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Aussie TV Broadcaster Dismisses Netflix Threat

10 Aug, 2015 By: Erik Gruenwedel

Netflix CEO Reed Hastings last winter told the media in Mexico he believed the TV network broadcast business model would be gone by 2030. The result of a growing direct-to-consumer entertainment business model driven by on-demand programming.

Yet Richard Freudenstein, CEO of Australia broadcaster Foxtel, isn’t buying the doomsday forecast. The executive said TV broadcasts down under appeal to a wider audience than subscription streaming, which he said largely offer content targeting specific viewers. 

Netflix, which bowed service in Australia and New Zealand in March, reportedly has generated more than 1.5 million subscribers — dwarfing rival services, including Foxtel’s nascent Presto SVOD service with less than 200,000 subs.

“There has been a lot of hype around SVOD and clearly some big early numbers but over time people will realize there is a big difference between SVOD and a Foxtel service,” Freudenstein told The Australian Financial Review.

Foxtel, which is 50% owned by Rupert Murdoch’s News Corp., operates both cable and satellite TV operations to about 2.8 million subscribers. It grew subs 7% in the most-recent fiscal quarter while lowering churn.

Specifically, Freudenstein believes live event programing such as sports and news, coupled with original episodic content exceed SVOD offerings.

“We are investing in more Australian content … and we show more first-run programs across our platforms in a week than Netflix does in any year. There is absolutely room in Australia for both SVOD and Foxtel to grow,” he said.

Data from Broadcasters’ Audience Research Board (BARB) in the United Kingdom would seem to support Freudenstein’s claim. It found that since Netflix bowed service in the United Kingdom and Ireland in 2012, it is in about 15% of U.K. homes, with SVOD accounting for 16% of video consumption in those homes.

Overall, Netflix households predominantly also subscribe to pay-TV services such as Sky or Virgin Media. BARB contends Netflix represents less than 2.2% of all video consumption in the U.K.

"Most of the companies that predict the death of TV are actually trying to become TV," said Tess Alps, chairwoman of U.K. broadcast marketing firm Thinkbox. "And the likes of Google and Apple are using the word 'TV' because it's aspirational and signifies quality to viewers. Netflix is hilarious. To my mind, there is no question it is part of the TV landscape — it buys content from broadcasters and producers, it's available via TV platforms, it's watched on TV sets, it invests in original content, which it sells back to broadcasters — yet it positions itself as a TV-killer."



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