Spark, Netflix a well-timed marketing promotion

There’s no comparison between Spark’s Netflix promotion the and the halted Vodafone-Sky deal.

One would have changed New Zealand’s telecommunications and media scene. The other is a marketing promotion.

Clever, perhaps. Timely, yes. But still marketing.

Netflix credit

Spark customers signing a two-year broadband contract will get a one-off credit on their Netflix subscription.

The deal only applies to unlimited data plans and is equal in value to a year’s standard Netflix subscription.

Netflix’s standard package costs $15 a month in New Zealand. The deal means Spark customers get a $180 credit against their Netflix bill to use as they choose.

Spark unlimited plans start at $105, so customers spend $2500 to get $180 worth of Netflix.

In money terms that’s less generous than the discounts some other ISPs offer. But Netflix is a magic name in the online media business.

While it is an aggressive move with the right video service, it’s not strategic.

The right video brand

Netflix is the big name in streaming TV and movies. It’s the brand everyone wants.

Spark needs a high profile deal to tie restless consumers to its brand.

Spark will continue to offer its own Lightbox online service as well.

The deal timing is interesting. It comes after the Commerce Commission turned down the proposed Vodafone-Sky merger. If that deal had gone through, it would be a handy face-saver for Spark which was wrongfooted by Vodafone.

Either way it underlines how telcos look to value-added services to sell their, otherwise, dumb pipes.

The telecommunications market rebooted after Telecom shed Chorus to win UFB contracts. At the time, most industry insiders expected the big players to compete on quality of service.

That never happened. No-one argues the big broadband companies offer anything other than indifferent customer service.

Adding value

Instead Vodafone and Spark sought other ways to compete. The game moved to adding value.

In Spark’s case the value-add includes home security and earlier attempts at bundling video entertainment. Spark dipped its toe in the media water with Lightbox and an investment in Coliseum Sports Media.

Vodafone has a partnership with Sky to do the same thing. The two companies may still reach a merger agreement.

At this stage the deal between Spark and Netflix is looser than any of the above. It’s just about marketing. Yet it gives Spark an opportunity to link its name with the biggest online media brand. Think of the move as a show of intent.

“Content provider”

Jason Paris, Spark Home Mobile and Business CEO talks of an ambition to become New Zealand’s preferred content provider. He says: “This partnership is a step on the road toward Spark becoming a go-to destination for media and entertainment.”

Maybe. But offering low-cost Netflix to customers already spending a lot of money doesn’t not make one a “go-to destination”. At best it makes Spark a deal broker.

For a media and entertainment to work in New Zealand Spark has to sharpen its act when it comes to bidding for sports rights. That means Rugby, lthough a tempting bundle of other popular sports including Cricket, Netball and Football might swing it.

Offering Netflix is a step in the right direction and a useful hey-look-over-here while a rival is in the spotlight. It’s not a strategy.

Writing at the NZ Herald Holly Ryan reports Sky is not happy about the Spark-Netflix deal.