Foxtel and Netflix: the Beginning of an Unlikely Friendship

When rumours emerged of a partnership between cable giant Foxtel and US streaming company Netflix last week, there was disbelief. Why would a pay TV platform partner up with a direct competitor? Well, ‘stranger things’ have happened. Foxtel has since confirmed that it will be joining forces with Netflix, culminating in an unheard-of TV experience. When one considers the interests of both companies though, it makes sense. In one sense, it may be exactly what Foxtel needs to ensure its survival. On the other side of the coin, it’s a gateway to Netflix bringing more traditional TV viewers onto their platform. 

Foxtel before online streaming

Before the emergence of online streaming platforms, there was cable TV. In this space, the largest player has been Foxtel offering exclusive television shows, as well as recording and on-demand features. Foxtel has also offered Australian viewers quality content, such as Game of Thrones, live sports and Big Little Lies. However, the cost of this service doesn’t come cheap, with the least expensive offering being $49 per month. To put Foxtel’s current predicament in perspective, 5 million Australians currently subscribe. This pales in comparison to Netflix’s 11 million users in Australia alone.

Television for the avid streamer

Foxtel has no doubt cottoned-on to the fact that Australians are now choosing online streaming services over traditional media. For Foxtel subscribers, there is less incentive to stay subscribed to a cable TV service and pay an extra amount for Netflix each month. With this in mind, Foxtel decided it’s better to add this, rather than lose subscribers entirely. Foxtel subscribers will subsequently be able to access Netflix content as early as this week. A designated ‘Netflix’ button will even be added to Foxtel remote controls. However, the same can’t be said for sole Netflix users, as they won’t get access to Foxtel.

Integrate your competitors, don’t compete with them 

For companies that fall under the ‘old media’ umbrella, this can prove a valuable lesson in making the business viable into the future. It is unlikely that Foxtel would be able to compete in the league of Netflix in its own right, as the prices and offerings are simply too competitive. Businesses which acknowledge this fact early on are in a better position to act on it. A good example of this is Disney’s acquisition of 20th Century Fox earlier this year for the modest sum of $71 billion. This deal was itself brokered in anticipation of Disney’s upcoming streaming service (to compete with Netflix and Stan’s). In the age of new media, old media has no choice but to embrace the change in the way people consume entertainment. However, this can be a lesson for business owners everywhere – your competitors aren’t merely there to run against you, they can always join the race with you.

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