Foxtel Media CEO Mark Frain dishes on how the customer and advertising experience are shifting amid the proliferation of streaming.

Episode Transcript

Please note, this transcript  may contain minor inconsistencies compared to the episode audio.

[00:00:00 ] Damian: I'm Damien Fowler.

[00:00:01 ] Ilyse: And I'm Ilyse Liffreing.

[00:00:02 ] Damian: And welcome to this edition of The Current Podcast.

[00:00:05 ] Ilyse: This week we're delighted to speak with Mark Fra, the CEO of Foxtail Media.

[00:00:10 ] Damian: Foxtel Media is the advertising arm of the Foxtel Group, one of Australia's leading media companies, with more than 4. 7 million subscribers.

[00:00:19 ] Ilyse: Like many legacy broadcasters, over the last decade, Foxtel has reinvented itself for the Netflix era, building on its pay TV subscription model by adding in streaming platforms such as Binge and Kayo. It supports streaming services.

[00:00:35 ] Damian: And last year, Foxtel introduced an ad tier on the service, following in the footsteps of Netflix and Disney We started by asking Mark about the state of the television advertising model in Australia this year.

[00:00:46 ] Mark: Yeah, I mean, I think like the rest of the world, the TV market here in Australia is, going through significant change with the growth of, all of the streaming platforms with many of the, add tiers and add capabilities starting [00:01:00 ] to, launch in the Australian marketplace. Probably what is pretty unique, in terms of the Australian marketplace is that there's currently three major freeware broadcasters that all have their own, digital, platforms as well.

[00:01:14 ] so they're managing transition from linear to digital themselves, but at the same time you've just got this enormous groundswell of video inventory coming from the streaming player. So we're, certainly getting towards a tipping point in the trends in the Australian TV marketplace at the moment.

[00:01:31 ] Damian: Mark, could you just, put into perspective the growth of streaming that you've seen at Foxtel?

[00:01:41 ] Mark: Foxtel has been on an enormous transformation for last four or five years. And if I look, probably four or five years ago, just under 10 percent of our subscribers were streaming customers. And if I look at where we are today, that number is just under [00:02:00 ] 70%. So a quantum growth in the type of customer we've got.

[00:02:04 ] And critically, what that has also meant is that in the last four or five years, the Foxtel customer base Has grown pretty much close to 100 percent from where it was previously, and that's all been down to, the growth of streaming. And secondly, if I look at it from a Foxtel Media, advertising perspective.

[00:02:27 ] And probably only three years ago that seven or eight percent of our advertising revenue came from digital. As we go into the next financial year, that number will be just under 60%. So we're the beneficiary of that change in customer base from Foxtel, from traditional broadcast TV business to one now that is, is leading and driving streaming the Australian marketplace.

[00:02:51 ] Damian: Yeah, in terms of Foxtel, could you talk us through your relationship between, your existing linear model and [00:03:00 ] your launching of an ad tier on Binge?

[00:03:03 ] Mark: Yeah. So traditionally, Foxtel has been the, major pay TV provider. In the Australian marketplace, with numerous, linear channels from sport, entertainment, news, all the typical, pay TV channels you would have, coupled with, two digital platforms, Foxtel Now, that have really been the IP services of Foxtel.

[00:03:26 ] And then over the last four to five years, the Foxtel Group. Has launched heavily into streaming. Firstly, it launched KO, a dedicated sports streaming platform with over 40 premium sports, including both the major codes locally in Australia and a lot of the global content like Formula One, as an example.

[00:03:50 ] About 18 months, two years after launch of KO, we then launched Binge. which is K. O. 's sister if you like, entertainment [00:04:00 ] platform backed by a lot of HBO, NBCU, content. So, made a significant jump, into streaming in the last three to four years. And that has allowed the Foxtel group to pretty much double its subscriber count, from being a traditional pay TV company to now one that plays heavily in streaming.

[00:04:19 ] Damian: You know, in the streaming ecosystem, which we all know is highly competitive, right now, everyone's looking for subscribers and numbers, what's the competitive advantage that Binge brings to the table?

[00:04:32 ] Mark: Yeah. Yeah, you're right. I mean, number one, it's enormously competitive. I think table stakes now are a premium level of content. unfortunately from the global content producers that we work with, coupled with our local content, I think we've got a significant library of content that has debt. I think if you, scratch the surface on some of the content offerings, you don't get the depth of premium content.

[00:04:59 ] On [00:05:00 ] Binge, we've been very strict on running Four to five minutes of ads an hour on very tight on frequency capping just to make sure that, we give those customers that are buying into the value equation of subscription and advertising a very good customer experience, which includes both the content they're watching and also the advertising experience.

[00:05:22 ] Ilyse: would you say Binge competes with other streamers when it comes to like content acquisition, production, and then maybe like ad experience?

[00:05:33 ] Mark: Yeah. I think we're fortunate enough, that the way that almost the origins of the Foxtel pay TV business has given us relationships and longstanding content relationships with the likes of NBCU, Warner Brothers, Discovery, the BBC group, et cetera. So many of the big globally renowned, media businesses.

[00:05:59 ] [00:06:00 ] So that has allowed us to transition a lot of that content from the traditional pay TV channels. onto an on demand platform like Binge, and then we've been a significant investor in local content. So we've been able to both produce a number of Binge originals but at the same time leverage the existing local content we've already produced across the Foxtel group. Almost, I mean, we often describe it internally as one kitchen with many restaurants. and by that, I mean by the many different points of distribution, whether that be a linear paid TV channel, or whether that be a binge, on demand platform.

[00:06:45 ] so we talk a lot about, watchability as a term in our business and making sure that every platform that we represent, that the ad experience stacks up to be the most watchable experience for customers.

[00:06:59 ] Ilyse: And does the [00:07:00 ] content you have speak to specific audiences? Or are you finding that your audience is really across the board?

[00:07:11 ] Mark: There's no question. I think that's the beauty of the streaming platforms that various elements of kind of content bringing a very different audience. And we're in the streamer landscape, you're we're in this very much pause play mentality from a customer perspective. So if that content is so appealing for customers, they may come in.

[00:07:35 ] And binge on that content for X amount of weeks or months and then dip back out.

[00:07:40 ] Particularly with the under younger end of the market that come in and out and then maybe into another streaming platform where they've cited another bit of world kind of renowned content that's got heaps of social buzz with it.

[00:07:52 ] Ilyse: Mm hmm. Yeah, right? That's what I was gonna say.

[00:07:56 ] Damian: I think. Not to malign as a Gen X er. As [00:08:00 ] a millennial, I'm not

[00:08:03 ] Ilyse: anything. Um, and so, that's interesting when you talk about, content in that way. and that has a lot to do with, viewer retention, as you mentioned. Is there anything else that, Foxtail is envisioning or, strategizing? to really hold onto those viewers or attract new ones.

[00:08:25 ] Mark: Yeah, I mean, I, I think from our perspective, we've gotta, we've gotta continue to evolve, the customer and product experience. There is, there's not a moment to stand still in this streaming environment. whether that be improving the. The viewer quality from HD to 4K to 8K. I think customer expectations are so high.

[00:08:50 ] And whatever we do, in terms of the content experience and the ad experience, we just got to make sure that total value equation, stacks up.

[00:09:00 ] Ilyse: Yeah, you know, in the U. S. at least, bundling is very popular. especially if you're a major network like Disney that's bundling like three different of its like streaming services. What about when it comes to like partnerships with you guys? Are you looking into any of those types of offerings when it comes to like bundling?

[00:09:22 ] Mark: Or, or are you looking to like partner with any network or streamer? , is kind of partnership is embedded in our model. whether that be, as I mentioned before, that the content partners, the Warner Brothers, the NBC use, of this world. So we've had a long standing relationships and partners with them moving forward and going back to the earlier points upon the value equation.

[00:09:49 ] even in the core, Foxtel set top box business over time, we've continued to add, all of the streaming platforms to that service, whether it be Netflix, whether it be [00:10:00 ] Amazon, whether it be Paramount. So, customers have felt they were getting more of their content choices, more of their streaming platforms in, in one place.

[00:10:10 ] So there's been a level of partnership with the streamers right from the outset even, with the core set, top box business, and we've carried that on, to wher