Netflix and Spark agreement

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#1727814 28-Feb-2017 17:11

mattwnz:

I am a bit concerned about this, in terms of competition. Does it potentially mean that Lightbox may not get all the new titles in the future, which will make it less attractive? If that occurs, people will want to get the Netflix offer instead of the Lightbox one, which could eventually make Lightbox redundant. Especially as Lightbox probably isn't making any money anyway, as many subscribers will be getting it bundled at no cost. I presume Spark has to pay Netflix for the service in the deal, so effectively Spark is paying for two different on-demand systems. I can't see how that will be sustainable for too long. But that said, it is good to see Spark at least doing something.

See my thoughts earlier - http://www.geekzone.co.nz/forums.asp?forumid=151&topicid=208770&page_no=2#1727088

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mattwnz

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#1727833 28-Feb-2017 17:46

ockel:

See my thoughts earlier - http://www.geekzone.co.nz/forums.asp?forumid=151&topicid=208770&page_no=2#1727088

Content though really is the key. If lightbox has some exclusive popular shows, then it should always have a place. Same with Sky, which has exclusive content (sport). But if the content isn't exclusive, then it becomes a commodity service, and a race to the bottom. Already there are services that have duplicate content, and consumers are essentially paying multiple times for that duplicate content, if they are purchasing multiple services.

ockel

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#1727870 28-Feb-2017 18:57

mattwnz:

ockel:

See my thoughts earlier - http://www.geekzone.co.nz/forums.asp?forumid=151&topicid=208770&page_no=2#1727088

Content though really is the key. If lightbox has some exclusive popular shows, then it should always have a place. Same with Sky, which has exclusive content (sport). But if the content isn't exclusive, then it becomes a commodity service, and a race to the bottom. Already there are services that have duplicate content, and consumers are essentially paying multiple times for that duplicate content, if they are purchasing multiple services.

Content has always been king. The key question is whether Lightbox will continue to bid for and win new content. Exclusive gets you the subscribers. Even Netflix recognised this and is investing an extraordinary amount of cash (that it hopes to recover) in new and exclusive content. No more exclusive = churn of up to 50% pa.

BTW the average number of streamed services overseas was, pre Xmas, about 1.7. ie most have 2.

On sport.......

Lets do a hypothetical. You're a large telco (lets call you Optus for the sake of discussion). And you bid 3x the next guy for some exclusive content (lets call it EPL for the sake of discussion). And you make it exclusive - you only get to watch it if you're an Optus customer. Ouch. Sounds anti-competitive, right? Sparks worst nightmare so to speak. Quick call the ACCC - we need to stop this foreclosure behaviour..... oh, wait, maybe the competition authority doesnt do anything about restricting access to exclusive sport content. Someone explain why that is? Even sport is substitutable. Maybe with an inferior good (economically speaking in terms of utility) but its substitutable. Just like different series of general entertainment. People will find something else to watch.

Anyhow fast forward 3 years [cos thats the crystal ball gazing that a competition authority is paid to do. Predict the future. Yeah, right.] and no-one wants to pay the new hyper inflated market price for the "EPL" rights. No economic return in it. No EPL for consumers for 3 years? Maybe. Cut price service offered on a different platform? Maybe? Oh that sounds familiar......

ComCom made a huge mistake with Caltex/Z in terms of increasing market concentration and is now, IMHO, overcompensating on everything else forever more.

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tdgeek

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#1728014 28-Feb-2017 22:52

Rikkitic:

Why not a catch-up aggregator service? If Sky or another monopoly provider is allowed to hog all rights forever, or if it only has rights for a one-off live broadcast, then only people able and willing to pay the usually inflated price get to see the program. This encourages piracy. So allow monopoly broadcasts and charging whatever the market will bear for those willing to sell their children, but after a reasonable delay make reruns available for little or no money so the less well-off can also enjoy the content, even if they don't get to see it live. I think Sky already does this to a limited extent with Prime, but it could be taken further, possibly with the aid of some creative legislation. So you could conceivably have a situation where monopolies or competing providers offer exclusive content, but sometime later it all ends up with one provider as rerun material.

Hmmm

1. You can't have Sky or another monopoly provider. Mono =1

2. Sky isn't and has never been a monopoly. They entered an empty market, filled it with content, and no one else has competed. And before you say they own everything, they don't. They bid and or buy. Golf went off, Cricket went off, IVESCO (V8 Supercars) was about to go off due to stupid prices being demanded.

3. Hog all rights forever. No. They buy rights, like Netflix, Lightbox, Amazon, TVNZ, Mediaworks, Hulu, and everyone else. maybe not Netflix as they have Netflix originals, but in fact they are JUST exclusive rights purchases, as Netflix doesnt make anything.

4 Inflated Price. Check Sky's financials. Sound ROI, nothing big, normal. If they were inflating, their profits would be huge, they aren't. No rorting there.

5. Sky bought Prime, there is no need to sacrifice revenue by allowing a replay option. It wasn't two weeks, it was a few hours, allowing consumers to either pay Sky, or wait a wee bit and get it free, from Sky. I commend that.

6. Creative Legislation. So you want pay TV regulated? Could work. Once the real and genuine businesses get out of here, some fool would buy a business where their innovation and creativity is not allowed as it's regulated.

7. Competing providers offer exclusive content. I think thats the case now. Great TV series comes out, its exclusive at TDGEEK TV. Yay for me. Later, once the use by date has kicked in, it becomes cheaper, so others grab it. This happens already.

I do see your points. But say RWC was sold to everyone. Sky, TVNZ, Mediaworks, and anyone else has it. They pay less for the rights as others have it. But the advertising is low value as everyone else has it. Ratings are no value as everyone else has it. So, it is cheaper to buy the rights, but its probably more costly than exclusive as you pay money for rights and they have no value.

We can have a single provider like Sky for sports. Or can that and spread it around. People then complain about a so called monopoly, or they complain about paying more for multiple providers. Back in the day, it was all about Sky monopoly. We want competition. Well, that's here. Many options, choice. But it is still a problem, why is that???

Rikkitic

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#1728021 28-Feb-2017 23:17

tdgeek:

I don't know the answers to the points you raise. It just seems to me that there might be better ways of doing things. Part of the problem as I understand it is the issue of having either one dominant provider that supplies all the content, or competing ones that fragment it. In the first case, the dominant provider has an effective monopoly with the potential to abuse that. In the second, consumers are disadvantaged in that they need multiple subscriptions to access all the content.

Yet there is already a system that works a little like what I am proposing. You can pay a premium to see exclusive content at a cinema or via pay-per-view, or you can be patient and watch it later for less money, or you can be more patient and watch it on DVD for even less money. The longer you are prepared to wait, the cheaper and less exclusive it gets. By the time it reaches DVD, the original provider no longer has anything to do with it and you can watch it without any subscription. Might this not be a model for a manner of distribution that protects the interests of providers with exclusive content, but also enables consumers to view any content at some point regardless of who originally made it available? A modern DVD equivalent would be a catch-up service that made content from all providers available on demand after a certain period of time. The best of both worlds?

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#1728022 28-Feb-2017 23:41

Rikkitic:

tdgeek:

I don't know the answers to the points you raise. It just seems to me that there might be better ways of doing things. Part of the problem as I understand it is the issue of having either one dominant provider that supplies all the content, or competing ones that fragment it. In the first case, the dominant provider has an effective monopoly with the potential to abuse that. In the second, consumers are disadvantaged in that they need multiple subscriptions to access all the content.

Yet there is already a system that works a little like what I am proposing. You can pay a premium to see exclusive content at a cinema or via pay-per-view, or you can be patient and watch it later for less money, or you can be more patient and watch it on DVD for even less money. The longer you are prepared to wait, the cheaper and less exclusive it gets. By the time it reaches DVD, the original provider no longer has anything to do with it and you can watch it without any subscription. Might this not be a model for a manner of distribution that protects the interests of providers with exclusive content, but also enables consumers to view any content at some point regardless of who originally made it available? A modern DVD equivalent would be a catch-up service that made content from all providers available on demand after a certain period of time. The best of both worlds?

I agree.

The problem is that everyone wants it now. RWC, Super 14, they want it now. TV series, the same although there is so much on, thats workable.

A monopoly has advantages. All in one place, one cost. But if you only like a few things its costly.

Fragmentation is the same, if you like only a few things you might get by with one or two subs. Others need every sub. No easy answer

Take Sky. Lets call it a sports monopoly. (grrrr). You can get Sky and Sports. Or you can forego that and watch Prime replays. Or you can use FanPass and get a day, a week, a month option. Thats pretty fair play. They could easily force you to get Sky or no sport. Take Grand Slam Tennis, there are three Grand Slams. 2 weeks each. Its cheap to get FanPass for two one week passes 3 times a year.

I know the competition from SVOD is at play here, why I have no idea, Sky and Lightbox or Netflix are so different.

At the end of that day, its the sports that are the issue, too much money demanded. For non sport exclusivity, thats important. As I think Mattnz said, if there is no exclusivity, then its a commodity. I can buy a Moro bar anywhere, so no loyalty and hence cash from me.

I cannot see an answer. Monopoly or fragmentation will both have lovers and haters.

Talking about replays, when I was a nipper, Coro was I think 5 years behind. Now, we hear "played in the US yesterday" as the catch cry.

3 TV channels and a video store was a lot easier!

mattwnz

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#1728025 1-Mar-2017 00:03

tdgeek:

5. Sky bought Prime, there is no need to sacrifice revenue by allowing a replay option. It wasn't two weeks, it was a few hours, allowing consumers to either pay Sky, or wait a wee bit and get it free, from Sky. I commend that.

The thing is that if national sports, which are seen as part of NZs culture, are only behind a paywall, then it is very likely that it would get political, and regulation would occur. So Sky buying Prime pacified this. Overseas national sports events are often FTA, and that is written into legislation, and I think that is a good thing, and something NZers could benefit from. The problem with Prime, is that it is still only in SD which is a poor experience, when it could be HD, so it is crippled anyway. The same with the Olympics which a decade ago were FTA in HD on TVNZ. Yet a decade later, a limited amount was shown in SD in prime. Even though it was the tax payer who did a lot of the funding for this. Certainly I think regulation does need to occur in this market, as the NZ market is too small for a competitive market in many areas. The same applies in many industries in NZ, eg Food, Building materials, and it was also the case in the mobile market, until a third player was introduced to create some real competition.

Ironically sports viewing is on the decline, as is peoples interest in these sports wanes, and that is from the Sky bosses own mouth after the VF deal fell through. I think that is partly because people don't want to watch them if they are having to pay for a package of unwanted channels, in order to get sport.

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mattwnz

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#1728028 1-Mar-2017 00:15

tdgeek:

A monopoly has advantages. All in one place, one cost. But if you only like a few things its costly.

Fragmentation is the same, if you like only a few things you might get by with one or two subs. Others need every sub. No easy answer

Take Sky. Lets call it a sports monopoly. (grrrr). You can get Sky and Sports. Or you can forego that and watch Prime replays. Or you can use FanPass and get a day, a week, a month option. Thats pretty fair play. They could easily force you to get Sky or no sport. Take Grand Slam Tennis, there are three Grand Slams. 2 weeks each. Its cheap to get FanPass for two one week passes 3 times a year.

Those are all brands of the same company though, so they are making money from whatever product you choose. They can also set whatever price they want, due to no competing product.

The thing is that in some ways you could say there are no monopolies, as there is nothing stopping anyone setting up their own channel, and bidding for the content. But unless you have unlimited money to set this up and run it, it probably won't be sustainable. Take the Soccer for example, Sky lost this last time around. But won it this time around. So they could claim it was a competitive market. But what happened to the other company that lost it? It doesn't look like they could make it work, and why was that? It is somewhat similar to Facebook or Google, or even Trademe. There is no way that someone can create a competitor, unless they are a very very big player such as Apple. But even Apple would struggle to build a competitive product to Facebook or Google. Even Google can't compete with facebook in the social media area..

ockel

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#1728048 1-Mar-2017 07:38

mattwnz:

tdgeek:

5. Sky bought Prime, there is no need to sacrifice revenue by allowing a replay option. It wasn't two weeks, it was a few hours, allowing consumers to either pay Sky, or wait a wee bit and get it free, from Sky. I commend that.

The thing is that if national sports, which are seen as part of NZs culture, are only behind a paywall, then it is very likely that it would get political, and regulation would occur. So Sky buying Prime pacified this. Overseas national sports events are often FTA, and that is written into legislation, and I think that is a good thing, and something NZers could benefit from. The problem with Prime, is that it is still only in SD which is a poor experience, when it could be HD, so it is crippled anyway. The same with the Olympics which a decade ago were FTA in HD on TVNZ. Yet a decade later, a limited amount was shown in SD in prime. Even though it was the tax payer who did a lot of the funding for this. Certainly I think regulation does need to occur in this market, as the NZ market is too small for a competitive market in many areas. The same applies in many industries in NZ, eg Food, Building materials, and it was also the case in the mobile market, until a third player was introduced to create some real competition.

Ironically sports viewing is on the decline, as is peoples interest in these sports wanes, and that is from the Sky bosses own mouth after the VF deal fell through. I think that is partly because people don't want to watch them if they are having to pay for a package of unwanted channels, in order to get sport.

We HAVE got to get past this sport is a national interest problem. Sport is just another form of entertainment. There are many voiceless people that would rather arts and culture (or god forbid health and education) get funded (for viewing on TV or otherwise) before taxpayer money is used to allow a group of people watch rugby (which is all that it is) on TV for free. Sport is just a small part of NZ's culture but the rugby fraternity is the loudest voice. Get over it NZ its just not that important.

Anti-siphoning is a market distortion that results in gaming that is not in the interest of the consumer. Ministry of Culture and Heritage looked into this 10 years ago. Lots of opinions, lots of submissions. The subject should be dead and buried. You'd prefer that the FTA provider, of which there are less in NZ than other countries, has until 14 days before an event to decide whether it will bid or not? And then if it doesnt rate then it can schedule the Sound of Music in primetime instead of a Bledisloe Test? Cos thats the Australian factual example. Or that the T20 world cup almost didnt make it to air in Australia cos the FTA networks didnt want to pay for it? There is now more on pay in Australia than there ever was - and every 3 years the Government of the day considers removing more sports or dropping anti-siphoning legislation. Why? Cos it just doesnt work out best for the consumer. Just those that want it but dont value it (ie want someone else to pay in some way).

FTA gets more and more marginalised by big events like the Olympics. Sky had a record number of channels and a record number of hours for the Rio Olympics last year. And more than London. Much more than the 1 channel plus a bit of online than TVNZ offered with Beijing. Lets see how TVNZ does with the Commonwealth Games this year. How much will be on Duke (in SD) and how much on One. Or will the Commonwealths get displaced in favour of the News and Coronation Street? Dont worry - I'm sure you'll able to get it online. But two channels of broadcast is all you'll get and one of those in SD. Really love the Olympics? Really want to see all the events in HD - then open your wallet and blow away the mothballs. You want something, you pay for it. Taxpayer funded Olympics? BS. The sports training bodies got more money than the athletes. Stop drinking from Winstons jingoistic cup.

Sixth Labour Government - "Vision without Execution is just Hallucination"

ockel

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#1728049 1-Mar-2017 07:44

mattwnz:

tdgeek:

A monopoly has advantages. All in one place, one cost. But if you only like a few things its costly.

Fragmentation is the same, if you like only a few things you might get by with one or two subs. Others need every sub. No easy answer

Take Sky. Lets call it a sports monopoly. (grrrr). You can get Sky and Sports. Or you can forego that and watch Prime replays. Or you can use FanPass and get a day, a week, a month option. Thats pretty fair play. They could easily force you to get Sky or no sport. Take Grand Slam Tennis, there are three Grand Slams. 2 weeks each. Its cheap to get FanPass for two one week passes 3 times a year.

Those are all brands of the same company though, so they are making money from whatever product you choose. They can also set whatever price they want, due to no competing product.

The thing is that in some ways you could say there are no monopolies, as there is nothing stopping anyone setting up their own channel, and bidding for the content. But unless you have unlimited money to set this up and run it, it probably won't be sustainable. Take the Soccer for example, Sky lost this last time around. But won it this time around. So they could claim it was a competitive market. But what happened to the other company that lost it? It doesn't look like they could make it work, and why was that? It is somewhat similar to Facebook or Google, or even Trademe. There is no way that someone can create a competitor, unless they are a very very big player such as Apple. But even Apple would struggle to build a competitive product to Facebook or Google. Even Google can't compete with facebook in the social media area..

The company that had the soccer decided not to bid for it. Too much money for them they said. And they had a partner that was well funded. Makes 3x the cashflow that Sky makes - its called Spark. Why didnt Spark choose to make it work? Sky's investors poured millions and millions into a loss making company to bid for content and make channels. Not unlimited money and now its profitable. Why isnt it possible for Spark to have done this. [Think carefully about this one]

Sky didnt win the soccer this time around. It was a Middle Eastern company called BeIn Sports (an Al Jazerra subsidiary). Sky provide carriage for BeIN.

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tdgeek

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#1728050 1-Mar-2017 07:50

mattwnz:

tdgeek:

A monopoly has advantages. All in one place, one cost. But if you only like a few things its costly.

Fragmentation is the same, if you like only a few things you might get by with one or two subs. Others need every sub. No easy answer

Take Sky. Lets call it a sports monopoly. (grrrr). You can get Sky and Sports. Or you can forego that and watch Prime replays. Or you can use FanPass and get a day, a week, a month option. Thats pretty fair play. They could easily force you to get Sky or no sport. Take Grand Slam Tennis, there are three Grand Slams. 2 weeks each. Its cheap to get FanPass for two one week passes 3 times a year.

Those are all brands of the same company though, so they are making money from whatever product you choose. They can also set whatever price they want, due to no competing product.

The thing is that in some ways you could say there are no monopolies, as there is nothing stopping anyone setting up their own channel, and bidding for the content. But unless you have unlimited money to set this up and run it, it probably won't be sustainable. Take the Soccer for example, Sky lost this last time around. But won it this time around. So they could claim it was a competitive market. But what happened to the other company that lost it? It doesn't look like they could make it work, and why was that? It is somewhat similar to Facebook or Google, or even Trademe. There is no way that someone can create a competitor, unless they are a very very big player such as Apple. But even Apple would struggle to build a competitive product to Facebook or Google. Even Google can't compete with facebook in the social media area..

Soccer, good example. It doesnt work on a single subscription model. NZ is too small. The rights costs doesnt get recovered by individual subs. Being a big player makes no difference, apart from being able to afford running a loss making service forever.

When Sky had the EPL, and got it back, they pay the same rights costs. But, there is no surcharge on the Sports sub for EPL, so Sky buys EPL and you watch it for free. Their model does work, as its based on annual total revenue, less rights costs, equals an acceptable profit. They will have budget that they can spend, it works. The costs for each sport are spread across 800,000 subscribers.

Some whine about wanting to pick and mix, i.e. Sport has no monthly fee, but a game costs $2, F1 race costs $3 and so on. What they are wanting is for Sky to use a, EPL model that doesnt work.

Ther are all Sky brands, my point is Sky can make you pay for Basic and Sport or go without, but they give options. So what if Prime is SD, its free. What your saying is give us Sky sport on Prime in HD for free.

ockel

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#1728051 1-Mar-2017 07:57

tdgeek:

mattwnz:

tdgeek:

A monopoly has advantages. All in one place, one cost. But if you only like a few things its costly.

Fragmentation is the same, if you like only a few things you might get by with one or two subs. Others need every sub. No easy answer

Take Sky. Lets call it a sports monopoly. (grrrr). You can get Sky and Sports. Or you can forego that and watch Prime replays. Or you can use FanPass and get a day, a week, a month option. Thats pretty fair play. They could easily force you to get Sky or no sport. Take Grand Slam Tennis, there are three Grand Slams. 2 weeks each. Its cheap to get FanPass for two one week passes 3 times a year.

Those are all brands of the same company though, so they are making money from whatever product you choose. They can also set whatever price they want, due to no competing product.

The thing is that in some ways you could say there are no monopolies, as there is nothing stopping anyone setting up their own channel, and bidding for the content. But unless you have unlimited money to set this up and run it, it probably won't be sustainable. Take the Soccer for example, Sky lost this last time around. But won it this time around. So they could claim it was a competitive market. But what happened to the other company that lost it? It doesn't look like they could make it work, and why was that? It is somewhat similar to Facebook or Google, or even Trademe. There is no way that someone can create a competitor, unless they are a very very big player such as Apple. But even Apple would struggle to build a competitive product to Facebook or Google. Even Google can't compete with facebook in the social media area..

Soccer, good example. It doesnt work on a single subscription model. NZ is too small. The rights costs doesnt get recovered by individual subs. Being a big player makes no difference, apart from being able to afford running a loss making service forever.

When Sky had the EPL, and got it back, they pay the same rights costs. But, there is no surcharge on the Sports sub for EPL, so Sky buys EPL and you watch it for free. Their model does work, as its based on annual total revenue, less rights costs, equals an acceptable profit. They will have budget that they can spend, it works. The costs for each sport are spread across 800,000 subscribers.

Some whine about wanting to pick and mix, i.e. Sport has no monthly fee, but a game costs $2, F1 race costs $3 and so on. What they are wanting is for Sky to use a, EPL model that doesnt work.

Ther are all Sky brands, my point is Sky can make you pay for Basic and Sport or go without, but they give options. So what if Prime is SD, its free. What your saying is give us Sky sport on Prime in HD for free.

EPL used to cost $199 for a season. Of 37 weeks. It was a little more than $5/week. And yet it couldnt attract enough subscribers AT THAT PRICE to make an economic return to justify bidding again.

How much are you willing to pay to watch the sport you want? $8/match? $10/match? $15/match? At 20 weeks for the Super18 how much are you willing to pay $200 for a season? $300? $500? Think about that. Not how much it cost but how much you're willing to pay.

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Jas777

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#1728083 1-Mar-2017 08:39

Agree about sport on FTA. I remember the days before SKY, do we want to go back to that? No, but if you still want the amount of sport and for it to be on FTA then the taxpayer will fund it.

I don't know much about the law in respect to if NZ first got it through but if a competition such as SUPER 18 and Rugby Championship was developed and paid for by PAYTV and was never originally on FTA can they make go to FTA? What if any legal issues would arise?

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#1728087 1-Mar-2017 08:45

Jas777:

Agree about sport on FTA. I remember the days before SKY, do we want to go back to that? No, but if you still want the amount of sport and for it to be on FTA then the taxpayer will fund it.

I don't know much about the law in respect to if NZ first got it through but if a competition such as SUPER 18 and Rugby Championship was developed and paid for by PAYTV and was never originally on FTA can they make go to FTA? What if any legal issues would arise?

The rugger people will want the big bucks, someone will have to pay. If taxpayer pays then I want the taxpayer to put on the biggest and best movies for free for me too

And Nat Geo, and BBC channel, and F1 and so on, where do you stop?

Jas777

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#1728092 1-Mar-2017 08:54

The problem also with regards to pick and mix is that some people seem to think that if pick and mix comes in what they pay drops a lot. Bit like going from a buffet to a normal restaurant and expecting to pay half the price.

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