Netflix is the new king of Australian TV subscriptions for digital natives

EDIT: We have adjusted our claims that Netflix is the leading subscription service today compared to Foxtel upon learning that business customers contribute to only 1% of their 2.8m customer base. We believe it is unlikely that Netflix has already achieved a total user base of 2m+ in Australia. However, given the nature of our sample, we believe our research is an accurate lead indicator for the impending direction of Australian consumer behaviour at large.

Since our Netflix research in July 2014, we’ve seen significant industry changes in the subscription TV sector in Australia over the past 10 months.

After publication, our research caught significant attention from the major the players in the market. A domino effect ensued, including a public appeal from Quickflix CEO against geo-dodging, our data being publicly quoted by the Communications Minister Malcolm Turnbull at a major conference, a subsequent price-drop from Foxtel, and the eventual launch of Presto TV and Stan into the market.

Meanwhile, our estimation that the population of Australians using Netflix via VPN services being more than the 150,000 first estimated by pay-TV executives was confirmed in September by an independent piece of research by Choice Magazine.

All this was a pre-cursor to the launch of Netflix in Australia in late March.

Now that we are a month into the new subscription service, we wanted to again take a look at Australia’s love-affair with Netflix, and if the latest market changes have affected where our money is going. As well as respond to some of the already published data on daily site visits and brand awareness, aggregating de-identified real consumer purchase data.

Besides, my Internet connection is now only 60% the speed that it used to be a month ago, so I needed someone to blame!

Netflix is fast becoming the most popular subscription service in Australia for non-businesses, and the Netflix launch was 3x more successful than the Stan launch.

The following graph shows the growth of subscribers in each of the services within our sample of 85,000 people. As you view this data note the following:

  • As our data captures individual spending, business subscriptions to Foxtel are excluded from this study.
  • Secondly, the Australian Netflix offering launched in late March offered a 1-month free offer. Meaning that the new user growth in April actually signed up in March.

Based on Pocketbook data, you can see in the following graph that the Netflix subscriber base (red line) has caught up with Foxtel (blue line) in April. Additionally, what is truly staggering is that 3x the people have taken to Netflix in its initial month of launch, compared to Stan in February (turquoise line).



Looking at our view of market share by subscribers, we can see that individuals paying for Netflix in April (39%) is actually more than Foxtel (38%) based on our data. Stan today has around 7% of the total market, which is still a significant achievement from a zero start a few months ago.


Whilst it is highly unlikely that Netflix already has reached the same subscriber base as Foxtel, these are impressive growth figures in our sample set and a sign of potentially what is to come for the general media subscription landscape.

Geo-dodgers sticking to Netflix US via VPN. While new subscribers are almost all using the new Netflix Australian service.

As the above aggregates both Netflix subscribers using the US service via VPNs, as well as new subscribers to the Netflix Australian service, we wanted to look at what the composition of new customers to Netflix in April looked like.

Our data here clearly shows the following:

  • Those using Netflix US through VPN services (red line) continued to use Netflix via the same method, and
  • Almost all of the new subscribers to Netflix in March and April were new subscribers to the Australian service (orange line).


Additional to this, we found that only 3% of the VPN users were also trialing the Netflix Australian service. It appears much more needs to be done to dissuade VPN users from making it a historical footnote.

The most popular Netflix Australia package is the middle-of-the-road $11.99 per month package.

Over two-thirds of users to Netflix Australia subscribed to the Standard package, which is priced higher than Stan ($10 / month) and Presto ($9.99 / month).

Netflix Plan % Adoption
Basic ($8.99/m) 18%
Standard ($11.99/m) 69%
Premium ($14.99/m) 13%

It is also more than 50% cheaper than the cheapest Foxtel subscription of $25 / month (since their price drop last September). This significant saving is the reason many have and will cancel their existing Foxtel subscription. Venture Consulting earlier this year found the that up to 10% of Foxtel subscribers have the intention to cancel. Our estimation is that this cancel proportion will likely outstrip that number.

13% of Foxtel customers are already trialling Netflix, with 6% already switched to either Netflix or Stan – cutting monthly spending from $98 to $11.

The attractive pricing and the free initial month have certainly tempted consumers to give these new services a go. The 89% savings from spending on average of almost $100 a month to a mere $11 a month seems to be a key attraction.

The following charts summarises the trialling and switching population. We anticipate these numbers to balloon over the coming months, and should particularly grow as we hit the June-July school holidays period and head towards Christmas.

Subscribers still with Foxtel % trialling others
Trialling Netflix 13%
Trialling Stan 3%
Trialling Presto 1%
Trialling at least 2 2%


Subscribers already cancelled Foxtel % switched
Using Netflix 6%
Using Stan 1%
Using Presto 0%

Foxtel’s price-drop has shifted their customer base and possibly cannibalised their high-end customers.

Over the past 7 months of discounting, we can see a significant shift in the make up of Foxtel subscribers by monthly spending. The significant trend is the growth of lower end subscribers (71% growth in those paying less than $26 per month), offset by the fall in the top end (11% fall in those paying more than $100 per month).

Note that the overall Foxtel subscription total (blue line in Chart 1) has increased only marginally and the majority of the Foxtel subscriber base is paying over $100 per month. Therefore the 11% fall is more than offset by the high growth of the lower bands, and the lower bands exhibited high growth due to a much lower starting point. (The average Foxtel subscriber paid $109 per month in April 2015.)

Growth in Foxtel subscribers by monthly spending % growth
Under $26 per month 71%
Between $26 and $50 per month 44%
Between $50 and $100 per month 10%
More than $100 per month -11%

Final word.

According to our data, Netflix’s customer growth in the space of 1 month has been staggering, buoyed by a significant existing user-base already accessing the service via VPN services, free month offering and significant public attention. Netflix also has a number of natural advantages compared to others in the market, on which to build momentum:

  • Ease of trial (free and no-setup cost).
  • Perceived content advantage for customers given its US branding
  • Competitive pricing compared to the likes of Stan and Presto.

These are likely to continue to propel the growth of non-business customers – particularly on a trial basis over the next 12 months. Foxtel today has captured around 2.8 million Australian subscribers, or over 10% of our population. While it’ll be difficult for us to conclude by just the April statistic that Netflix already has as many customers as Foxtel, we can draw some conclusions on the likely trajectory of Netflix in the future. Especially considering their growth in the US, where they have just hurdled over 10% of the US population earlier this year.

About Our Sample

This study didn’t include iTunes, Google Play, Spotify, Pandora and Xbox purchases. Our sample size is 85,000+ Australian consumers only.

Is a 85,000-subjects sample big enough? By way of comparison, Nielsen Television Audience Measurement – the definitive measure for Australian TV ratings success in the industry has about 5,000 Australian households, and OzTam, jointly subscribed to by Seven, Nine and Ten, has 4,913 homes on their panel.

As previously noted, Foxtel has a lot of business subscribers – company kitchens, meeting rooms and bars – they are not captured by this sample.

Additionally, there is some skew towards a digitally savvy audience in our data. However, from our previous research, this is not too far pronounced – as evidenced by the Choice magazine research earlier evidenced. We would advise that the most compelling use of our research is as a leading indicator of Australian spending trends.

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