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  Reply # 1854258 28-Aug-2017 18:27
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tdgeek:

 

Not in deep trouble, they lost a small %. Previous years it been very small. yes, low margin is exposure.

 

 

Yes, it's more of a slow hemorrhage than an arterial bleed, but it isn't a one off. It's a trend, and not only is that trend continuing, it seems to be accelerating. Cable providers overseas are seeing a similar phenomenon. They have a high fixed cost base. While this rate of subscriber loss won't kill them immediately, or even for some time, it will kill them in a few years if it goes unchecked.

 

tdgeek:

 

At $12 per month per subscriber they cant drop HD as they pay Optus extra for that. Any small price decrease, say $10 per month means goodbye profit.

 

 

The $12 per subscriber average profit analysis misses the point somewhat. HD is sunk cost. It costs them to produce the material and lease the transponder bandwidth, regardless of uptake. It only costs them insofar as those subscribers who pay for the ticket don't any more. Plenty of subscribers don't pay for it, and extending it to them costs zero.

 

Rising costs as subscriber numbers fall and fixed costs have to be spread across an ever-smaller user base will probably hit the ARPU by more than $12 in the not too distant future, if the current rate of subscriber decline continues. If they want to continue with a satellite service similar to the current one for more than a couple of years, stopping that bleed is critical. And I see no sign that they know how to do it.

 

tdgeek:

 

Sky should shift pricing around but they cant make it cheaper, its already quite cheap, based on what it costs to provide sport.

 

 

Price is only half of the value equation. What you get for the money is the other half. If they can't drop prices much, then they need to improve the value proposition by improving the viewer experience. People will pay for a good product if it represents quality and value. That's why Lada's haven't driven Mercedes Benzes from the markey. But if they want to price something as a premium product and compete successfully, then it has to actually be a premium product that viewers value and enjoy. Standard definition, low bitrate fare constantly interrupted by ads and promos isn't


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  Reply # 1854259 28-Aug-2017 18:34
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I would have thought in 2017, HD would be standard for everyone, and 4K would be the resolution that you pay extra for. But I am guessing that less people would pay to have 4k, than HD, so it would essentially be a big decrease in revenue to drop the fee. But how many people get sky, but don't have HD? Guessing a lot of those would be elderly where picture quality may not matter so much to them.

 

 


 
 
 
 


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  Reply # 1854260 28-Aug-2017 18:36
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shk292: There is, in my opinion, a false assumption from the supporters of Sky in this debate - and that is that sports rights cost what they cost, and this has to be paid.

 

I actually think that the costs of sport, especially rugby in NZ, has been fuelled by Sky bidding to win it exclusively, because without it they would die.  They know (incorrectly or otherwise) that they have a captive market, including those who pay for Basic and subsidise Sport.  So, they can afford to pay huge sums for sports rights and pass these on to the customers.

 

What if they didn't do this?  What if Sky currently pay $100M for NZ Rugby (a number I just made up), then they go out of business next month and the next highest bid for rugby rights is $40M from TVNZ or Amazon?  Do we think NZ rugby would say "stuff you", close up shop and there would be no more rugby in NZ?  Or perhaps could another model be found which incoporates less money, more subscribers and more diverse providers?

 

I think if you step away from the current assumptions - ie huge rights costs and geographic exclusive broadcast rights - there may be different answers.  Not all of which will involve Sky. 

 

The other side of the coin (in relation to rugby) would suggest that if large amounts weren't paid the NZRFU would have trouble nurturing and retaining the high level of talent we have here. With the idea of professionalising womens rugby seemingly gaining momentum, the question also has to asked where will this money come from? If it came from Sky picking up the broadcast rights monthly subs will increase, which leads to a host of other questions and implications, including those around the impact of more people leaving the platform and further blame of 'piracy'.


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  Reply # 1854262 28-Aug-2017 18:41
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shk292:

 

There is, in my opinion, a false assumption from the supporters of Sky in this debate - and that is that sports rights cost what they cost, and this has to be paid.

 

I actually think that the costs of sport, especially rugby in NZ, has been fuelled by Sky bidding to win it exclusively, because without it they would die.  They know (incorrectly or otherwise) that they have a captive market, including those who pay for Basic and subsidise Sport.  So, they can afford to pay huge sums for sports rights and pass these on to the customers.

 

What if they didn't do this?  What if Sky currently pay $100M for NZ Rugby (a number I just made up), then they go out of business next month and the next highest bid for rugby rights is $40M from TVNZ or Amazon?  Do we think NZ rugby would say "stuff you", close up shop and there would be no more rugby in NZ?  Or perhaps could another model be found which incoporates less money, more subscribers and more diverse providers?

 

I think if you step away from the current assumptions - ie huge rights costs and geographic exclusive broadcast rights - there may be different answers.  Not all of which will involve Sky

 

 

But you are also assuming that. Sky wont want to pay any more than they have to. If they win the bid, they are top bidder. There may be no other bidders of note? In which case NZ Rugby, SANZAR etc might put it to Sky? While Rugby holds the upper hand, so does Sky, assuming no one else will or can front up. 

 

The easy way out is to seperate sport subsidised from Basic. That makes Basic a nice overall family package. Sports then costs the balance. Sport subscribers it doesnt matter, they pay the same. Basic only subscribers save. Sky loses there, but gains on new subscribers at a cheap Basic + FTA package. 

 

Now while Rugby is our national winter sport, I would say the fanbase isn't HUGE. Its big, but not huge. Lots of people arent into rugby, and just watch tests. Its one sport of many on Sky. 

 

I dont think there are any Sky supporters on here. One side doesnt like the price and are unhappy or miffed or jealous. The other sees that Sky doesnt rort, the service costs what it costs. Even moving to SVOD only wont matter a great deal price wise, I estimated $8 per month, maybe a bit more. Theres no silver bullet or rortfest going on. IF NZ had twice the population and Sky had 1.6 million subscribers, plenty of room there to reduce prices


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  Reply # 1854266 28-Aug-2017 18:46
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Dratsab:

 

shk292: There is, in my opinion, a false assumption from the supporters of Sky in this debate - and that is that sports rights cost what they cost, and this has to be paid.

 

I actually think that the costs of sport, especially rugby in NZ, has been fuelled by Sky bidding to win it exclusively, because without it they would die.  They know (incorrectly or otherwise) that they have a captive market, including those who pay for Basic and subsidise Sport.  So, they can afford to pay huge sums for sports rights and pass these on to the customers.

 

What if they didn't do this?  What if Sky currently pay $100M for NZ Rugby (a number I just made up), then they go out of business next month and the next highest bid for rugby rights is $40M from TVNZ or Amazon?  Do we think NZ rugby would say "stuff you", close up shop and there would be no more rugby in NZ?  Or perhaps could another model be found which incoporates less money, more subscribers and more diverse providers?

 

I think if you step away from the current assumptions - ie huge rights costs and geographic exclusive broadcast rights - there may be different answers.  Not all of which will involve Sky. 

 

The other side of the coin (in relation to rugby) would suggest that if large amounts weren't paid the NZRFU would have trouble nurturing and retaining the high level of talent we have here. With the idea of professionalising womens rugby seemingly gaining momentum, the question also has to asked where will this money come from? If it came from Sky picking up the broadcast rights monthly subs will increase, which leads to a host of other questions and implications, including those around the impact of more people leaving the platform and further blame of 'piracy'.

 

 

Sky wont increase prices. If you imagine as I just posted that they have 1.6 million subscribers in a larger NZ, plenty of room there to reduce prices. But at NZ's size, you can argue that its marginal. People paid the premium and enjoy it. The premium being pay TV PLUS a lack of economy of scale in s small population. Now, $15 is the standard price for all things TV, and that just isn't correct. We are just too small.  


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  Reply # 1854267 28-Aug-2017 18:47
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mattwnz:

 

I would have thought in 2017, HD would be standard for everyone, and 4K would be the resolution that you pay extra for. But I am guessing that less people would pay to have 4k, than HD, so it would essentially be a big decrease in revenue to drop the fee. But how many people get sky, but don't have HD? Guessing a lot of those would be elderly where picture quality may not matter so much to them.

 

 

 

 

Optus lease also has an HD extra add-on. Others have HD add on too, not just Sky.


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  Reply # 1854273 28-Aug-2017 18:58
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JimmyH:

 

tdgeek:

 

Not in deep trouble, they lost a small %. Previous years it been very small. yes, low margin is exposure.

 

 

Yes, it's more of a slow hemorrhage than an arterial bleed, but it isn't a one off. It's a trend, and not only is that trend continuing, it seems to be accelerating. Cable providers overseas are seeing a similar phenomenon. They have a high fixed cost base. While this rate of subscriber loss won't kill them immediately, or even for some time, it will kill them in a few years if it goes unchecked.

 

Agree. Sky doesnt really have that high a fixed cost base. I always assumed that the satellite cost was the major problem, that they cannot fix for a few short years. But going SVOD only will only reduce costs by $8+ per month per subscriber, so thats not the problem. If they get a sweet deal from Optus, same figure. 

 

The leak has been veeeeerrrry slow to date, now its risen. Not much, but the bottom line effect was 30 million. Plus another 30 million in rights cost increases. They may have to downsize as NZ is too small when everyone wants everything cheap as. Netflix $14 of there was also Netflix Sport, I guess thats $25?? It doesnt work.

 

tdgeek:

 

At $12 per month per subscriber they cant drop HD as they pay Optus extra for that. Any small price decrease, say $10 per month means goodbye profit.

 

 

The $12 per subscriber average profit analysis misses the point somewhat. HD is sunk cost. It costs them to produce the material and lease the transponder bandwidth, regardless of uptake. It only costs them insofar as those subscribers who pay for the ticket don't any more. Plenty of subscribers don't pay for it, and extending it to them costs zero.

 

Rising costs as subscriber numbers fall and fixed costs have to be spread across an ever-smaller user base will probably hit the ARPU by more than $12 in the not too distant future, if the current rate of subscriber decline continues. If they want to continue with a satellite service similar to the current one for more than a couple of years, stopping that bleed is critical. And I see no sign that they know how to do it.

 

Optus charge for HD. Say 33% have HD. Thats $3-33 off the bottom line, a 25% drop, thats significant. Which highlights my point, there is not much wiggle room, its not the cash cow that many think it is.

 

tdgeek:

 

Sky should shift pricing around but they cant make it cheaper, its already quite cheap, based on what it costs to provide sport.

 

 

Price is only half of the value equation. What you get for the money is the other half. If they can't drop prices much, then they need to improve the value proposition by improving the viewer experience. People will pay for a good product if it represents quality and value. That's why Lada's haven't driven Mercedes Benzes from the markey. But if they want to price something as a premium product and compete successfully, then it has to actually be a premium product that viewers value and enjoy. Standard definition, low bitrate fare constantly interrupted by ads and promos isn't

 

 

They can increase features, yes. But everyone moans about the cost, the arguments are all about the price. Its not a premium product either. Its a Pay TV service, that after costs, makes a sound but not fantastic profit. Netflix isn't a dirty cheap rubbish service because its $14, its just a very different service. More stuff, older stuff, cheaper stuff, its a good option. If Sky was charging a premium price, it would be the current price plus a premium. IMO


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  Reply # 1854278 28-Aug-2017 19:01
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This topic should be "How Much is Sky Rorting Us with the Exorbitant Price They Charge"


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  Reply # 1854292 28-Aug-2017 19:28
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tdgeek:

 

mattwnz:

 

I would have thought in 2017, HD would be standard for everyone, and 4K would be the resolution that you pay extra for. But I am guessing that less people would pay to have 4k, than HD, so it would essentially be a big decrease in revenue to drop the fee. But how many people get sky, but don't have HD? Guessing a lot of those would be elderly where picture quality may not matter so much to them.

 

 

 

 

Optus lease also has an HD extra add-on. Others have HD add on too, not just Sky.

 

\

 

 

 

It maybe a case of them trying to get a better deal with their supplier, as it is 2017 after all, and their providers are competing against a internet streaming delivery network. 


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  Reply # 1854489 29-Aug-2017 02:22
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^ Yes, but when does Sky's Optus lease agreement end?




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  Reply # 1854490 29-Aug-2017 02:38
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tdgeek:

 

mattwnz:

 

I would have thought in 2017, HD would be standard for everyone, and 4K would be the resolution that you pay extra for. But I am guessing that less people would pay to have 4k, than HD, so it would essentially be a big decrease in revenue to drop the fee. But how many people get sky, but don't have HD? Guessing a lot of those would be elderly where picture quality may not matter so much to them.

 

 

 

 

Optus lease also has an HD extra add-on. Others have HD add on too, not just Sky.

 

 

What are you talking about? theres no extra fee from Optus transmitting in HD, Sky only pay a transponder rental and can use whatever format they like.

 

 

 

 


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  Reply # 1854509 29-Aug-2017 07:16
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Apsattv:

 

tdgeek:

 

mattwnz:

 

I would have thought in 2017, HD would be standard for everyone, and 4K would be the resolution that you pay extra for. But I am guessing that less people would pay to have 4k, than HD, so it would essentially be a big decrease in revenue to drop the fee. But how many people get sky, but don't have HD? Guessing a lot of those would be elderly where picture quality may not matter so much to them.

 

 

 

 

Optus lease also has an HD extra add-on. Others have HD add on too, not just Sky.

 

 

What are you talking about? theres no extra fee from Optus transmitting in HD, Sky only pay a transponder rental and can use whatever format they like.

 

 

 

 

 

 

The transmission costs in the financial statements included the 7 leases, and HD fees


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  Reply # 1854511 29-Aug-2017 07:17
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sonyxperiageek: ^ Yes, but when does Sky's Optus lease agreement end?

 

I thought it was 2018 or 2019 then someone here said it was 2021


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  Reply # 1854516 29-Aug-2017 07:59
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tdgeek:

 

Dratsab:

 

shk292: There is, in my opinion, a false assumption from the supporters of Sky in this debate - and that is that sports rights cost what they cost, and this has to be paid.

 

I actually think that the costs of sport, especially rugby in NZ, has been fuelled by Sky bidding to win it exclusively, because without it they would die.  They know (incorrectly or otherwise) that they have a captive market, including those who pay for Basic and subsidise Sport.  So, they can afford to pay huge sums for sports rights and pass these on to the customers.

 

What if they didn't do this?  What if Sky currently pay $100M for NZ Rugby (a number I just made up), then they go out of business next month and the next highest bid for rugby rights is $40M from TVNZ or Amazon?  Do we think NZ rugby would say "stuff you", close up shop and there would be no more rugby in NZ?  Or perhaps could another model be found which incoporates less money, more subscribers and more diverse providers?

 

I think if you step away from the current assumptions - ie huge rights costs and geographic exclusive broadcast rights - there may be different answers.  Not all of which will involve Sky. 

 

The other side of the coin (in relation to rugby) would suggest that if large amounts weren't paid the NZRFU would have trouble nurturing and retaining the high level of talent we have here. With the idea of professionalising womens rugby seemingly gaining momentum, the question also has to asked where will this money come from? If it came from Sky picking up the broadcast rights monthly subs will increase, which leads to a host of other questions and implications, including those around the impact of more people leaving the platform and further blame of 'piracy'.

 

 

Sky wont increase prices. If you imagine as I just posted that they have 1.6 million subscribers in a larger NZ, plenty of room there to reduce prices. But at NZ's size, you can argue that its marginal. People paid the premium and enjoy it. The premium being pay TV PLUS a lack of economy of scale in s small population. Now, $15 is the standard price for all things TV, and that just isn't correct. We are just too small.  

 

 

 

 

There is another false assumption that other broadcasters are willing to pay so much less than SKY which as you've seen with the EPL is simply not true. Twice.


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  Reply # 1854523 29-Aug-2017 08:12
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karni:

 

 

 

 

 

There is another false assumption that other broadcasters are willing to pay so much less than SKY which as you've seen with the EPL is simply not true. Twice.

 

 

I have never seen that put forward. Its common knowledge that broadcasters bid for rights, and common knowledge that Sky isn't always the top bidder or will pay the asking price.

 

EPL

 

Golf

 

BlackCaps

 

V8 Supercars (This one, they were not going to buy them, they did in the end)


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