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Foxtel builds up to SVOD advertising launch

Australian pay TV platform Foxtel is on track to launch an advertising proposition on its Binge SVOD service in March next year, according to Mark Frain, CEO of Foxtel Media.

Mark Frain

Foxtel evolved from pay TV to a streaming-focused business while maintaining its traditional set-top business over the last five years.

Speaking at the Future of TV Advertising event in London, Frain said his company had to move aggressively into streaming to address declining revenues and increasing costs and the impact this was having on the coe business. Kayo Sports took all of the group’s premium sports from TV to an on-demand streaming platform. This was followed by SVOD service Binge.

Kayo cost A$25 a month compared with a price of around A$100 for the core pay TV offering. Some 67% of customers are now streaming customers, compared with 8% in 2022. Foxtel is now in every second house, double the penetration it had in 2017.

Kayo Sports now has 1.27 million subs while binge has 1.45 million.

Foxtel Media was a linear ad business. The group did not turn on advertising on Kayo until it had critical mass. Foxtel will launch an ad tier on Binge in March next year.

“We will launch with an audience of just under half a million, so it is a valuable audience to reach,” he said. The group will cap ad load at four minutes per hour with frequency capping.

The group has worked to ensure that the ad experience is positive. Frain said that “watchability, connectivity and useability” were key.

He said that Foxtel had always run half the ad load of FTA networks in the Australian market. This was only now beginning to deliver a premium in relation to the ad sale, he said.

He said audience engagement on Kayo Sports was 30% better than FTA, and ad awareness was 1.5 times greater. Ads were working 50% better, he said.

Work on measuring these results was enabling Foxtel to charge more than FTA, he said. A$50-60 CPM on Binge was about three times the value of CPMs on FTA linear TV, he said. “This is our opportunity to be at the top of the food chain when it comes to CPMs,” he said.

Frain said Foxtel Media revenue had grown 18% year-on-year, with digital accounting for 30% of the overall book.

He said that Kayo was now a A$60 million ad business on its way to becoming worth A$100 million.

In terms of measurement, Frain said that Foxtel Media was able to “mark its own homework” in the way that Meta and YouTube had done for years, with no pushback. He said he believed that changes in the measurement ecosystem were now inevitable.

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