Sky blames piracy for lost customers. Sky: it's time to wake up and smell the coffee.

Forums › Sky, Neon, Lightbox › Sky blames piracy for lost customers. Sky: it's time to wake up and smell the coffee.

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#1935695 10-Jan-2018 15:56

trig42:

networkn:

dafman:

At NZ$189m, that's around 2% of what Netflix spent on just on it's original programming last year (US $6 billion), and only a subset of what it spent acquiring external rights. Netflix is awash with cash. If it can afford to spend $6 billion developing original shows without having to increase it's subscription fees, it's nonsense to say that if chose to spend some of that cash on acquiring international sports rights that it would have to increase it fees to New Zealanders by five times (which is what tdgeek is saying).

I am not sure the total number of sports channel subscribers, but let's say 600K subscribers buy sport, you would need to spread the $189M in cost over 600,000 subscribers and make a profit for doing so, so let's generously say $350 per subscriber per year increase over the current price. $42 a month increase over the $22 you'll be paying now, plus you'll need a stable and pretty fast internet connection. Also, they would need commentators and infrastructure to cover it, including trucks to roll to the games and record it and edit it. Let's say that adds $5 more a month. That's now $69 a month for Netflix with Sport. BTW you just cut a fair number of people without internet connections suitable for running HD Sport over IP out of watching Live Rugby/Sport in general.

It's time for you to accept that it's not as simple as you have been going on about for 10 pages.

There is no such thing as a free lunch, however much you might want it.

For the record, Netflix made 178M last year off 2.65B in revenue (total sales), they are hardly awash with cash.

Also, I don't see people raging about the 3 price increases in 3 years that you see Sky get when they sent out their annual price increase letters. Some pundits believe the price of Netflix will reach $30USD a month.

I'd pay Netflix $69 a month if it included NZ Rugby, Cricket, League and other sport that Sky currently has (America's Cup) and the normal Netflix offering. So long as I could get the sport OnDemand (no need to record), it was in HD, and I could have it on the same number of devices I currently can get NF on.

I like where you're coming from but would the average NZ sport viewer? In 2014 (the last decent stats) the average Sky Sport viewer watched ~265 minutes of sport per month. At $70/month that means you're happy to pay $15/hour to watch sport. Really? You think Joe Public is with you on this?

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dafman

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#1935752 10-Jan-2018 18:34

tdgeek:

You have to be joking. Id quit while I was ahead if I was you

Netflix is a global company, Sky is just a business in a very very small company, how can you possibly compare NF to Sky based on rights expenditure? That's crazy, sorry. If NF took over sports in NZ, its market is NZ, what Sky pays, NF will pay, the customer numbers dont change

Agree, you can't compare NF to Sky - which is my very point as NF is a global company with massive revenue and expenditure compared with Sky.

For that very reason, if NF took over sports from Sky, there would be no standalone NZ market - NF (or Amazon for eg) would purchase global rights from Rugby NZ:

NZ Rugby may have to accept a lower price than historical. So be it, that's market forces and they would learn to live with it.
NF probably only be interested in international matches, so provincial rugby would need to be picked up in local FTA (ie. NZ on Air), or die.

The point is, sports would be under a model completely different to Sky, so you CAN"T keep saying that the current Sky cost base would apply to a new provider.

For me, and many others, if we can get pay per view for particular sport games as required - without having to fork $100+ every month for the privilege of watching via antiquated 1980's kit, then that's a much better model than current.

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#1935775 10-Jan-2018 19:03

tdgeek:

No it wouldn't. Tall Poppy Syndrome, thats all it is. Sky hate existed well before any litigation threats

That's true to an extent, but sentiment seems to have changed quite a bit recently.

I can remember back when Sky was new. The hate came from those who didn't have it and were railing against their beloved rugby/cricket (...) now being on Sky instead of free-to-air. Those with Sky pretty much loved it, and were very vocal about this.

Fast forward to now. I think without exception everyone I know with Sky complains about the company, complains about the product. Apart from the avid sports enthusiasts who are pretty much trapped at the moment, those I know who still have Sky are actively considering dropping it. Quite a few friends and work colleagues have done it recently, or seem to be actively thinking about it. I am in that camp as well. I was a vocal Sky enthusiast in the 1990s and 2000s, now I'm not (having dropped most packages and trying to convince the wife to drop Sky entirely).

This is change in sentiment reflected in their subscriber numbers. For many years they had quite a bit of churn, but were maintaining or growing their subscribers on a net basis. Now they aren't, they are bleeding subscribers and it's starting to look more like an arterial haemorrhage than a paper cut.

So while it's true that there have always been some haters, sentiment has turned greatly against Sky and there are many more than used to the the case - particularly among subscribers (which should worry them much more than dislike by non-subscribers).

There is probably a good PhD for a business student who can properly analyse what has happened and why it has happened. I think price and content is only part of it. Certainly Sky has (justifiably or unjustifiably) gained a bit of reputation as an arrogant bully, which may be part of the picture. But as a subject, Sky, its (arguable) mis-management, and its mounting woes are certainly a fascinating topic for discussion.

ockel

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#1935811 10-Jan-2018 19:32

dafman:

tdgeek:

You have to be joking. Id quit while I was ahead if I was you

Netflix is a global company, Sky is just a business in a very very small company, how can you possibly compare NF to Sky based on rights expenditure? That's crazy, sorry. If NF took over sports in NZ, its market is NZ, what Sky pays, NF will pay, the customer numbers dont change

Agree, you can't compare NF to Sky - which is my very point as NF is a global company with massive revenue and expenditure compared with Sky.

For that very reason, if NF took over sports from Sky, there would be no standalone NZ market - NF (or Amazon for eg) would purchase global rights from Rugby NZ:

NZ Rugby may have to accept a lower price than historical. So be it, that's market forces and they would learn to live with it.
NF probably only be interested in international matches, so provincial rugby would need to be picked up in local FTA (ie. NZ on Air), or die.
The point is, sports would be under a model completely different to Sky, so you CAN"T keep saying that the current Sky cost base would apply to a new provider.

For me, and many others, if we can get pay per view for particular sport games as required - without having to fork $100+ every month for the privilege of watching via antiquated 1980's kit, then that's a much better model than current.

If Netflix or Amazon bid for the global rights to rugby it'd be a pretty penny more than you're imagining. It was reported at USD340m for the 2006-11 period. That was reported to have increased to USD400m for the 2011-2016 period before overseas (non AU/NZ/SA) terrortories were added and before adding TriNations.

Fast forward to 2016-2020 where it is reported to be worth AUD615m - an increase of 35% on the previous contract [as an aside if NZ is paying NZD60m a season then NZ contributes about 50% of the global rights value???!]. And if the sports rights inflation is even vaguely historically consistent that'd mean the next global rights round for 5 years would be about USD650m. If the sports rights inflation gets close to the EPL rate then that'd be much more. And you're asking the Netflix (or Amazon) board to punt more than USD100m per year on a fringe sport? Would love to be the fly-on-wall for that business presentation!

And then you'd have to work out the global pricing and delivery for all your potential subscribers - not insurmountable but an interesting proposition. Would it be akin to NFL streaming prices (which are non-exclusive remember) of USD200/season?

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ockel

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#1935814 10-Jan-2018 19:44

dafman:

For that very reason, if NF took over sports from Sky, there would be no standalone NZ market - NF (or Amazon for eg) would purchase global rights from Rugby NZ:

NZ Rugby may have to accept a lower price than historical. So be it, that's market forces and they would learn to live with it.
NF probably only be interested in international matches, so provincial rugby would need to be picked up in local FTA (ie. NZ on Air), or die.
The point is, sports would be under a model completely different to Sky, so you CAN"T keep saying that the current Sky cost base would apply to a new provider.

For me, and many others, if we can get pay per view for particular sport games as required - without having to fork $100+ every month for the privilege of watching via antiquated 1980's kit, then that's a much better model than current.

I'm still trying to get my head around why you think that NZ rugby may have to accept a lower price than historical.

Are you saying that you think that the global rights value of rugby will fall ? (which would make it be an even less valuable commodity than all other global competitions - ie its not as attractive as NRL or AFL for example which the value dwarfs that of the SANZAR competition)

Or that you believe that NZ Rugby would have to accept a smaller share of the pie relative to its Australian and South African governing bodies?

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dafman

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#1935899 10-Jan-2018 22:35

ockel:

dafman:

For that very reason, if NF took over sports from Sky, there would be no standalone NZ market - NF (or Amazon for eg) would purchase global rights from Rugby NZ:

NZ Rugby may have to accept a lower price than historical. So be it, that's market forces and they would learn to live with it.
NF probably only be interested in international matches, so provincial rugby would need to be picked up in local FTA (ie. NZ on Air), or die.
The point is, sports would be under a model completely different to Sky, so you CAN"T keep saying that the current Sky cost base would apply to a new provider.

For me, and many others, if we can get pay per view for particular sport games as required - without having to fork $100+ every month for the privilege of watching via antiquated 1980's kit, then that's a much better model than current.

I'm still trying to get my head around why you think that NZ rugby may have to accept a lower price than historical.

Are you saying that you think that the global rights value of rugby will fall ? (which would make it be an even less valuable commodity than all other global competitions - ie its not as attractive as NRL or AFL for example which the value dwarfs that of the SANZAR competition)

Or that you believe that NZ Rugby would have to accept a smaller share of the pie relative to its Australian and South African governing bodies?

My assumption is that Sky are the highest bidder in the market - that's why they have maintained securing exclusive rights each successive year. I could be wrong with this assumption, but the global trend for consuming media is falling prices, not increasing. I guess we won't know for sure either way until Sky eventually bows out.

And speaking of bowing out, this is me done and dusted on this particular thread. I'll watch this one now from the sidelines.

networkn

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#1935914 10-Jan-2018 23:41

dafman:

My assumption is that Sky are the highest bidder in the market - that's why they have maintained securing exclusive rights each successive year. I could be wrong with this assumption, but the global trend for consuming media is falling prices, not increasing. I guess we won't know for sure either way until Sky eventually bows out.

And speaking of bowing out, this is me done and dusted on this particular thread. I'll watch this one now from the sidelines.

They are the highest bidder, and I would expect them to fight hard to keep them, so SVOD services would have to bid against them.

I am not sure where you've seen any indication of falling prices anywhere? Content purchases as has been shown above, have increased every year. I expect to see increased consumer pricing as a result. Won't take Sky bowing out for a demonstration of that, you can see it for yourself now.

Netflix has raised it's prices 3 times in 4 years.

tdgeek

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#1935935 11-Jan-2018 07:02

networkn: Would you pay $89? $99? Because if pundits are correct and Netflix is going to cost $30 USD a month within 6-8 years..

On top of that you might need $20 for prime and $15 to light box. I can see a day when people are lamenting the death of sky...

An issue that popped up with EPL, was some had to continue with Sky AND stump up for EPL. Fragmentation. Should USD30 become the new and correct standard, then having even a small few becomes costly. Three becomes USD90. Or forego content to reduce costs. Or pirate, which then becomes SVOD increases piracy.

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#1935936 11-Jan-2018 07:08

JimmyH:

tdgeek:

No it wouldn't. Tall Poppy Syndrome, thats all it is. Sky hate existed well before any litigation threats

That's true to an extent, but sentiment seems to have changed quite a bit recently.

I can remember back when Sky was new. The hate came from those who didn't have it and were railing against their beloved rugby/cricket (...) now being on Sky instead of free-to-air. Those with Sky pretty much loved it, and were very vocal about this.

Fast forward to now. I think without exception everyone I know with Sky complains about the company, complains about the product. Apart from the avid sports enthusiasts who are pretty much trapped at the moment, those I know who still have Sky are actively considering dropping it. Quite a few friends and work colleagues have done it recently, or seem to be actively thinking about it. I am in that camp as well. I was a vocal Sky enthusiast in the 1990s and 2000s, now I'm not (having dropped most packages and trying to convince the wife to drop Sky entirely).

This is change in sentiment reflected in their subscriber numbers. For many years they had quite a bit of churn, but were maintaining or growing their subscribers on a net basis. Now they aren't, they are bleeding subscribers and it's starting to look more like an arterial haemorrhage than a paper cut.

So while it's true that there have always been some haters, sentiment has turned greatly against Sky and there are many more than used to the the case - particularly among subscribers (which should worry them much more than dislike by non-subscribers).

There is probably a good PhD for a business student who can properly analyse what has happened and why it has happened. I think price and content is only part of it. Certainly Sky has (justifiably or unjustifiably) gained a bit of reputation as an arrogant bully, which may be part of the picture. But as a subject, Sky, its (arguable) mis-management, and its mounting woes are certainly a fascinating topic for discussion.

Far points. I still see the ONLY issue is the $100 per month. If the arrogant bully refers to taking on those who bypass rights illegally, I dont see an issue with that. I see someone the other day was billed GBP80,000 as they streamed some event on FB. Thats a bully for sure, but it was streamed to thousands of users

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#1935937 11-Jan-2018 07:11

dafman:

tdgeek:

You have to be joking. Id quit while I was ahead if I was you

Netflix is a global company, Sky is just a business in a very very small company, how can you possibly compare NF to Sky based on rights expenditure? That's crazy, sorry. If NF took over sports in NZ, its market is NZ, what Sky pays, NF will pay, the customer numbers dont change

Agree, you can't compare NF to Sky - which is my very point as NF is a global company with massive revenue and expenditure compared with Sky.

For that very reason, if NF took over sports from Sky, there would be no standalone NZ market - NF (or Amazon for eg) would purchase global rights from Rugby NZ:

NZ Rugby may have to accept a lower price than historical. So be it, that's market forces and they would learn to live with it.
NF probably only be interested in international matches, so provincial rugby would need to be picked up in local FTA (ie. NZ on Air), or die.
The point is, sports would be under a model completely different to Sky, so you CAN"T keep saying that the current Sky cost base would apply to a new provider.

For me, and many others, if we can get pay per view for particular sport games as required - without having to fork $100+ every month for the privilege of watching via antiquated 1980's kit, then that's a much better model than current.

IMHO, packaging anything means a lower cost. If rugger had to rely on individual subs, thats hard, and messy for some. OIts like paying $X for movies or $4 per movie. Ok if you watch 2 a month.

I do believe the current cost base will apply to a new provider, rights costs, divided by NZ subscribers. Globally, one would assume that rugger also gets international rights, that will still apply.

tdgeek

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#1935938 11-Jan-2018 07:15

dafman:

privilege of watching via antiquated 1980's kit, then that's a much better model than current.

I prefer MySky over live streaming or OD. As stated above, pause and rewind. Broadband vagaries. I find it super reliable. Its not trendy, but its bulletproof. Quick. Easy. A lot to be said for that.

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#1935940 11-Jan-2018 07:20

dafman:

And speaking of bowing out, this is me done and dusted on this particular thread. I'll watch this one now from the sidelines.

No real need to bow out, as they latter pages here are what forums should be about, robust discussion, rather than bagging for the sake of it. Its a complex issue, and that Sky hate, 1980's tech and so on, isn't the issue. Its a match between costs to provide and prices to subscribe. Its far from "$100 is too much"

ockel

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#1935977 11-Jan-2018 08:31

dafman:

ockel:

dafman:

For that very reason, if NF took over sports from Sky, there would be no standalone NZ market - NF (or Amazon for eg) would purchase global rights from Rugby NZ:

NZ Rugby may have to accept a lower price than historical. So be it, that's market forces and they would learn to live with it.
NF probably only be interested in international matches, so provincial rugby would need to be picked up in local FTA (ie. NZ on Air), or die.
The point is, sports would be under a model completely different to Sky, so you CAN"T keep saying that the current Sky cost base would apply to a new provider.

For me, and many others, if we can get pay per view for particular sport games as required - without having to fork $100+ every month for the privilege of watching via antiquated 1980's kit, then that's a much better model than current.

I'm still trying to get my head around why you think that NZ rugby may have to accept a lower price than historical.

Are you saying that you think that the global rights value of rugby will fall ? (which would make it be an even less valuable commodity than all other global competitions - ie its not as attractive as NRL or AFL for example which the value dwarfs that of the SANZAR competition)

Or that you believe that NZ Rugby would have to accept a smaller share of the pie relative to its Australian and South African governing bodies?

My assumption is that Sky are the highest bidder in the market - that's why they have maintained securing exclusive rights each successive year. I could be wrong with this assumption, but the global trend for consuming media is falling prices, not increasing. I guess we won't know for sure either way until Sky eventually bows out.

And speaking of bowing out, this is me done and dusted on this particular thread. I'll watch this one now from the sidelines.

Okay so you had a howler and showed your ignorance of Netflix's financials. Lets see if you have gone 0/2 but at least improve your understanding of how (generally) the global sports rights market works. Feel free to correct any factual errors but this is how it works (as I understand it).

SANZAR appoints an agent to sell its global rights for its property (being Super 15/16/18 and Tri-Nations). As with any agent selling your property you ask them to get the best price for that property - and usually you expect that the price will be greater than the last one unless the previous round was way overpriced and we're in a falling market. Its also in the best interest for the agent to get a higher price as it means more commission. A lot like selling a house, right? Sell the property for less than last time and your client will probably use someone else next time. [BTW please provide evidence of falling content prices - sports rights have been increasing the fastest but the general entertainment creators have been enjoying bidding wars from the distributors for some time. You're getting yourself confused with falling retail prices (through competition) and increasing input prices from content creators. They are very different aspects so I suggest you lie down until you get your head around the concept of inputs and outputs and that they have different market dynamics)

So the agent (we'll call them IMG Worldwide or some such) asks for tenders and expressions of interest in the property. And it will offer the rights in any number of packages (global, by region, by country, paytv, FTA, streaming etc). As with any agent it is important to get as many interested and registered bidders (or tenderers) as possible to create price tension (again like a house on auction day - the more bidders in the room, the better the likely outcome for the vendor). Having someone like Amazon register as a bidder increases price tension and may influence the final outcome (as per the IPL where although Amazon was a registered bidder, it didnt put in a bid for any of the rights packages).

Anyhow - everyone puts in their bids and its IMG's role to work out the best collection of bids that maximises the price that the vendor receives. Your assumption is that Sky is the biggest bidder in this market - and you're probably correct. But the deal that IMG presents will be the aggregation of the value of the rights for ALL regions. NZ is just one piece of the pie. As is Australia, South Africa, the UK, Europe, the Americas and ROW. You get the idea, right? Its all sold on a piecemeal basis and unless someone wants to buy the global rights (and the global rights bid is greater than the sum of the individual regions) then it'll continue to be sold on a regional basis (to maximise the price of the vendors property!). Still no indication of how prices might fall here unless you think that rugby (as a commodity) is falling in value (in stark contrast to all other major sports franchises).

After the deal(s) are struck by IMG then the three governing bodies of SANZAR will each take their agreed proportion of the final rights value. It may be as simple as 1/3 each or it may be some other split depending on the negotiations between the 3 bodies. You seem to have this simplistic assumption that Sky bids and pays NZRugby for the rights. No. Sky bids IMG for the NZ rights as part of the total rights package - its price paid goes into the global bucket and that global bucket is shared out. Easy to understand, right? [BTW there may be direct payments under the SANZAR agreement for local competitions that IMG carve out of the global value but will just give you a headache in trying to understand].

The same thing is done for NRL, AFL, EPL, Olympics, SeriesA, La Liga, Bundesliga, cricket rights (BBL, IPL, World Cup, T20), F1, MotoGp etc etc etc.

Articles like this may help your education: http://www.sportspromedia.com/news/report-img-pockets-global-serie-a-rights-for-1-billion

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trig42

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#1935984 11-Jan-2018 08:57

ockel:

Okay so you had a howler and showed your ignorance of Netflix's financials. Lets see if you have gone 0/2 but at least improve your understanding of how (generally) the global sports rights market works. Feel free to correct any factual errors but this is how it works (as I understand it).

SANZAR appoints an agent to sell its global rights for its property (being Super 15/16/18 and Tri-Nations). As with any agent selling your property you ask them to get the best price for that property - and usually you expect that the price will be greater than the last one unless the previous round was way overpriced and we're in a falling market. Its also in the best interest for the agent to get a higher price as it means more commission. A lot like selling a house, right? Sell the property for less than last time and your client will probably use someone else next time. [BTW please provide evidence of falling content prices - sports rights have been increasing the fastest but the general entertainment creators have been enjoying bidding wars from the distributors for some time. You're getting yourself confused with falling retail prices (through competition) and increasing input prices from content creators. They are very different aspects so I suggest you lie down until you get your head around the concept of inputs and outputs and that they have different market dynamics)

So the agent (we'll call them IMG Worldwide or some such) asks for tenders and expressions of interest in the property. And it will offer the rights in any number of packages (global, by region, by country, paytv, FTA, streaming etc). As with any agent it is important to get as many interested and registered bidders (or tenderers) as possible to create price tension (again like a house on auction day - the more bidders in the room, the better the likely outcome for the vendor). Having someone like Amazon register as a bidder increases price tension and may influence the final outcome (as per the IPL where although Amazon was a registered bidder, it didnt put in a bid for any of the rights packages).

Anyhow - everyone puts in their bids and its IMG's role to work out the best collection of bids that maximises the price that the vendor receives. Your assumption is that Sky is the biggest bidder in this market - and you're probably correct. But the deal that IMG presents will be the aggregation of the value of the rights for ALL regions. NZ is just one piece of the pie. As is Australia, South Africa, the UK, Europe, the Americas and ROW. You get the idea, right? Its all sold on a piecemeal basis and unless someone wants to buy the global rights (and the global rights bid is greater than the sum of the individual regions) then it'll continue to be sold on a regional basis (to maximise the price of the vendors property!). Still no indication of how prices might fall here unless you think that rugby (as a commodity) is falling in value (in stark contrast to all other major sports franchises).

After the deal(s) are struck by IMG then the three governing bodies of SANZAR will each take their agreed proportion of the final rights value. It may be as simple as 1/3 each or it may be some other split depending on the negotiations between the 3 bodies. You seem to have this simplistic assumption that Sky bids and pays NZRugby for the rights. No. Sky bids IMG for the NZ rights as part of the total rights package - its price paid goes into the global bucket and that global bucket is shared out. Easy to understand, right? [BTW there may be direct payments under the SANZAR agreement for local competitions that IMG carve out of the global value but will just give you a headache in trying to understand].

The same thing is done for NRL, AFL, EPL, Olympics, SeriesA, La Liga, Bundesliga, cricket rights (BBL, IPL, World Cup, T20), F1, MotoGp etc etc etc.

Articles like this may help your education: http://www.sportspromedia.com/news/report-img-pockets-global-serie-a-rights-for-1-billion

Correct, and where it gets messy, is more than one vendor.

In Rugby alone, SANZAR sell the rights to SuperRugby and the Rugby Championship (not Tri Nations anymore).

NZ Rugby sells the rights to NZ Domestic rugby, and domestic (in-bound tours) internationals (ABs June tests, Womens, Maori, U23 etc.)

World Rugby (I think) sell the rights to the Sevens.

The RFU sell rights to inbound England tours, the WRU to Welsh ones and so-on.

I'd assume Sky has to bid for ALL of these (and the agents must put together packages for European Rugby etc.)

We could potentially have a situation (if Sky went broke) where different providers bid and win different competitions. You may need Amazon for Super Rugby/RC, BEIN for European games (ABs northern tours) and something else (Lightbox? TVNZ?) for Domestic games/tests. I'd wager that IF that happened, it would cost more than a Sky Sport sub currently costs (over and above the IMO falsely inflated Sky Basic price).

And that is just Rugby.

ockel

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#1935987 11-Jan-2018 09:06

trig42:

Correct, and where it gets messy, is more than one vendor.

In Rugby alone, SANZAR sell the rights to SuperRugby and the Rugby Championship (not Tri Nations anymore).

NZ Rugby sells the rights to NZ Domestic rugby, and domestic (in-bound tours) internationals (ABs June tests, Womens, Maori, U23 etc.)

World Rugby (I think) sell the rights to the Sevens.

The RFU sell rights to inbound England tours, the WRU to Welsh ones and so-on.

I'd assume Sky has to bid for ALL of these (and the agents must put together packages for European Rugby etc.)

We could potentially have a situation (if Sky went broke) where different providers bid and win different competitions. You may need Amazon for Super Rugby/RC, BEIN for European games (ABs northern tours) and something else (Lightbox? TVNZ?) for Domestic games/tests. I'd wager that IF that happened, it would cost more than a Sky Sport sub currently costs (over and above the IMO falsely inflated Sky Basic price).

And that is just Rugby.

Do you think that its a concept that even a Herald reporter could understand? Or is it too complex to put into words for the average reader so instead we'll just rely on headlines and clickbait fodder?

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