Probe launched into Sky TV content deals

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MikeB4
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#627161 18-May-2012 07:08

The thing that irks me the most is not the lack of smorgasbord approach but when you have purchased the Sky channel selection you get churned up a revolving load of repeats that go on for 6 to 12 months or more.

This is most obvious in Travel, History, Crime, Food, Comedy Central to name a few. In my book that is a rip off.

Here is a crazy notion, lets give peace a chance.

JonnyCam

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#627208 18-May-2012 09:57

This is most obvious in Travel, History, Crime, Food, Comedy Central to name a few. In my book that is a rip off.

But if you don't see value in what is being offered, wouldn't you cancel your subscription?

I'm sure in areas with paytv competition (such as the US) they have channels which are just fluff/filler and the repeats are just as bad.

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#627307 18-May-2012 13:01

JonnyCam:

This is most obvious in Travel, History, Crime, Food, Comedy Central to name a few. In my book that is a rip off.

But if you don't see value in what is being offered, wouldn't you cancel your subscription?

I'm sure in areas with paytv competition (such as the US) they have channels which are just fluff/filler and the repeats are just as bad.

Sounds like Sky NZ..

Regards,

Old3eyes

mm1352000

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#627338 18-May-2012 13:49

Following this discussion with interest.
The maths seems to point to Sky not being incredibly unreasonable in terms of the charge to subscribers. However those calculations say nothing about whether the prices they are paying for the content is also reasonable. In my opinion that is the more interesting discussion, because if the content were cheaper then both Sky and FTA broadcasters might have a better shot at getting more and/or better quality content. My personal opinion is that *some* professional athletes and entertainers are paid and/or demand obscene amounts of money for their "services". Content producers and rights holders have to recover that money somehow, so for me it seems logical that they are just passing the costs down the chain... and eventually we pay for it.

tdgeek

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#627370 18-May-2012 15:05

mm1352000: Following this discussion with interest.
The maths seems to point to Sky not being incredibly unreasonable in terms of the charge to subscribers. However those calculations say nothing about whether the prices they are paying for the content is also reasonable. In my opinion that is the more interesting discussion, because if the content were cheaper then both Sky and FTA broadcasters might have a better shot at getting more and/or better quality content. My personal opinion is that *some* professional athletes and entertainers are paid and/or demand obscene amounts of money for their "services". Content producers and rights holders have to recover that money somehow, so for me it seems logical that they are just passing the costs down the chain... and eventually we pay for it.

True. I'm sure Sky and FTA providers have little choice in the cost of the content. They buy what they can afford that will add value to their service, to encourage viewers and to get good advertising revenues.

The issue for me is that Sky has a monopoly, but is that their fault? They built a good business and no one else has been prepared to enter the market. Population is a big reason. To force Sky not to have exclusive deals is bizarre. That wll reinforce other potential entries to the market to flag it. FTA needs to compete if that is the issue, and pay for more content, and if exclusivity is banned, well they should still need to pay for it if they wish to have it. How will they do that? Make taxpayers pay? That is unfair. Make those programs pay TV? That is an option.

crackrdbycracku

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#627379 18-May-2012 15:19

Hi, just for fun I'm going to try to put the case for Sky.

Here goes:

Hi Geeks,

Look, high quality content whether sports or Game of Thrones or whatever is expensive. It is expensive to produce, it is expensive at to buy at the wholesale level (where we, Sky are) and yes it is expensive at the retail level where you are. That's just the way it is.

New Zealand is a small market so while the value of particular content may vary in relative terms the absolute value you can get out of a market like New Zealand is finite and not that big. This is why we take the bundling approach we do. We use the high price/high quality content such as All Blacks rugby and GoT to get people to buy the bundled service. Sure, we could sell content on a per game or per channel basis but the truth is that the overall return would be smaller. Selling on a per channel basis nobody would pay the same price just for the premium channels. Basically, we are cross subsidising the stuff you want with stuff don't because you will buy the bundle.

The problem is that if regulation took away our ability to sell bundles in this way, by taking away our exclusive rights, then the value of live sport and high quality shows would drop because the amount people would be prepared to pay the current price would drop. People would say: "Yeah, but I don't want the bundle so I should be paying less" and competitors might even meet this demand in the short term.

This would be all well and good for a while but with the drop in value, price, would come a drop in quality. Sports people, rugby players here, would not be paid as much and the quality of sports would suffer. Eventually, there simply would not be enough people paying enough for shows like GoT to be shown here at all. Remember the size of the market here is limited so even if everybody was paying, they probably wouldn't be paying enough.

Our bundles where you pay for content you don't want allow us to provide the content you do, at an extra charge. We need this revenue per customer as we have studied the market and concluded no other model will pay for these shows to be shown here. Whether we are talking about traditional broadcast or internet services it really doesn't matter because the market is the same size.

We are sorry but there simply isn't any other way to provide high quality content to New Zealand.

Yours sincerely,

Sky Guys.

Not saying I agree but this is how I would lay out the argument if I was Sky

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OldGeek

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#627390 18-May-2012 15:49

crackrdbycracku: Hi, just for fun I'm going to try to put the case for Sky.

The NZ market is indeed small compared to other countries but what if Sky sold out to one of the Ozzie providers? Would economy of scale result in a product mix that provides greater choice?

The rest is conjecture that may or may not be true. Just because it sounds credible does not make it so.

tdgeek

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#627429 18-May-2012 17:17

crackrdbycracku, agree fully. However it is billed, the gross revenue needs to be maintained.

crackrdbycracku

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#627442 18-May-2012 18:09

OldGeek:
crackrdbycracku: Hi, just for fun I'm going to try to put the case for Sky.

The NZ market is indeed small compared to other countries but what if Sky sold out to one of the Ozzie providers? Would economy of scale result in a product mix that provides greater choice?

Again as Sky:

Hi,

Thanks for the feedback. That is an interesting suggestion but unfortunately if Sky was sold to an Australian provider then we wouldn't be able to provide the quality of service New Zealanders currently enjoy. Basically, as an adjunct to an Australian service all the special local features and content, such as the All Blacks, would be either lost or severely limited.

The service would be dominated by Australian content or content preferred by Australians. Only a locally provided service can cater for the local needs.

It just wouldn't be the same for customers.

Thanks,

Sky Guys.

Just so everybody is on the same page, I'm not representing Sky nor am I pretending to. I'm just saying what I would say if I was Sky, OK?

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compost

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#627523 18-May-2012 20:42

crackrdbycracku: Hi, just for fun I'm going to try to put the case for Sky.

....

Just so everybody is on the same page, I'm not representing Sky nor am I pretending to. I'm just saying what I would say if I was Sky, OK?

So how long did it take for you to get Stockholm Syndrome?

Seriously: I return for the umpteenth time to the example of Pharmac. By changing the format and nature of negotiations, NZ pays significantly less for drugs than we used to. This demonstrates that there is no such thing as a universal price that all buyers must pay.

Some of the assumptions mentioned about the need for exclusive content deals are worth challenging. I have no clue about current deals or pricing but if some highly sought-after content costs $10m a year for exclusive rights, and two broadcasters are willing to spend $5m each to share the content, then the content owner receives the same amount but the broadcasters could charge customers less to cover costs, and more people could afford to see the content.

As to the argument that Sky has no choice but to pay the asking price, I don't agree. They have made themselves part of the problem by trying to corner the live sports market. They are now in a position that they will have to continue to pay top dollar for exclusive rights to make sure no-one else gets a sniff, otherwise they won't be able to continue to charge the Sky-high prices that they do.

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tdgeek

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#627547 18-May-2012 21:42

compost:
crackrdbycracku: Hi, just for fun I'm going to try to put the case for Sky.

....

Just so everybody is on the same page, I'm not representing Sky nor am I pretending to. I'm just saying what I would say if I was Sky, OK?

So how long did it take for you to get Stockholm Syndrome?

Seriously: I return for the umpteenth time to the example of Pharmac. By changing the format and nature of negotiations, NZ pays significantly less for drugs than we used to. This demonstrates that there is no such thing as a universal price that all buyers must pay.

Some of the assumptions mentioned about the need for exclusive content deals are worth challenging. I have no clue about current deals or pricing but if some highly sought-after content costs $10m a year for exclusive rights, and two broadcasters are willing to spend $5m each to share the content, then the content owner receives the same amount but the broadcasters could charge customers less to cover costs, and more people could afford to see the content.

As to the argument that Sky has no choice but to pay the asking price, I don't agree. They have made themselves part of the problem by trying to corner the live sports market. They are now in a position that they will have to continue to pay top dollar for exclusive rights to make sure no-one else gets a sniff, otherwise they won't be able to continue to charge the Sky-high prices that they do.

I don't feel your Stockholm Syndrome comment is appropriate. Akin to name calling. crackrdbycracku has just used a different theme to post. And he qualifiedf that.

If both pay 5 million, that sounds doable. But, buying content that is then available FTA becomes not worthwhile, it adds no value to Sky subscribers. So, in the real world, I'd expect Sky to flag it, FTA can pay 10 million. They may or may not be prepared to, or afford to pay that. Not a real solution IMO

You are saying that Sky are cornering the sport market so that affects the price they pay? If anything, it would reduce the cost if they are buying big. Sky NZ is teeny in the world content market. FIA sets the price for F1, same will apply I assume to the other sports.

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#627618 19-May-2012 07:47

compost:
crackrdbycracku: Hi, just for fun I'm going to try to put the case for Sky.

....

Just so everybody is on the same page, I'm not representing Sky nor am I pretending to. I'm just saying what I would say if I was Sky, OK?

So how long did it take for you to get Stockholm Syndrome?

Seriously: I return for the umpteenth time to the example of Pharmac. By changing the format and nature of negotiations, NZ pays significantly less for drugs than we used to. This demonstrates that there is no such thing as a universal price that all buyers must pay.

Some of the assumptions mentioned about the need for exclusive content deals are worth challenging. I have no clue about current deals or pricing but if some highly sought-after content costs $10m a year for exclusive rights, and two broadcasters are willing to spend $5m each to share the content, then the content owner receives the same amount but the broadcasters could charge customers less to cover costs, and more people could afford to see the content.

As to the argument that Sky has no choice but to pay the asking price, I don't agree. They have made themselves part of the problem by trying to corner the live sports market. They are now in a position that they will have to continue to pay top dollar for exclusive rights to make sure no-one else gets a sniff, otherwise they won't be able to continue to charge the Sky-high prices that they do.

Pharmac is a single buyer. if Pharmac does not buy the drug as a Pt. the drug can be very expensive. Remember when Pharmac did not cover Herceptin it cost cancer Pt.'s $100'00 for treatment.

Now SKY has competition for content but has the funds to out bid rivals. Are you now arguing for SKY to be a pure Monopoly (single buyer)?

JimmyH

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#627772 19-May-2012 19:18

Some of the assumptions mentioned about the need for exclusive content deals are worth challenging. I have no clue about current deals or pricing but if some highly sought-after content costs $10m a year for exclusive rights, and two broadcasters are willing to spend $5m each to share the content, then the content owner receives the same amount but the broadcasters could charge customers less to cover costs, and more people could afford to see the content.

So, assuming one of the other broadcasters is a FTA network, the rest of your chain of logic would be:
1. I decide it's not worth subscribing to Sky to see (say Game of Thrones as an example), since it's on FTA and I have the tech to skip the ads.
2. I cancel SoHo, so do many others.
3. Sky drops SoHo
4. The $10M is no longer on the table, so the content gets dropped entirely.
5. Instead of paying $2.30 per week for SoHo, I now have to drop circa $50-60 for the box set of the premium content I want to see.

End game is less content, costing more, with less convenience?

Athlonite

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#627833 20-May-2012 06:21

tdgeek: and if exclusivity is banned, well they should still need to pay for it if they wish to have it. How will they do that? Make taxpayers pay? That is unfair. Make those programs pay TV? That is an option.

so you like to pay $9.95 per day to watch the six oclock news or $12.00 per day to watch your daily dose of shorty street hmmm thought not thats why FTA has ads and sky don't (also the reason you pay for sky and not FTA) the taxpayer already pays via TVNZ on Air and advertising pays for the rest

although I hardly watch TV these days as its so much garbage now it's not funny I've turned to the net to get the content I want to watch when I want to watch it not months or years later when it's finally shown here

NonprayingMantis

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#627836 20-May-2012 06:42

compost:
crackrdbycracku: Hi, just for fun I'm going to try to put the case for Sky.

....

Just so everybody is on the same page, I'm not representing Sky nor am I pretending to. I'm just saying what I would say if I was Sky, OK?

So how long did it take for you to get Stockholm Syndrome?

Seriously: I return for the umpteenth time to the example of Pharmac. By changing the format and nature of negotiations, NZ pays significantly less for drugs than we used to. This demonstrates that there is no such thing as a universal price that all buyers must pay.

Some of the assumptions mentioned about the need for exclusive content deals are worth challenging. I have no clue about current deals or pricing but if some highly sought-after content costs $10m a year for exclusive rights, and two broadcasters are willing to spend $5m each to share the content, then the content owner receives the same amount but the broadcasters could charge customers less to cover costs, and more people could afford to see the content.

As to the argument that Sky has no choice but to pay the asking price, I don't agree. They have made themselves part of the problem by trying to corner the live sports market. They are now in a position that they will have to continue to pay top dollar for exclusive rights to make sure no-one else gets a sniff, otherwise they won't be able to continue to charge the Sky-high prices that they do.

I'm afraid I don;tfollwo this peice of logic.

If 2 broadcaster pay $5m each for the content, then they are only going to have half the customers watching it vs one broadcaster (since people won't watch something on one channel, then switchover and watch it again).

So why would they be able to charge customers (whether pay TV customers or advertisers) less as much when the viewership is only going to be half, yet other overheads will be more

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