Spark New Zealand begins formal process to select a growth partner for Lightbox

Forums › Sky, Neon, Lightbox › Spark New Zealand begins formal process to select a growth partner for Lightbox

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#2210940 4-Apr-2019 20:58

The point I think you’re trying to make is that LB has a better range of newer content than NF which imo is only looking at it from one perspective. Another perspective is they both have new and exclusive content but one has a broader range of content.

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#2210954 4-Apr-2019 21:19

tdgeek:

I didn't miss it, my point was not based on what one poster watches

Proportion is irrelevant/a weak argument. If only 10% of their large amount of content is new/original, it could still be more new/original content than Lightbox has.

You can only watch so much content so there simply has to be "enough" new content to make the fact they have a large amount of older content somewhat irrelevant if you're interested in new content.

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#2210971 4-Apr-2019 21:38

D.W:

tdgeek:

I didn't miss it, my point was not based on what one poster watches

Proportion is irrelevant/a weak argument. If only 10% of their large amount of content is new/original, it could still be more new/original content than Lightbox has.

You can only watch so much content so there simply has to be "enough" new content to make the fact they have a large amount of older content somewhat irrelevant if you're interested in new content.

Thats obvious. Assuming most of us only want to watch modern content. Thus, who cares if Netflix has 4000 titles? If most are old, as there're many that are new. Who cares if Lightbox has much less content if most of them are new, as that is their model. It may well be that the new titles on both are not that dissimilar.

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#2210973 4-Apr-2019 21:42

tdgeek:

Thats obvious. Assuming most of us only want to watch modern content. Thus, who cares if Netflix has 4000 titles? If most are old, as there're many that are new. Who cares if Lightbox has much less content if most of them are new, as that is their model. It may well be that the new titles on both are not that dissimilar.

The old content is a point of differentiation if new content is comparable. Nobody is going to complain if they have the option to watch a truckload of older content (of which there is plenty of high quality viewing) from time to time.

Ultimately its purely anecdotal but I don't know a single person that has opted to pay for Lightbox over Netflix.

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#2210975 4-Apr-2019 21:50

D.W:

tdgeek:

Thats obvious. Assuming most of us only want to watch modern content. Thus, who cares if Netflix has 4000 titles? If most are old, as there're many that are new. Who cares if Lightbox has much less content if most of them are new, as that is their model. It may well be that the new titles on both are not that dissimilar.

The old content is a point of differentiation if new content is comparable. Nobody is going to complain if they have the option to watch a truckload of older content (of which there is plenty of high quality viewing) from time to time.

Ultimately its purely anecdotal but I don't know a single person that has opted to pay for Lightbox over Netflix.

Where did I suggest that??? Both are relevant, both differ. A poster here stated that LB was irrelavent, doesn't compete. They all complete. Neon you hardly read about, but it was in the news two days ago (many angry Neon GoT viewers as there was a glitch)

If an SVOD provider only has the same content everyone else has its not relevant. Thats not the case for any of them AFAIK

D.W

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#2210988 4-Apr-2019 21:57

tdgeek:

Where did I suggest that??? Both are relevant, both differ. A poster here stated that LB was irrelavent, doesn't compete. They all complete. Neon you hardly read about, but it was in the news two days ago (many angry Neon GoT viewers as there was a glitch)

If an SVOD provider only has the same content everyone else has its not relevant. Thats not the case for any of them AFAIK

My original response was to you saying that LB content was "newer", which just isn't the case. Netflix has a truckload of new content these days.

You spoke about the large amount of old content Netflix has, with no recognition that they have invested heavily in original content in recent years.

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#2211000 4-Apr-2019 22:19

D.W:

tdgeek:

Where did I suggest that??? Both are relevant, both differ. A poster here stated that LB was irrelavent, doesn't compete. They all complete. Neon you hardly read about, but it was in the news two days ago (many angry Neon GoT viewers as there was a glitch)

If an SVOD provider only has the same content everyone else has its not relevant. Thats not the case for any of them AFAIK

My original response was to you saying that LB content was "newer", which just isn't the case. Netflix has a truckload of new content these days.

You spoke about the large amount of old content Netflix has, with no recognition that they have invested heavily in original content in recent years.

Looking back at my posts I have acknowledged that NF has new titles, they all do. Also that NF markets itself on MANY titles. LB has new titles in general, NF has 4000 odd, are they all new? No. Do they have many new titles, yes, already said. LB will have a larger % of new to old titles as they run that model. Thats standard math. Maybe you are mixing up posts relating to the Steve guy that says LB is not relevant, doesn't compete and so on, and whoever said he has never heard of anyone who opted to pay for Lightbox over Netflix. Who suggested that?

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#2211073 5-Apr-2019 07:57

Just a warning that for some people the cool period is no longer an option.

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#2211074 5-Apr-2019 08:01

freitasm: Just a warning that for some people the cool period is no longer an option.

Can you clarify that please. Is there an issue with posts in this thread?

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#2211086 5-Apr-2019 08:06

Yes there is an issue. This thread is not going anywhere, lots of strawman argument, replies that are not directly related to quote text or content.

Repeating arguments don't make them true. If there is no citation of sources with hard numbers then just let go, don't create numbers out of thin air.

Getting tired of people not getting along.

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#2215554 12-Apr-2019 09:55

tdgeek:

Tell me where Lightbox failed. Whats the purpose of Lightbox? If you don't know the latter you cannot comment on the former

You say to stop giving it away free and learn from mistakes, after you have just suggested to give Spark Sport away for free??

Plus you now see the new Sky CEO as at fault, for trying to rescue a dying business?

Spark (nee Telecom) has had media aspirations since before the start of this millennium. It has had IPTV aspirations since ~2000 when IPTV was first mooted and commercial rollouts began (thanks to the fine people at Alcatel, once of Telecoms close partners).

With the international rise of Netflix it showed Telecom that a thin-client streamed content operator was viable - and that with the adoption of TVNZ OnDemand through the early part of this decade, NZ'ers would be interested in and potentially willing to pay for content.

Lightbox failed to meet its financial targets. It continues to be subsidised (and I'm speculating that its heavily subsidised) by its parent. Its adoption and usage (see NZOnAir Screen Report to assess the gap between customers and usage) means that it would probably never be financially viable as a stand-alone business. I'd love to see disclosure on how successful Spark has been in the media space.

The new Sky CEO has indicated that Sky should be the home of sport in NZ. Thats signalling that he is willing to pay up to retain sports. Thats a bidding war that benefits the vendors of rights but not the distributors. Hence Spark and Sky will drive up sports costs. Some significant shareholders see that as destroying shareholder value and have exited the share register at any price - the new CEO is gambling all-or-nothing and doing it with a 10,000 pound gorilla who wants to play in the same game. If you thought Sky was a dying business before then its now moved into a binary outcome - and at an accelerated rate.

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waikariboy

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#2215562 12-Apr-2019 10:11

"more than 355,000 subscribers" - how many are paying for this, i know you get lightbox free for spark customers.

Balm its gone!

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#2215563 12-Apr-2019 10:13

ockel:

tdgeek:

Tell me where Lightbox failed. Whats the purpose of Lightbox? If you don't know the latter you cannot comment on the former

You say to stop giving it away free and learn from mistakes, after you have just suggested to give Spark Sport away for free??

Plus you now see the new Sky CEO as at fault, for trying to rescue a dying business?

Spark (nee Telecom) has had media aspirations since before the start of this millennium. It has had IPTV aspirations since ~2000 when IPTV was first mooted and commercial rollouts began (thanks to the fine people at Alcatel, once of Telecoms close partners).

With the international rise of Netflix it showed Telecom that a thin-client streamed content operator was viable - and that with the adoption of TVNZ OnDemand through the early part of this decade, NZ'ers would be interested in and potentially willing to pay for content.

Lightbox failed to meet its financial targets. It continues to be subsidised (and I'm speculating that its heavily subsidised) by its parent. Its adoption and usage (see NZOnAir Screen Report to assess the gap between customers and usage) means that it would probably never be financially viable as a stand-alone business. I'd love to see disclosure on how successful Spark has been in the media space.

The new Sky CEO has indicated that Sky should be the home of sport in NZ. Thats signalling that he is willing to pay up to retain sports. Thats a bidding war that benefits the vendors of rights but not the distributors. Hence Spark and Sky will drive up sports costs. Some significant shareholders see that as destroying shareholder value and have exited the share register at any price - the new CEO is gambling all-or-nothing and doing it with a 10,000 pound gorilla who wants to play in the same game. If you thought Sky was a dying business before then its now moved into a binary outcome - and at an accelerated rate.

What is Lightbox's financial target, I must have missed that

Is it a problem if it is subsidised? Spark subsidises Netflix, and Fanpass. Sky subsidises sport with the two Basic's

Sport, you can argue its competition, or do we prefer a monopoly? There is a range of SVOD providers out there now, lots of choice. The same may happen with sport. You mention exited the share register due to pushing up sport costs, the share price has been declining before Spark entered the market with Spark Sport. If both parties are keen to be in sport then I envisage we have two sports providers in our market

As for Lightbox, it seems to me they want it to grow, that may involve a premium version? I have no idea but wanting an SVOD sercvice to grow is a good thing

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#2215565 12-Apr-2019 10:15

waikariboy:

"more than 355,000 subscribers" - how many are paying for this, i know you get lightbox free for spark customers.

How many netflix subscribers sit on the free trail? Do they report these separately?

How many netflix subscribers are billed from alternative means? Do they report these separately?

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ockel

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#2215584 12-Apr-2019 10:40

tdgeek:

What is Lightbox's financial target, I must have missed that

Is it a problem if it is subsidised? Spark subsidises Netflix, and Fanpass. Sky subsidises sport with the two Basic's

Sport, you can argue its competition, or do we prefer a monopoly? There is a range of SVOD providers out there now, lots of choice. The same may happen with sport. You mention exited the share register due to pushing up sport costs, the share price has been declining before Spark entered the market with Spark Sport. If both parties are keen to be in sport then I envisage we have two sports providers in our market

As for Lightbox, it seems to me they want it to grow, that may involve a premium version? I have no idea but wanting an SVOD sercvice to grow is a good thing

Lightbox at its inception would have had a target IRR that should have been several hundreds of basis points above parent WACC given its startup nature and risk profile. That would have been set to justify the capital allocation to the project at inception and in each corresponding period. It would likely have been given 3 years to achieve that IRR and expected to been EVA positive from that point on. Thats basic management accounting. To not adopt such accounting would be extremely irresponsible in terms of representing shareholders interests.

Its not a problem to subsidise a project but that subsidy must be accounted for in terms of project costs - as the capital from that subsidy could be used in other internal projects seeking capital. Payments from Spark to Netflix will be a real and measurable cost to HMB and should be regularly reviewed to ensure that that capital isnt better deployed elsewhere in the business.

Since the new Sky CEO came on board (share price didnt do much after the announcement of his appointment last year) both the Sky share price and the Spark share price have underperformed the market (this despite Sparks good yield nature in a declining interest rate environment). Markets can tolerate competition. Markets dont like irrational competition.

And Lightbox already has a premium version. If Spark wanted Lightbox to grow - and it made good financial sense to do so (EVA positive) then it would commit more capital to it. Spark wants media to grow earnings. It always has, it always will. As a business it can only cut costs for so long - sooner or later it has to grow the top line. And media is an important plank to that.

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