Categories
telecommunications

Sky bats on front foot with Sport Now

Sky TV has rebooted its streaming sports service with Sky Sport Now. It’s a new app for phones, computers and tablets offering 12 dedicated sports channels. It will replace Sky’s Fanpass from August 1.

At the same time Sky will start broadcasting a dedicated sports news channel. It will have local news and have local presenters. It will also pull material from around the world. This includes bulletins from Fox Sports News Australia and Sky Sports News UK.

The revamped streaming app will have dedicated channels for rugby, golf, cricket and football. Sky will add two ESPN channels and the new sports news channel to the mix. There will also be pop-up channels for major sporting events.

Better everything, high definition

Sky CEO Martin Stewart Sky Sport Now is the first evidence of the company’s new focus on online streaming.

Well yes. It’s also the first evidence that Sky is fighting back against Spark Sport. For months it has looked as if it had no answers, nothing practical to respond with.

The new app addresses one of the weaknesses of the old four channel Sky Fanpass by giving users access to replays and on demand content. There will also be links to statistics on games and individual athletes.

Pricing for Sky Sport Now includes a weekly $20 pass and a monthly $50 pass. Customers who sign up for a year pay $40 a month.

Sky Now competes with Spark

Elsewhere Stewart told Chris Keall at the New Zealand Herald Sky will be a more aggressive bidder when buying sports rights. He says: “If someone outbids us, they’re going to go broke”.

Of course he is talking about Spark Sport.

This is where things get interesting. In round numbers Spark’s revenue is about four times Sky’s. It has relatively little debt, which means it can access cheap money to invest in new products and services.

So, on one level Spark appears to be a formidable opponent. In theory, it could easily outbid Sky for key sporting rights.

Asymmetry

Yet Sport is only a small part of Spark’s business and it most definitely not the main game. Apart from anything else, Spark is about to embark on building a 5G mobile network. This could cost the thick end of a billion dollars over the next decade. There are other calls on its funds. Spark is multi-faceted business.

Investors might not be happy if Spark gets into a high stakes bidding war with Sky over sport.

Sport is central to Sky’s business. That’s likely to be even more the case in future as seemingly unstoppable streaming services like Netflix chip away at the other parts of its business.

Sky doesn’t have much of a future without access to a solid cross section of popular sport programming.

Virtual signalling

By signalling its willingness to outbid Spark for key sports codes, Sky is warning its rival’s investors that the costs could escalate. It is in effect asking if they have a stomach for the fight ahead.

This is not mere posturing. Spark has already blinked with other products that were part of its move into digital services.

The company is looking for partners to share the risk with its Lightbox service. You can take it as read Spark would sell Lightbox at the drop of a hat if there was a realistic offer. Spark also recently closed its Morepork security business.

Digital services like Spark Sport may not be as central to the company’s long-term plans as it has previously said.

There’s another clue for Spark watchers following the Sport project’s progress. Spark is now giving away its Rugby World Cup service to customers signing long-term contracts. This can be read as devaluing the brand, or it could be read as using sport to support the main business.

Room for two?

There can room for two New Zealand streaming sports companies if they can both get the mix right.

Spark doesn’t have enough in its current line-up to be a must-buy service. The Rugby World Cup is a one-off. English Premier League is a niche, albeit a fanatical one with an audience willing to pay.

It needs a long-running, popular, season-long competition, not just a few weeks of a cup tournament.

In effect, Spark needs main rights to at least one of Rugby Union, Rugby League and Cricket. Seeing as you asked, Netball is almost as important, but it can’t carry a channel on its own.

Sky, on the other hand, can’t afford to lose any of these major codes.

The long tail

This is not to say the other sporting codes don’t matter. There is a long tail. It helps to think of the big codes as being like anchor tenants in a shopping mall. They bring in the majority of punters who then stay on for the other options.

The acid test for Spark, indeed the acid test for New Zealand streaming sport is the Rugby World Cup. As Jeff Latch mentioned at Spark’s recent press conference, there will be unhappy people no matter how well Spark performs.

If the RWC is a triumph, Spark Sport can ask investors to loosen the purse strings building a bigger brand. If it’s a disaster, the project will be seen as a brief flirtation. Spark’s next move will be damage limitation and probably a face-saving exit from sport streaming.

Most likely the verdict will be somewhere between these two extremes. For some New Zealanders this will be more of a nail-biter than any action on the pitch.

Categories
media

Sky TV deserves My Box video piracy win

Sky TV is celebrating a court win against My Box, the streaming service that advertises its ability to play Sky’s content for free.

The Auckland High Court ruled that My Box cannot describe its service as legal. It confirms that using its hardware and software to show Sky-owned material is a breach of copyright.

The court will hold a hearing to decide costs early next year.

Sophie Moloney, Sky’s general counsel says: “This decision, along with the recent ruling against Fibre TV boxes in Christchurch, sends a very clear message to New Zealanders that these services are not all they are cracked up to be.”

Sky’s roundabout victory

What’s curious about this case is that Sky didn’t manage to win a straight legal victory over video piracy. It took action against My Box and the company owner Krish Reddy under the Fair Trading Act.

In effect, Sky’s successful legal argument was that My Box was making claims about its service that were misleading.

This echoes the way US authorities finally managed to nail gangster Al Capone because of his tax evasion, not his more serious crimes.

My Box pirate

What’s pleasing about this case is that Reddy is an out-and-out pirate. This isn’t like a bunch of kids being busted for watching a naughty episode of a show that isn’t even available through legitimate entertainment channels. It’s not like someone bittorrenting a missing episode or using a VPN to watch BBC coverage.

Sky has a far better moral argument here.

Reddy may not be a gangster, but his My Box business is copyright piracy on an industrial scale. He claims to have sold 17,000 boxes.

While you can’t argue that every one of those 17,000 customers would have otherwise subscribed to Sky, it’s clear that Reddy sucked a lot of money earmarked for video entertainment out of an industry that struggles to pay its way.

Last year I received one of the My Box spam emails. Heaven knows how the company got hold of my details. It did come via a long defunct but still forwarded email address.

Wake up call

The fact that it was spam is a wake up call in itself. But the email wasted no time telling me that I could get content for free without paying a Sky subscription. It looked crooked.

Piracy is in decline. There’s less need to steal content when it isn’t expensive to buy from the likes of Netflix or Lightbox.

Even sport, which comes with more of a premium price tag, is affordable for most New Zealanders. At least in relative terms. A year-long subscription to Bein Sport NZ or Sky Fanpass is roughly a couple of days pay for someone on a minimum wage.

Sky is My Box’s most obvious victim. In a way so are the people who paid the company money and believed they were getting legitimate access to streaming video services.

In theory, any customer would have a good case to demand their money back. I suspect they, like Sky, will find there are few if any assets left in the business.

Categories
media telecommunications

Football deal highlights Spark Sky TV threat

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 portfolio

The 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 FanPass

This 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 TV

All-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.

Second, Premier 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 the rights.

Overseas moves

In 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.

Latch

Spark 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 Lightbox.

Netflix close to two million NZ viewers

Had 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.

Categories
telecommunications

Stuff Pix media strategy a new direction

Stuff Fibre says it is to offer Stuff Pix, a movie streaming service, from early next year. It takes the company in a new direction, one that hasn’t been tried before in New Zealand.

While getting into content is a natural move for an ISP part-owned by Fairfax, the largest regional media company, Stuff Pix has little to do with its parent’s traditional news business.

Instead, Stuff Pix opens with a catalogue of around 600 movies. Customers can watch them online for between $1 and $7 each.

Paddy Buckley who previously headed Quickflix in New Zealand will run Stuff Pix as general manager.

Stuff Pix not taking on Netflix

Buckley says the operation is a replacement for closed video stores, not a Netflix competitor. It will be open to all internet users and its main attraction will be the price. There is no subscription fee. Customers pay a one-off fee to view each movie.

He says the prices will be the lowest on the market. While it is technically possible to buy movies for less by parallel importing, customers need to set up a VPN (virtual private network).

Different, not differentiator

Although part-owned by a large corporation, Stuff Fibre is a broadband minnow and has yet to make an impact on the market. Until now it has offered rock-bottom prices and little else.

Adding Stuff Pix to the business is a bold attempt to build something other than a low-margin, race-to-the-bottom owner of a dumb pipe.

As you might expect from a minnow, Stuff Pix is a modest entry into the streaming market which is dominated around the world by Netflix.

The list of 600 movies is not large. Most old-school video stores had far more extensive catalogues. The movies on offer are not-exclusive. Stuff Pix will sell to people who are not Stuff Fibre customers.

In other words, with the way the businesses and offers are structured at present, no-one is going to buy Stuff Fibre to get at Stuff Pix. On that basis, it isn’t a differentiator. But it is an extra line of revenue and that’s important.

Buckley says Stuff Pix prices will be the lowest on the market. This means it will run on slender margins. The broadband service business is all about relatively small margins: the steady drip of subscription fees rolling in month after month that can still be a money-making recipe.

Revenue per user

Normally when ISPs add media, the idea is to bolster the margins and to raise the average revenue earned per user. That could work at Stuff Fibre, there will be opportunities to cross-sell moves to existing customers.

New Zealand’s two largest ISPs, Vodafone and Spark, have their own media offering. Vodafone resells Sky TV content through its Vodafone TV service. It isn’t cheap. Yet has an extensive catalogue of material and exclusive rights to popular sporting codes so there is a lot of value in the bundle.

Vodafone TV has the potential to more than double the revenue the company gets from each customer. It should do even better when it comes to lifting the per customer profit.

Meanwhile, Spark’s Lightbox streaming service seems a defensive play although it is a clear differentiator. Spark customers get Lightbox as part of broadband or mobile accounts. It’s a way of adding value and justifying higher prices. Spark’s basic unlimited fibre plan costs $95 a month compared to Stuff Fibre’s basic $90 a month.

Categories
media telecommunications

Sky TV fights piracy battle that’s already been won

Sky TV launched legal action in a bid to force ISPs to block access to streaming and video download websites.

As you’d expect, the move didn’t go down well with the industry. At least two ISPs say they will fight Sky in court.

Sky sent notice that it will seek court orders for Spark, Vodafone, 2degrees and Vocus — which trades as Orcon, Slingshot and Flip – to block a list of unspecified sites. The date blocking should start is not specified in the letters.

Spark and Vocus seem ready to resist.

The four ISPs account for more than 90 percent of all online accounts in New Zealand. If Sky gets them to block, picking off the smaller players will be trivial.

Pirate Bay

Sky TV’s letter specifically names the Pirate Bay as a site it wants to be blocked.

The pay TV company says it is targeting illegal pirate sites as they are a threat to local entertainment industries and sporting codes.

The timing is curious. Most of the threat from piracy has subsided. The battle is won.

Once were pirates

It would have made sense for Sky to have moved against these websites in the past. But today piracy is only a shadow of its former self.

Vocus consumer general manager Taryn Hamilton says his company’s stats show visits to The Pirate Bay – a popular file-sharing site – is now at 23 percent of its 2013 peak.

Most of the damage to Sky TV’s business was done a long time ago. Today pirates are no threat. Legitimate online streaming services like Netflix, Hulu and Amazon are what is really killing Sky’s business. They have already killed the pirates.

They offer a similar mix of entertainment programming at a fraction of Sky’s price. Netflix is $15 a month, Sky TV is around $80.

Sport is different

Things are different with sports programming. Sky has the rights to the most popular sporting codes in New Zealand, there are no legitimate alternatives.

While determined customers with VPNs can often shop around overseas for a better deal, it’s often too much trouble for most people. And overseas coverage can be inferior,

Hamilton says the idea of Sky blacklisting sites is dinosaur behaviour and something you might expect to see in North Korea.

It is certainly dinosaur behaviour. The fact that Sky names the faded and diminished Pirate Bay as a public enemy is a sign of how out-of-touch it is with the current scene.

Yet blocking websites isn’t restricted to totalitarian North Korea. A number of countries have laws blocking pirate websites. Often after the kind of litigation Sky plans. Web-blocking regimes don’t always work. There are plenty of workarounds for determined pirates.

Fighting Sky

Hamilton says Vocus will fight Sky in court. His company is not alone. Spark says it also aims to fight the injunction. Last time there was a copyright battle, Spark sided with Sky TV.  InternetNZ says it is seeking legal advice. Vodafone, which has a close relationship with Sky, says it will comply with any court order. At the time of writing, 2degrees has yet to commit.

Should the four ISPs co-ordinate their defence, maybe with help from InternetNZ and other interested parties, life could be difficult for Sky, which is already in long-term decline as it continues to fail to adjust to new technology.

Lawyers are obvious winners here. Litigation is likely to be expensive. One problem is there is no precedent in New Zealand for this kind of complaint, the Copyright Act stems from a time before video streaming was practical. Until now most service providers have walked away from pitched battles.

Kodi victory

Around the time Sky sent letters to the ISPs, the company won an interim injunction against Fibre TV which sells the Kodi set-top box. Fibre TV sells the set-top box along with software designed to make piracy easy. The decision was made in the Christchurch District Court and Sky was awarded costs.

It is possible that the Kodi victory spurred Sky TV’s renewed interest in attacking the ISPs. Possible, but unlikely. Fibre TV was small and unable to put up much of a fight. The case against Fibre TV was a slam dunk and there’s not much public sympathy for the company.

On the other hand, the attack on ISPs looks set to be a public relations disaster for Sky. The move is unpopular with consumers.

Criticism of Sky TV

As you’d expect Sky TV has come in for a lot of criticism over its move – not just from the ISPs who are in the firing line.

It is fair to say Sky is struggling to defend an outmoded business model. Yet it is equally understandable that the company wants to protect the value of the rights it has purchased in good faith from movie or TV studios and sporting codes.

It is possible that Sky is acting against ISPs on behalf of rights holders. In the past, the big US-based media companies have attempted similar actions. They or the sporting codes could be bankrolling Sky’s litigation or even pressuring Sky to act as their proxy.

All these protagonists seem out of touch with what’s happening on the ground. Netflix has shown how to make software piracy redundant. It charges what consumers consider a fair price for a decent selection of programming. That becomes a compelling alternative to navigating the dark side of the internet.

Sky needs to find a way to cut its prices to Netflix-like levels. From outside, that looks hard because it appears bundling channels lets Sky subsidise some content by overcharging for other content. If so, it is an unsustainable business model. Moreover, the problem has nothing to do with Orcon customers being able to see the Pirate Bay.