Over the past week, struggling Australian pay-TV provider Foxtel made an unlikely ally in global streaming giant Netflix. In India meanwhile, Netflix has also unveiled a mobile-only plan.

Foxtel announced on Wednesday that its new deal with Netflix will allow subscribers to access the streaming service through the simple push of a button on their Foxtel remote control.

According to Roy Morgan, the News Corp-owned pay-tv service has been struggling for several years now, and Netflix’s entry into Australia is largely to blame.

The news arrives only two months after News Corp reportedly injected $300 million into Foxtel to ease company debts, following the brand’s consolidation with Fox Sports.

“The proliferation of cheap streaming video services led by Netflix in recent years has provided the biggest challenge yet to Foxtel’s traditional business model and there are more cashed up competitors on the way,” Roy Morgan CEO Michele Levine said in a statement.

Patrick Delany, Foxtel CEO, told Business Insider Australia the primary impetus for the deal was to maintain subscribers. “The group’s strategy is that with Foxtel, we strengthen the product and maintain the subscriptions.

“Growth for the group in revenues and subscribers is going to come out of streaming.”

Going forward, current Foxtel subscribers can get Netflix added to their package for free for six months if they renew their Foxtel contract before September. New subscribers who sign up to Foxtel’s ‘sport, drama and entertainment’ package – going for $58 a month – will also gain the Netflix sweetener for six months. Once those six month periods have concluded, customers will have to pay the full price for Netflix in addition to their Foxtel subscription.

“[Netflix] is Australia’s favourite streaming app. It’s as simple as that: it’s got world scale, it’s the biggest, it complements our content,” Delany told Business Insider Australia. “Why not do something big and bold? That’s the way the world’s going, you have got to adjust your thinking.”

According to Delany, the deal makes ‘obvious sense’ when factoring Netflix’s domination of the Australian market and the need to keep pace with audience needs.

Roy Morgan data shows that 13.36 million Australians now have access to either Netflix or Foxtel via household subscription. Of those 13.36 million, more than three fifths (62.6%) only subscribe to Netflix (around 8.4 million individuals) and 14.4% (around 2 million individuals) only subscribe to Foxtel – leaving an overlap of 23% (approximately three million individuals).

Source: Roy Morgan Single Source: January – June 2019, n=24,255 Australians aged 14+. Base: Australians aged 14+]

“Enabling the five million Australians with household access to Foxtel to view the streaming service through their Foxtel IQ box is a solid defensive measure to help prevent existing Foxtel subscribers ditching the service, continues Levine, “and provides an extra incentive for new users to sign up for Foxtel.

“The more Foxtel can be regarded as the ‘gateway’ to video content from the likes of Netflix, and perhaps other rival services in future, the more access Foxtel will gain to detailed user data metrics that will help them tailor their services, and advertising, to individual viewing preferences and the more valuable their service will in turn be to advertisers looking for an audience.”

Foxtel very much appears to be embracing the long-form video entertainment industry’s shift to subscription-only models. Kayo, Foxtel’s sport streaming service, was well received in the Australian market at its launch late last year. Both Kayo and Foxtel Now – the app version of the service – have grown 80% since the beginning of 2019, according to Media Week.

Netflix’s mobile-only plan

Across the pond, Netflix is experimenting with a mobile-only streaming plan in the Indian market. The plan launched yesterday at Rs 199 (AU$4.13) per month, Netflix’s cheapest offering to date. Subscribers to the new tier are restricted to a single mobile device with standard 480p quality streaming.

The mobile-only plan, now in full force, began as a test in India. Netflix indicated that the test may expand to other countries, but declined to detail which ones.

Following the company’s Q2 earnings results, which failed to meet expectations, Netflix’s stock has continued to drop of the past week. Adding an additional, more casual tier to its slate may be an effort to draw in lower income earners. The earnings report revealed Netflix’s global paid subscriber base only increased by 2.7 million in the past quarter – nearly half of what the company was forecast to bring in – bringing its total subscriber base to approximately 150 million worldwide.

Further Reading:

• Australia’s top 100 youth brands revealed – YouTube, Google and Netflix lead the pack »
• Netflix trials ads between episodes, users threaten abandonment »
• MCN’s six-second ad format to make Australian debut on Fox Sports »

Image credit:Thibault Penin