Reference no: EM133131986

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).

In the present day (October 2021), which market structure would best describe the pay-for-viewing TV industry in Australia now?
Clearly explain why.

My answer, would this be correct?

The case study mentions a total of 8 competitors in the current Australian market, indicating a monopolistic competition structure. The 8 competitors are close substitutes but are slightly differentiated. In such a structure there are many or a large number or firms competing in the same market, occupying a small part of the market share. It is relatively easy for companies to enter and exit such a market structure. This is represented by the recent influx of new competitors, the latest one being Paramount+ which was launched in August 2021. Such a composition and the competitors being close substitutes, allows for a limited control over pricing.