Foxtel's boss says that the pay TV operator and streaming services like Netflix can happily exist side by side.
Foxtel's aggressive price cuts ahead of the launch of Netflix and several locally-owned streaming services, helped boost its customer numbers by 227,000 in the year to June, to 2.85 million.
Netflix doesn't reveal customer numbers but Roy Morgan Research estimates 737,000 households are using the US service since it entered the local market in March, though many early customers were on free trial periods.
Similar services like Nine and Fairfax's Stan and Seven and Foxtel's Presto are also new players in what is known as subscription video on demand (SVOD).
The boom shows more and more Australians are prepared to pay for TV, Foxtel chief executive Richard Freudenstein says.
"What you're seeing is significant change in the dynamic in Australia," he told AAP.
"You're seeing good growth in SVOD at a low price point, at the same time you're seeing good growth in the premium Foxtel service.
"So you're seeing just a lot more people paying for television."
He expects Foxtel's customer base to continue to grow even as the likes of Netflix become more popular, as streaming services get more Australians accustomed to forking out for home entertainment.
"I think you will see people trade up over time, it will be a stepping stone to getting Foxtel," Mr Freudenstein said.
Foxtel's price cuts, increased marketing campaign and investment in Presto caused earnings to fall eight per cent to $981 million in the 2014/15 year, while revenue edged one per cent higher.
Weaker earnings are expected to be short-lived, Mr Freudenstein said.
"As we get the revenue benefit of the full year of new subscribers and continue to grow our subscribers, you'll start to see the profit go up again," he said.
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