Sky announced performance numbers and drops HD Ticket Fee

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#2192491 6-Mar-2019 19:09

I'm know I'm not exactly pro Sky, but I don't understand why they subsidise sport with basic, because that just pisses off everyone who doesn't want sport. If sport is so expensive, why are the sports fans not paying the true cost so that they could compete with the rest? Surely they'd actually be able to offer an SVOD basic /movies package superior to Netflix Premium for a similar price if they did, and that just makes all sorts of sense to me..

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richms

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#2192498 6-Mar-2019 19:17

I can only see it going to foxtel or similar.

Richard rich.ms

tdgeek

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#2192499 6-Mar-2019 19:18

Lias:

I'm know I'm not exactly pro Sky, but I don't understand why they subsidise sport with basic, because that just pisses off everyone who doesn't want sport. If sport is so expensive, why are the sports fans not paying the true cost so that they could compete with the rest? Surely they'd actually be able to offer an SVOD basic /movies package superior to Netflix Premium for a similar price if they did, and that just makes all sorts of sense to me..

Everyone does it. Basic should be $20 many would have that, its good value at that . But they need an ARPU of $80 to cover everything, so Basic and Sport, MySky there you go. They do sport at $60, Fanpass for 6 months. No Popups though, to discourage that. I feel Fanpass at $30 has hurt them as Spark customers can dump $105 of Sky and get $30 of Fanpass, and live with no popups (or full replays I think) Inconvenient but a lot cheaper. They could do sport full only at $60, plus MySky there is the $80, still a problem of price.

They are ceasing HD fee, but adding a small increase to Basic and Sport, so they are foregoing say $6 per month. Last time I looked profit was $12 per month per subscriber, so its tight. The overall issue is they aren't creaming it off suckers, no rorting. if you like sport it costs, and it will cost when they are gone too, that wont be magically solved by Sky going offline.

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#2192505 6-Mar-2019 19:20

richms:

I can only see it going to foxtel or similar.

Yes, as per another poster that makes most sense. I feel Spark will go for more content. If Foxtel or similar want it, they may just want the customers. Not the rest. They may not be interested if they have a sport competitor in this small country, so they dont bother. Once it all shakes out I expect to be paying the same or more for my sport.

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#2192526 6-Mar-2019 20:28

@MikeB4 other thread re a possible sale of Sky, and this is just last October, Comcast?NBC are mentioned, who were also sniffing at Australian TV

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12143301

Share price was 2-20 then, 1-43 now, cheaper and cheaper

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#2192540 6-Mar-2019 20:40

Amazon aren't interested in local headcounts. Sport, esp Rugby, is head counts. Support staff, truck rolls, maintenance, commentators, graphics artists, all sorts of things that their current offering doesn't require to be outside of the US. Amazon buys Rugby, then NZ has a big problem. They aren't going to cover First XV, Mitre10, possibly even Super Rugby takes a hit. Amazon isn't interested in older expensive technology like Satellite. Amazon buying Sky would basically kill off rural viewing to those who don't have internet of a suitable calibre. There is no win, except to try and boost Americas interest in Rugby. USA are the top 7's team in the world now. I predicted it 4 years ago. If USA Rugby gets big backers, happening if they add USA to the 12, then Rugby will get traction in the USA. USA could easily become the best in the world at Rugby. They have the athletes and the pool of potential players, infrastructure and sponsors. That buys good coaches. The issue being there isn't enough interest yet in Rugby at High School, but that is changing.

If Foxtel wanted into NZ, then they would buy Sky, makes sense. Issue being, why would they want it with a return of potentially $6 a user? Potentially they could lower the costs by consolidating infrastructure, but this means ringing Sky and speaking to an Australian. What would consumers get from the deal? Another SVOD Provider?

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#2192553 6-Mar-2019 21:04

MikeB4:

Any buyer would be offshore and that would be bad for the NZ consumer.

OK, I'll bite.

As a consumer, I care about value for money (basically content and pricing). Why should I care where a shareholder resides, or whether the shares are owned by someone residing in (say) Remuera as a opposed to San Francisco?

Aside from general anti foreign ownership sentiment, is there any reason why the domicile of shareholders matters for consumers/customers?

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#2192558 6-Mar-2019 21:07

JimmyH:

MikeB4:

Any buyer would be offshore and that would be bad for the NZ consumer.

OK, I'll bite.

As a consumer, I care about value for money (basically content and pricing). Why should I care where a shareholder resides, or whether the shares are owned by someone residing in (say) Remuera as a opposed to San Francisco?

Aside from general anti foreign ownership sentiment, is there any reason why the domicile of shareholders matters for consumers/customers?

Lack of understanding or caring about the local content, customers etc. There is a *massive* difference in the way scale works in bigger countries. They will make decisions based on what suits the masses, not the market and you'll be stuck with WTF moments all the time.

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#2192576 6-Mar-2019 21:27

networkn:

If Foxtel wanted into NZ, then they would buy Sky, makes sense. Issue being, why would they want it with a return of potentially $6 a user? Potentially they could lower the costs by consolidating infrastructure, but this means ringing Sky and speaking to an Australian. What would consumers get from the deal? Another SVOD Provider?

To get past the $6 user profit, they would run it lean. Foxtel is a MySky over broadband setup. They might do that with their IQ4 boxes, makes sense. The price has to drop and one has to assume they can pay more for their content as more people are subscribing, but its still cheaper, economy of scale. It looks great actually. probably bye bye satellite, unless they kept that as a minor service, maybe break even.

The $6 issue. Sky is big. The over 800,000 it used to be, most of those subscribers dont make money, their subs pay the running expenses. The last ones, after all expenses covered are the profit. The current issue with Sky is that the cream is reducing, that top section, so after all expenses are covered here are only 100,000 subscribers to earn the profit, so its 100,000 at $1000 per year, expected the year. Simplistically we have 600,000 paying the bills and 100000 generating the profit. When Sky lose 40,000 its not much just a few percent of the total, but as the subscriber level is inching closer to break even, its a large amount of the annual profit, and on that number 40,000 is just over 5% of revenue but 40% of profit. Do that twice in a row and tahts 80% of todays profit (100M p.a. expected) gone.

Conversely, if Foxtel has less costs for Sky's new content thats huge. if they can squeeze the price down to say $65 per month for entertainment and sport, the masses would flock to Sky NZ. If Sky got back to its heyday, and it would at GREAT prices, the cream I mention above explodes.

I knew a guy who ran a supermarket. He is broke now. When he had it, his sales needed to be say 100k per month. Or week. If he hit more, money was everywhere, if he fell short, it cost big time. Thats the issue with Sky, high volume, low margin. My mates supermarket went through a few short months underperformimg. Not that bad but just short. He lost bucketloads. Sky will probably lose 40000 subscribers next half, so drop 30M off the half year result just like that.

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#2192709 6-Mar-2019 23:10

To run it lean they would remove absolutely everything that could be run out of Australia, to Australia. There would be so little here. Not sure if that's a good thing, but it has it's downsides. I'd prefer to pay a few extra $ a month and get local support. Rare is the positive experience I have had where logistics are run from another country.

There would be some economies of scale which would help.

I am just not entirely sure that the money being made would warrant the investment required. I suspect if they did it, they would just pare back services in NZ until there wasn't anything left.

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#2192714 7-Mar-2019 00:05

networkn:

To run it lean they would remove absolutely everything that could be run out of Australia, to Australia. There would be so little here. Not sure if that's a good thing, but it has it's downsides. I'd prefer to pay a few extra $ a month and get local support. Rare is the positive experience I have had where logistics are run from another country.

There would be some economies of scale which would help.

I am just not entirely sure that the money being made would warrant the investment required. I suspect if they did it, they would just pare back services in NZ until there wasn't anything left.

Good points. here is how I would like to see it if they took over. Basing this on me, but also the reality of economics.

The takeover is just a share deal, so if that occurred, on day one, it's BAU. Leaning out the business is getting rid of brick and mortar that can all be centralised in one warehouse where the support staff can be on the phones. If they are spread out, thats a bit longer but I assume the call centre is central already, more or less. That reduces staff manning silly 10 or 12 buildings nation-wide. I can see satellite either going or being kept for the few that need it, as long as there are no effects on the bottom line. Ideally the Optus deal is per subscriber, Im unsure on that obviously. If there is a full merge then we use Foxtel, which will retain some Sky NZ content, they may drop some of their content, the goal to have a similar level but a lightly higher level overall. There will be duplication. When IQ4 are fully rolled out, shut down Sky's infrastructure that is not needed. They would keep production staff, and any technical staff that were needed. The lesser area can cater for IQ4 stock. Remove the warehouse and office and downsize that to cater for a limited satellite service. Support is from Oz as they know their boxes.

In short you will have a Netflix type of service, hardly any staff here. There is little need for large numbers of staff or office area. NZ will be to all intents and purposes a state of Australia for this pay tv business. If Sky shut down, no offers, what then? We get Foxtel from Australia and you end up with the same result. Clearly we are too small to have sport pay TV here. So we hang off a bigger partner.

Is all this ideal? No. You either have this and be an economic and a good priced pay tv sport/entertainment service or you have no service. As its too expensive.Then people leave then it becomes more expensive to run, welcome 2019.

tdgeek

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#2192717 7-Mar-2019 00:11

networkn:

I am just not entirely sure that the money being made would warrant the investment required. I suspect if they did it, they would just pare back services in NZ until there wasn't anything left.

Thats where we differ. As we have poor economies of scale in NZ, I feel its best to use Foxtel and not Sky. If we kept Sky and Foxtel tried to improve it, the same formula we have still applies. Revenue, expenses, population doesn't work here. So Foxtel buys us out, takes what content they want, we all get that in Australasia.

Its now an overseas company.

No local support

I can't see another way. Sky needs less costs, to create a lower price , to get more customers. Thats not possible for us alone, IMHO

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#2192729 7-Mar-2019 06:15

I am so used to no local support for services it's become the norm, Xbox, windows, vodafone,Netflix. There is limited local content on sky now which is a shame try watching NZ basketball it's normally only streamed on Facebook. I really think it's dumb bringing out a new smallesr box they are better off using the Kayo streaming model no box download an app less cost same result. I am seriously looking at Kayo over sky just for the price point. I only want sport 55 is too much unless they just offer sport's on its own. We are too small to compete with international streaming services they would be better to partner with a bigger international player. I am not knocking sky I would still use them if the price was right but with today's technology and overseas streaming it's a no brainer to look at other options

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#2192821 7-Mar-2019 09:30

Just an observation. The basic tenor of Sky discussions threads has shifted in recent months from 'what Sky needs to do to stay in business' to 'what will inevitably replace Sky'

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#2192825 7-Mar-2019 09:34

I am trying to think what difference dealing with a NZ-based company made when we were Sky subscribers. We rarely needed to contact support, but the one or two times I did, it was just the usual clicking through automated responses and talking to someone working from a script. Other than the Kiwi accent, I can't really think how this was any better or worse than an overseas service. Local content? I guess there is Face, though how local that is can be a matter of definition. There is Freeview, but we have that anyway. Sky News? All Australian with the occasional token mention of NZ and some free filler from our Parliament TV, which is on Freeview anyway. I can't recall anything about Sky content that is specific to New Zealand. I'm not a sports fan so maybe there is some stuff there that I am not aware of, but I don't really get the 'Sky is local' argument. I think it could be all Australian, or even American, and I doubt viewers would notice much difference.

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