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Enjoying near total dominance in the market

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Reference no: EM133129909

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).

Using an economic graph, clearly explain how Foxtel made decisions about setting its quantity and price in 2013. Show clearly the area of economic profit (if any) for Foxtel on the diagram.

Reference no: EM133129909

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