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Netflix Tipped To Overtake Foxtel As Fetch TV Starts Box War

Netflix Tipped To Overtake Foxtel As Fetch TV Starts Box War

Foxtel who are struggling to grow sales, following the disastrous launch of their “New” Q3 set top boxwhich was launched,  in response to the arrival of Netflix, is now facing the real risk that Netflix will overtake them.

Also set to hurt Foxtel, is the launch next month of a new media player by Fetch TV that makes the Q3 look like “seriously old technology”. The Fetch TV new box that has more RAM and faster processers than the Q3 and it instantly plays back content unlike the Q3 box that struggles to process commands and is slow recovering content from the drive.

According to new research from Telsyte the Australian uptake of subscription video on demand (SVOD) services has increased by almost 50 per cent in the last year and will overtake pay TV services such as Foxtel in the next three years.

Roy Morgan research released last week revealed that Netflix has more Australian subscribers than nearest rivals Stan and Presto combined however both Stan and Presto which will be on the new Fetch TV box are now growing faster than Netflix.

The Telsyte study found there will be 2.7 million active online streaming subscriptions in Australia by the end of June, which will represent a growth rate of 46 per cent over the same period in 2015. Of those subscribers 1.9 million are on paid accounts, rather than free trial periods, which services typically offer to lure in customers.

Telsyte said trends suggested the total number of paid SVOD subscriptions would rise to 4.1 million in June 2019, which would see it well beyond the current number of Pay TV subscribers (largely Foxtel) which currently sit at 3.3 million. Pay TV attracts much higher revenue than SVOD services, largely due to providers requiring customers to subscribe to packages of multiple channels, rather than selecting individual programs or channels.

While Netflix leads the pack of streaming services, Telsyte found that many households subscribe to more than one provider. Averaged across the country subscriptions per household has increased from 1.5 to 1.7 during the last 12 months.

As of the first quarter of 2016, Amazon Prime is set to challenge Netflix Stan and Presto however the big US streaming Company is set to face content problems in their first year due to already established SVOD players having the rights to content that Amazon Prime have in the USA and the UK.

The AFR said that Netflix, Stan (which is part-owned by Fairfax Media) and Presto represent about 85 per cent of all subscriptions.
Telsyte managing director Foad Fadaghi said Foxtel could maintain subscribers, but might see average revenue per user decline under increased competition from streaming services.

“While Amazon Prime has been popular overseas, the local success will be largely dependent on the amount of exclusive content and Australian pricing,” he said.

“Existing players in the Australian market have been aggressive in securing content in the past 12 to 24 months.”

He said Telsyte expected Pay TV subscriptions to continue to grow at less than 4 per cent compound annual growth rate in the next four years. While Foxtel would not be marginalised by the streamers, it may be forced to further reconsider the flexibility of its packages and pricing in order to compete.

“Pay TV subscriptions haven’t fallen yet as most consumers have seen SVOD as an additional service to Foxtel or did not have Foxtel to start with,” Mr Fadaghi said.

“Depending on content deals Foxtel could maintain subscribers, but might see ARPU (average revenue per user) decline under increased competition.”

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