which will offer unlimited streaming of movies across Foxtel’s channels for $19.99 a month.
That’s a smart move—consumers have already shown they’re willing to pay more for movies. That 22% rise in revenue came off the back of a 15% rise in the number of new subscriptions.
The other thing up Foxtel’s sleeve is their acquisition of the rights to popular HBO series Game of Thrones.
Foxtel stitched up a deal with HBO that prevents Australian viewers accessing the show on iTunes and Quickflix before Foxtel has screened the entire series.
The advantage of Foxtel’s service over Quickflix is that it is focussing on movies, not TV shows.
Though the service is $5 a month more expensive than Quickflix’s, its back catalogue of movies — everything that has screened across its channels is larger than Quickflix’s meagre offerings.
But for some reason Presto will only be available — initially at least — on computers and iPads, while its competitors are offering multi-device compatibility.
That’s a baffling move, especially considering rumours that both Netflix and Virgin are looking at setting up here.
And given that Australians are spending more money on these services than ever, it looks certain that there will be more competition and more streaming services coming our way.
Foxtel will need to do more if it is to compete.
Callum Denness
Contributing Editor, Money Morning
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