According to analysts, Foxtel, who mounted a massive low cost subscription drive over the weekend in News Corporation newspapers is facing a massive revenue drop despite having a monopoly on pay TV services in Australia.
Owned by Telstra and News Corporation the pay TV operator is offering a subscription for $17 however analysts claim that the average cost per user is more like $99 than the $17 being spruiked as an incentive by Foxtel to lure customers into their service.
News Corporation own figures reveal that Australian subscribers are paying on average $99 a month for their service, or close to $1200 a year, this information is contained in the latest News Corp filings lodged with the US Securities and Exchange Commission.
Viewers who want access to sport, movies and select entertainment channels have to pay an additional fee to the $17 offered in the Foxtel weekend marketing campaign.
According to new figures demand for Foxtel pay TV services have stalled despite the organisation snaring the rights to BBC content from the ABC free to air network.
During the last quarter Foxtel has only managed subscription growth of 3%, at December 2012 Foxtel customer dropout rate rose to 13.4 per cent, up from 12.5 per cent a year earlier.
According to Commonwealth Bank Analyst Alice Bennett Foxtel and sister Company Fox Sport is under considerable financial pressure. She estimates that Fox Sport earnings have dropped 30% in the third quarter of the 2012/2013 financial year.
The Financial Review claims that Foxtel is critical to the success of News Corp as it accounts for a major chunk of the organisations revenue following the resent restructure of the media organisation.
Fairfax claim that growth in the $2.7 billion Australian pay television sector has stalled with Foxtel and Fox Sports Australia hit by weak consumer confidence, higher programming costs and a downturn in new subscribers.
Tomorrow the organisation is tipped to roll a new Android native version of their catch-up service Foxtel Go with Samsung a key partner set to include the app on their range of devices spanning PC’s, smartphones and tablets.