This case study focuses on the pay-for-viewing TV (Pay TV in short) industry in Australia. Back in 2013, Foxtel had just finished acquiring Austar, its major competitor. Foxtel was enjoying near total dominance in the market. There were other players such as Optus TV and iiNet, however, their market shares were dwarfed by that of Foxtel. IBISWorld reported that Foxtel occupied 92.6% of market share in 2013. Then in March 2015, Netflix Australia was launched, opening the gate for an influx of other subscription video-on-demand (SVOD) services. These new services were internet-based, which differed from Foxtel’s model of cable TV. Nevertheless, they competed fiercely for subscribers. Fast forward to the present day (October 2021), Australian consumers now have a wealth of choices of content offered by Foxtel, Netflix, Stan, Amazon Prime, Apple TV, Disney+, Optus Sport, and the recently launched Paramount+ (launched in August 2021). Required: Question 1. Back in 2013, which market structure would best describe the pay-for-viewing TV industry in Australia? Clearly explain why. Question 2. Draw a firm diagram to illustrate Foxtel’s business back in 2013. Clearly explain how Foxtel made decisions about setting its quantity and price. Show clearly the area of economic profit (if any) for Foxtel on the diagram. Question 3. In the present day (October 2021), which market structure would best describe the pay-for-viewing TV industry in Australia now? Clearly explain why. Question 4. Draw a firm diagram to illustrate Foxtel’s business in 2021. Make sure to clearly and adequately label your diagram. Question 5. How have the following changed for Foxtel between 2013 and 2021? Quantity Price Economic Profit Clearly explain. Question 6. The COVID-19 pandemic hit Australia in early 2020. How do you think the pandemic has affected Foxtel’s business? Clearly explain. Please note: You only have to provide a detailed explanation, there is no need for a graph. Question 7. In your opinion, what should Foxtel do in order to remain competitive against their internet-based rivals? Do some research to find out what Foxtel has done since 2015 to fight back against the mounting competition in the market
This case study focuses on the pay-for-viewing TV (Pay TV in short) industry in Australia.
Back in 2013, Foxtel had just finished acquiring Austar, its major competitor. Foxtel was enjoying near total dominance in the market. There were other players such as Optus TV and iiNet, however, their market shares were dwarfed by that of Foxtel. IBISWorld reported that Foxtel occupied 92.6% of market share in 2013.
Then in March 2015, Netflix Australia was launched, opening the gate for an influx of other subscription video-on-demand (SVOD) services. These new services were internet-based, which differed from Foxtel’s model of cable TV. Nevertheless, they competed fiercely for subscribers.
Fast forward to the present day (October 2021), Australian consumers now have a wealth of choices of content offered by Foxtel, Netflix, Stan, Amazon Prime, Apple TV, Disney+, Optus Sport, and the recently launched Paramount+ (launched in August 2021).
Required:
Question 1. Back in 2013, which market structure would best describe the pay-for-viewing TV industry in Australia? Clearly explain why.
Question 2. Draw a firm diagram to illustrate Foxtel’s business back in 2013. Clearly explain how Foxtel made decisions about setting its quantity and price. Show clearly the area of economic profit (if any) for Foxtel on the diagram.
Question 3. In the present day (October 2021), which market structure would best describe the pay-for-viewing TV industry in Australia now?
Clearly explain why.
Question 4. Draw a firm diagram to illustrate Foxtel’s business in 2021. Make sure to clearly and adequately label your diagram.
Question 5. How have the following changed for Foxtel between 2013 and 2021?
- Quantity
- Price
- Economic Profit
Clearly explain.
Question 6. The COVID-19 pandemic hit Australia in early 2020. How do you think the pandemic has affected Foxtel’s business?
Clearly explain.
Please note: You only have to provide a detailed explanation, there is no need for a graph.
Question 7. In your opinion, what should Foxtel do in order to remain competitive against their internet-based rivals?
Do some research to find out what Foxtel has done since 2015 to fight back against the mounting competition in the market
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