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freitasm

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#248529 29-Mar-2019 16:46
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Spark New Zealand announced today it is beginning a formal process to engage with potential media partners to enhance and grow its Lightbox entertainment streaming business.

Lightbox is New Zealand’s leading local entertainment streaming business with more than 355,000 subscribers and has proven to be an effective part of Spark’s bundled offer. Spark’s preference is to identify a local or international media partner who can work with Spark to enhance Lightbox’s content proposition and support its growth.

Spark Marketing Director Matt Bain says “we believe that Lightbox’s continued success will require ongoing investment, especially in content. Spark is therefore seeking to work with an existing media player to leverage their entertainment content with the strong marketing and distribution platform that we have built already with Lightbox.

“We want to make sure we’re always bringing the best and broadest range of content to our customers. Given strong competition for the best shows, it makes sense to partner so we continue to secure the quality line-up they’ve become used to. To this end, we will shortly appoint an advisor to help drive a global process to achieve this outcome.

“In the meantime, Lightbox services will continue as normal, with great new content having already been acquired for 2019.”




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ockel
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  #2207175 29-Mar-2019 16:50

Wow, exit strategy already.  

 

How do you value a business that has very few paid customers (although it has doubled its revenue) but with almost no disclosure?





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freitasm

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  #2207176 29-Mar-2019 16:53
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Yes, that is how I read it.




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  #2207187 29-Mar-2019 17:24
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Your reading it way to cynically, it's just looking for a content partner to increase content growth.





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freitasm

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  #2207188 29-Mar-2019 17:25
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I am like that.




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Eitsop
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  #2207223 29-Mar-2019 18:20
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I think they may need help especially when they have live sports

ockel
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  #2207225 29-Mar-2019 18:23

hio77:

 

Your reading it way to cynically, it's just looking for a content partner to increase content growth.

 

 

Launched in August 2014?  That makes it 4 1/2 years old - and demanding a reasonable IRR compared to its hurdle rate.

 

More that 300,000 customers suggests $47m revenue annually plus anything derived from PPV.

 

Content costs probably still around the $25-30m estimated by the media (a few years ago mind you) plus the 50% pay-away for PPV.

 

It should be generating sufficient free cashflow to justify internal investment in new content.  Sadly the announcement suggests otherwise - so the revenue figure quoted (as an internal transfer) doesnt justify the benefit of a lower churn across the broadband segment.  If Spark is seeing a significant movement to UnPlan (suggesting people dont value Lightbox) and/or the viewing metrics for Lightbox (on a cost per viewer hour) then the internal transfer pricing is a sham and the actual IRR for the Lightbox business is too low to justify further internal investment.

 

Hence a need to bring in a content partner that can add good content at lower than market prices.

 

 

 

Cynicism seems justified, doesnt it?  When Spark actually discloses figures in its financial reports then the cynicism and speculation will abate.





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hio77
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  #2207252 29-Mar-2019 18:41
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ockel:

 

It should be generating sufficient free cashflow to justify internal investment in new content.  Sadly the announcement suggests otherwise - so the revenue figure quoted (as an internal transfer) doesnt justify the benefit of a lower churn across the broadband segment.  If Spark is seeing a significant movement to UnPlan (suggesting people dont value Lightbox) and/or the viewing metrics for Lightbox (on a cost per viewer hour) then the internal transfer pricing is a sham and the actual IRR for the Lightbox business is too low to justify further internal investment.

 

 

Lightbox is still included on mobiles and Entertainment Unplan.

 

I don't deal with Lightbox directly myself so i can't speak to the inner details, i do expect entertainment to pick right up soon though.





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antoniosk
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  #2207263 29-Mar-2019 19:14
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Wasn’t lightbox formed via Spark Ventures?




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ockel
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  #2207267 29-Mar-2019 19:18

antoniosk: Wasn’t lightbox formed via Spark Ventures?

 

Got sucked up into HMB a few years ago when it was deemed large enough to no longer be a Venture.





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hio77
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  #2207268 29-Mar-2019 19:19
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antoniosk: Wasn’t lightbox formed via Spark Ventures?

 

Yes, Ventures isn't an entity anymore though. Lightbox was moved under spark long time ago.





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ockel
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  #2207275 29-Mar-2019 19:31

hio77:

 

ockel:

 

It should be generating sufficient free cashflow to justify internal investment in new content.  Sadly the announcement suggests otherwise - so the revenue figure quoted (as an internal transfer) doesnt justify the benefit of a lower churn across the broadband segment.  If Spark is seeing a significant movement to UnPlan (suggesting people dont value Lightbox) and/or the viewing metrics for Lightbox (on a cost per viewer hour) then the internal transfer pricing is a sham and the actual IRR for the Lightbox business is too low to justify further internal investment.

 

 

Lightbox is still included on mobiles and Entertainment Unplan.

 

I don't deal with Lightbox directly myself so i can't speak to the inner details, i do expect entertainment to pick right up soon though.

 

 

Previously Lightbox was included in your broadband plan whether you wanted it or not.  How many broadband subscribers are on legacy plans and paying for Lightbox but not wanting/using it?  It would be suggested that about 50%????  

 

With Unplan if you want Lightbox you have to spend the extra dollars to get it.  When will Spark disclose the proportion of Unplan subscribers on Unplan vs Unplan Entertainment - ummmm, never.

 

The better approach would be to disclose Lightbox revenues (internal and external) - in much the same way as much-less-meaningful products in the financial reports.  Until then Lightbox is a financial failure and the announcement seeking a media partner confirms it fails to meet its project hurdles.





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ockel
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  #2210001 3-Apr-2019 10:00

Lightbox on the block - and now the CEO resigns (before the RWC too).

 

 

 

 





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tripp
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  #2210097 3-Apr-2019 13:36
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ockel:

Lightbox on the block - and now the CEO resigns (before the RWC too).


 


 


TV and sports costs a lot to do. Companies think it's easy. It's not.
It's also very easy to get high numbers of "users" when it's a "free" extra to other services.

I would expect both lightbox and sparks sports are running over budget.

rugrat
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  #2210292 3-Apr-2019 18:45
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Unplan includes Netflix, so not all Unplan money goes towards Light Box.

Also saw an offer for new Unplan customers of one year free Netflix, so unless Spark gets an amazing deal from Netflix would be making a loss there. Guessing they will be counted in amount of customers Light Box has.

https://www.spark.co.nz/shop/internet/unplan/

"The one entertainment plan that has the same flex as Unplan, but includes 12 months of Netflix and Lightbox Standard. This plan adapts its price tier based on your monthly data usage."










ockel
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  #2210300 3-Apr-2019 19:09

rugrat: Unplan includes Netflix, so not all Unplan money goes towards Light Box.

Also saw an offer for new Unplan customers of one year free Netflix, so unless Spark gets an amazing deal from Netflix would be making a loss there. Guessing they will be counted in amount of customers Light Box has.

https://www.spark.co.nz/shop/internet/unplan/

"The one entertainment plan that has the same flex as Unplan, but includes 12 months of Netflix and Lightbox Standard. This plan adapts its price tier based on your monthly data usage."

 

So the difference between Unplan and Unplan Entertainment is $10/mth.  Netflix standard is $15/mth.  

 

How much value does Lightbox contribute to the Unplan Entertainment - cos it looks like its still being given away for free.  Spark started with free Lightbox from its inception - and as with anything free, people do not value it.  And so Spark has had to continue to give it away for free.  

 

Really hard to see where a content partner can see any value in Lightbox as a business venture.





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