Foxtel/Warner deal shows that content houses are diversifying

TLDR version: Foxtel’s deal with Warner for HBO content is good news for the pay TV operator. So why is Warner also talking about launching its own SVOD service in the market? Content houses are figuring out that content monetisation is about maximising eyeballs, not necessarily hoarding content to attract SVOD subscriptions.

Deal buys Foxtel more time

Foxtel last week struck a deal to extend its access to long-time content partner Warner’s HBO content. The size of the deal hasn’t been confirmed, but estimates of around $200m per annum were mooted when Foxtel originally beat out Nine for the deal back in 2020.

Importantly, news reports suggest that Warner has decided against launching its HBO Max SVOD service in Australia next year, though a 2025 launch is still a possibility. Last year, Foxtel Boss Delaney said he expected Warner to launch HBO Max in Australia at some point.

The extension is significant for Foxtel because its successful Binge SVOD service relies on HBO titles such as The Last of Us, Succession and White Lotus. This guarantees Binge’s current strategy for another two years.

2025 is still open. One possibility is that Warner may retender, forcing Foxtel to bid again; it may take all content inhouse for an HBO Max launch; or it could re-extend with Foxtel on a non-exclusive basis.

Why does this matter?

There is still some apprehension that Warner’s plans to extend its HBO Max SVOD service into Asia might force it to choose between its own SVOD platform and its Foxtel relationship.

We think that this binary choice is getting less likely all the time. Industry trends increasingly support access to third-party content.

Disney has been forced to back away from a tightly integrated content/SVOD strategy, and is now licensing content to local FTA networks and others that was previously exclusive to Disney. The economics of operating global SVOD platforms have proven more challenging than expected, and when compounded with the loss of traditional licensing revenues proved unsupportable.

Disney’s experience and Warner’s deal-making suggest that the vertical integration trend we saw over the last three years has peaked and is now reversing. Content houses are increasingly looking for distribution deals to widen their audiences and increase revenues. They will probably keep the crown jewels in-house but that leaves plenty of scope for non-exclusive deals.

So even if Warner launches HBO Max in 2025, they will probably not adopt a fully exclusive approach, though they may keep some titles in reserve.

In ANZ, this is good news for FTA TV, pay TV and SVOD operators like Stan and Neon that require access to third-party content. This trend has undoubtedly made it easier for Foxtel to land this deal with Warner.

For audiences, the result will be a mix of traditional and SVOD content delivery that will increase options to see attractive content, mitigating concerns about content being paywalled in a tighter economic environment.