It's no coincidence Sky TV reported a $240 million loss days after Spark won the Premier League Football rights. A thread connects the two news stories.
Spark is New Zealand's rising media power. Sky is still number one, but fading.
You can't blame Sky's problems on Spark's football win. The traditional pay-TV company hasn't owned Premier League rights for five years now. Yet the move underscores the shift from old school television technology to streaming media.
Football key to sport portfolioThe English Premier League joins Spark's growing TV portfolio.
The telco, yes Spark is still mainly a telco, also has the local rights to Manchester United TV. On the team's current form that may not be much to write home about. Even so it's a sound investment. United is the best know and most followed English club outside of the UK.
Spark says it plans to wrap the two football deals into a new standalone sports media business. Spark already has the rights to next year’s Rugby World Cup.
The company has hinted there is
still more to come. Sky TV doesn't have the clout, or the
money, it once had. So Spark has an opportunity to prise
other popular sports away from the incumbent. If nothing
else, New Zealand Netball and Cricket must be possible
candidates. And perhaps various motor sports.
Sky FanPassThis is not great news for Sky. But there are chinks of light among the dark. The pay TV broadcaster cut a deal allowing Spark to resell its FanPass service.
Fanpass is now another small, but nicely done plank in Spark's sports media portfolio. It also means Sky gets to tap a market that it has previously struggled to reach.
Let's not forget LightBox. Spark's streaming TV operation may be a pale imitation of Netflix, but it's a useful value-add for Spark's broadband business.
Another useful add-on for
Spark is that it offers cut-price Netflix to customers
signing for long broadband contracts.
Sticky TVAll-in-all Spark already has enough media properties to keep viewers glued to its broadband services. And that's a critical part of the company's TV-over-internet strategy: customers who buy a bundle of services are less likely to decamp to a rival broadband service.
Premier League football isn't New Zealand's most popular sporting code by a long shot. However, it has particular value for Spark. First, it tends to be watched by relatively well-heeled fans who are willing to pay a couple of hundred dollars or so for a year's worth of games.
League fans are well used to watching games using
streaming. It was the first major sporting property to
be picked up by a digital organisation. That was Coliseum
Sports Media which had the rights from 2013 to 2016. Spark
works in a partnership with Coliseum before BeIn Sport won
Overseas movesIn a media statement Spark managing director Simon Moutter say his company developed its plan after looking at overseas sports content media moves.
He says: “We’ve carefully considered the different models and will be looking to replicate the good things other businesses have done and learn from the challenges they’ve had — all the while thinking carefully about how sports media fits in a New Zealand context”.
Spark says it will launch its own sport
‘platform’ early in 2019 and will annouce pricing and
package deals closer to the launch.
LatchSpark Sport head Spark hired Jeff Latch to head the Spark Sport operation. He will oversee buying more content rights and will take charge of the ‘platform’. Latch was previously director of content at TVNZ. In that role he was in charge of buying content, including sport. Spark is partnering with TVNZ for the Rugby World Cup project.
Latch says Spark will work with a specialist sports-streaming company. He says the platform used will be different from the one used by Spark’s Lightbox service.
He also said Spark intends
its sports media operation to work as a standalone business
and not be used merely as a way to woo broadband or mobile
customers. To a degree this is what Spark has done with
Netflix close to two million NZ viewersHad Sky merged with Vodafone it may have fought off the challenge from Spark, although that's far from certain. Yet nothing could protect Sky from its other threat: Netflix.
Roy Morgan research says Netflix now has nearly two million viewers in New Zealand. The service saw subscription numbers grow 35 percent in the last year to reach 1.9 million viewers. The research company goes on to report:
"Now over three million New Zealanders have access to some form of Pay or Subscription TV, up 13.9 percent on a year ago. The growth in Pay and Subscription TV is being driven by the likes of Netflix along with a suite of rival streaming services including Lightbox, Sky TV’s Neon and Amazon Prime Video."
Viewer numbers are growing slower for Sky TV's Neon service. It was up 1.7 percent in the year to reach a total of 1.6 million viewers. Lightbox is the second most popular video on demand servide with 830,000 users. That's up 43 percent on last year, growing faster than Netflix. Vodafone TV has 295,000.
Football deal highlights Spark Sky TV threat was first posted at billbennett.co.nz.