Foxtel CEO talks Netflix, Disney+, HBO and the future
Finder caught up with Foxtel CEO Patrick Delaney for a one-on-one chat about the future of pay TV in Australia after a historic agreement with Netflix.
It's been a big 24 hours for Foxtel, Australia's biggest pay TV provider. Despite being a stalwart of the Australian broadcast scene for the best part of three decades, the rise of fast broadband has opened up avenues for new competitors to push in on its domain. Almost overnight, Foxtel has started facing issues with its perceived value.
Of those new competitors, Netflix and Kayo Sports are perhaps the most well-known, but with the likes of Disney+, HBO Max, NBCUniversal, Amazon and YouTube pushing out dedicated streaming platforms filled with original content, the vast library of entertainment Foxtel is known for is being questioned by consumers for the first time.
On 24 July, at an event in Sydney jammed with press, partners and some of Foxtel's best-known personalities, Foxtel announced its plan to counter TV's new landscape. An evolution of the Foxtel IQ user interface focuses on better surfacing new and relevant content through improved exploration and a smarter AI, as well as the surprise integration of supposed competitors, starting with Netflix and SBS, into the Foxtel ecosystem.
It's a brave move; but a smart one that instead of asking consumers to choose between "them and us", says "what if we made it easier for you to access all of it?" Plus, the announcement came with a great new package deal; arguably the best we've ever seen from Foxtel.
After the presentation, Finder caught up with Foxtel CEO Patrick Delaney – fresh off the stage from his big announcement – to dive deeper into this strategy and to paint a picture of how Foxtel will move its pay TV operations forward into the future.
Interview: Foxtel CEO Patrick Delaney
Why was this the right time for Foxtel to update its user interface?
Patrick Delaney: The right time was as soon as we could do it and as quick as we could do it. When I came to Foxtel, we had good hardware, but the user interface wasn't hitting the right notes. Plus, we didn't have enough on-demand rights; we had a lot of live content. So, what we've done over the last 12 months is refine the hardware with the IQ4, but our big project was improving the interface. It's now very similar to the template that was laid down by Foxtel Go and Foxtel Now. So, then it just became a matter of, "how quickly can we get this interface on [the service]?"
The reason why we needed this update is because, depending on the demographic, when it comes to on-demand content, a streaming company has a big advantage over Foxtel. Because discovering things in a live channel, either via an EPG (Electronic Program Guide) or seeing a promo on air, is one one-hundredth as good as an interface where you can browse all the shows that surface thanks to smart algorithms. This update is a big change that had to happen as soon as it could so people could find as much value as possible in Foxtel. Because we have a huge amount of content.
So, why was this the right time? Well actually, it was the quickest we could do it.
How has the Foxtel platform gone since Game of Thrones finished?
PD: It went alright. We had a little bit of a blip as you would imagine and that's why this UI update and Netflix integration happening right now is good. The whole of our drama catalogue is way underutilised because people don't know what's there. Taking Foxtel content discovery from cruising channels and seeing on-air promos to this new kind of [AI-driven] interface is going to make a very big difference to our customers.
Is Netflix and SBS On Demand the end of the partnerships Foxtel intends to explore?
PD: No, we're talking to everyone, but these things take a long time and cost a lot to integrate. So, it comes down to who is in the hopper. SBS, for example, are very innovative and flexible. They were the first to jump in so they were the first on Foxtel, but we're talking to everyone.
Are these partnerships one-way, or will Foxtel content be appearing on Netflix?
PD: It's actually a bit separate. When you hit the Netflix button on the new IQ remote, you're heading into the Netflix app. So, really what we're doing at Foxtel is showcasing the Netflix app.
How do you see the upcoming Disney+ and HBO Max streaming services affecting the Foxtel business locally?
PD: We've got quite a long-term HBO deal in place, so my expectations are that HBO content will stay on Foxtel. In terms of Disney, I believe its plans are to get as much traction as possible, so the price will be low. Clearly, our customers would like Disney content on Foxtel, so if we can reach a deal with Disney to integrate the Disney+ app I think that would be great.
To be clear, you'll take this model you've applied with Netflix and look to do that with Disney+?
PD: I think that is the new model for everyone going forward, yeah.
So, Foxtel will become the port for all of these streaming services to dock at?
PD: One of the ports, yeah.
You say you're talking to everyone, is there an order of targets there, because you've also got your Amazons and YouTubes and so forth?
PD: It's about matching up and then prioritising the content that most appeals to our subscribers. We look at how much their content complements what we already have.
Netflix has looked to combat the increase in marketplace competition by doubling down the investment on its own original content; does your new approach to partnerships mean that's not a route Foxtel intends to take?
PD: Well, we already invest a lot. The issue we have is that we're a local player in a very small country. I believe we will continue to produce content locally, but we will also continue to aggregate others' content.
What about working on broadband bundles with the likes of Telstra to try and maximise this new focus with on-demand content?
PD: Well, Telstra and Foxtel now compete at a retail level, so we have our own bundling with NBN, and I don't know what Telstra will do. I know that as a Telstra subscriber you can access all Foxtel's content, but I can't talk about what they will do in terms of bundles and offers.
How are Foxtel and Kayo going to co-exist moving forward?
PD: They're co-existing very, very well now. Kayo Sports has a very different attitude and very different brand and aims at a very different market to Foxtel. What we're seeing at the moment is good Kayo growth, but we're seeing very little churn of our sports customers attributable to Kayo. I think the reason for that is that we're just targeting different markets. So, the Foxtel and Kayo dynamic is going very, very well and we're happy with the way things are going.
The big hole in your sport content is the Premier League, where Foxtel lost the rights to Optus Sport a few years ago. How hard will you go to get those broadcast rights back?
PD: Well, we'll see; right now, I don't know. The reason why we let them go was because our competitor paid an extraordinary amount of money that we couldn't justify. I'm not sure that is going to change. But maybe one day we can have the Optus Sport app on the Foxtel platform and then you could just buy it [through our interface].
Is that a conversation that has already been had?
PD: No, it's not, but maybe it's a chat we should have.