Foxtel CEO Richard Freudenstein has dismissed the threat posed by Netflix by saying that there is no way the American SVOD giant can compete with Foxtel on content.
Speaking at the Australia-Israel Chamber of Commerce, Freudenstein believes that the revenue raised by the low cost subscription video-on-demand service will not be enough to cover the cost of licensing premium content. The smaller Australian market, coupled with the lower cost of Netflix compared to Foxtel, means that Netflix Australia just doesn't have the numbers when it comes to being able to buy the content people want to watch.
"While Netflix produces a growing number of its own good quality shows, which it can afford based on its scale in the US, it will never be able to acquire the range of first-run content that Foxtel can," said Mr Freudenstein.
"Think about it. Even if the speculation is correct about SVOD numbers in Australia and even if all those customers were paying, the total revenue for all SVOD services would be only around $150 million per year. That doesn’t provide much for programming investment compared to Foxtel’s or free-to-air programming budgets."
Foxtel owns half of SVOD platform Presto, and with Presto subscriber numbers included, Foxtel saw a 8.6% growth in the number of subscribers. Freudenstein says that despite including Presto subscribers in the figures, Foxtel's cable and satellite service still saw strong numbers, and that most of revenue (which rose by 1.9%) comes from the traditional broadcast service. Since the arrival of Netflix in March, Foxtel has unleashed a marketing blitz, including discounting the service's entry price by 50%.
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