Foxtel will slash prices and revamp its channel offerings from November in the face of a surge in competition from internet streaming services.
The pay-TV operator will cut the price of its entry-level cable and satellite offering from $49.50 to $25-per-month in a bid to draw new customers.
It will also hand existing customers a range of extra channels and content for free, Foxtel chief Richard Freudenstein announced on Tuesday.
Speaking at the pay-TV industry's annual convention in Sydney, Mr Freudenstein acknowledged that many Australians feel Foxtel is too expensive.
"We are confident that these strategies will initiate a new era of growth," he said.
"We want Foxtel to be part of the daily lives of millions more Australian households."
Foxtel is facing unprecedented pressure to cut prices and boost content because of the growing availability of cheaper alternatives delivered over the internet.
US giant Netflix, which is not officially available in Australia, is thought to have some 200,000 Australian subscribers, each of whom can access TV and videos on demand for as little as $US10 ($A10.82) per month.
Foxtel is also facing a host of other new competitors.
The free-to-air TV industry launched its catch-up service FreeView Plus on Tuesday, while Nine and Fairfax last week announced a $100 million plan to launch their StreamCo streaming service by the end of the financial year.
The shake-up follows Foxtel's decision in August to halve the monthly price of its Presto movie-streaming service from $20 to $10.
"We intend to win in this space," Mr Freudenstein said.
News Corp, which co-owns Foxtel with Telstra, reported that about 2.6 million households subscribe to the service via cable, satellite or through the internet.
Freudenstein said subscriber growth grew 5.6 per cent in the 2014 financial year, with customer churn at 12.5 per cent.
Profit grew to $337 million from 229.8 million on revenues of $3.15 billion.
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