Foxtel V Netflix.... The Battle Begins!

Mar 09 2015

Having Spent some time in America over the past few months, I have been watching how the Pay TV companies or "Cable" as its called, and the video streaming service, Netflix work and sit in the Market. In the last 10 days I have had the pleasure of staying with 2 different families in 2 different states. Louisiana and Texas. Let me tell you how they operate and I will then bring you back to the relevance of Foxtel and Netflix in the Australian market.

So, first things first, lets get this straight. Nobody really watches Free-to-air. There is the Morning show on NBC broadcast from the Rockefeller Center in New York, and they also have rights to The Voice. Outside of that, its pretty dismal. Australia has a lot to be thankful there, for moment at least.

So, for the Family in Baton Rouge, they have cable. Really its the equivalent to Foxtel in Australia. These guys are Mid to late 40's, 2 kids, 2 dogs, and a cat. They are pretty normal. And for the People in Houston Texas, they are late 50's/early 60's, not pets, no kids left at home. Also Pretty normal. They use streamed Media over the internet, like Netflix and others. The thing I noticed about each family is there adoption of technology in their life. The Family in Baton Rouge, are rarely on Facebook, the other family, live on it. They also Live on netflix. Whilst the family in Baton Rouge, really only just new what it was, but that was about it.

This was a real eye opener for me, as I am a big lover of technology and streamed media, including Netflix. This brings me to the current agenda of the battle between Foxtel and Netflix in Australia. Whilst we have seen Foxtel do some pretty crazy deals to get people or keep people, I cant see them getting too hurt by Netflix when it launches. The reason for this is... 

  1. Netflix wont have the content that they have in America due to licence agreements already in place.
  2. People have to change or add technology to their systems to be able to get it.
  3. If people don't have a decent internet connection, they will simply not get the traction in the short term

Let me elaborate a little more on this. There will be shows that Netflix have the rights to in America, but don't have or have sold the rights to broadcast to Foxtel in Australia. (There is sure to be a lawsuit around this too, one would think)

If people have to change technology after all they have been through in the past few years in Australian broadcasting, you would have to think there will be some resistance, so a slower uptake would be immanent.

Then, depending on what NBN plan gets rolled out where, a lot of people may just not have the bandwidth to cope with Netflix. There are some big announcements around this though, which will help Netflix get going, and that is with iiNet and Optus. Who have announced strategic relationships with Netflix for un-metered download when streaming Netflix.

The one thing that continues to sit in my mind however is the desperation that Foxtel appear to have in getting new customers and keeping old ones. One of my best mates recently called to disconnect his Foxtel, and straight up on the phone, they offered the exact same package for half the price. Over a beer we had a discussion about what we think, as legendary business owners (giggle) that we are, was that they should have done more over the years to reward people that have stayed with them. Like for every year that a customer stays with them, give them a month for free, of a tiered level of pricing depending on how long you have been with them. 

The place where they can excel over Netflix however is in service. Being that Netflix is really all online, there is no call centre or communication that you have with them. This means no relationship. Foxtel have the opportunity to provide excellent Sales, service and phone manner, something that has been missing from them for some time.

For me, I'm a technology geek, so Netflix into Australia seems a very logical form of progression and opens the door for hundreds of other online streaming companies to dip their toes into teh Australian Market, and once Netflix start delivering content that cannot be found elsewhere, coupled with quality internet, then we may see Foxtel quaking in their boots.

But that's just my opinion, I would love to hear yours.

Please, leave a comment on here or on facebook.

Until next time.

Mark