Quickflix says Sky TV content deals hinder broadband uptake

 Quickflix, the ASX-listed supplier of streaming and online movies and television shows, says Sky Network Television's content arrangements will hold back demand for New Zealand households to buy into the national ultra-fast broadband network.

The Sydney-based company can't offer certain content to New Zealand subscribers that it can sell on the other side of the Tasman due to Sky's exclusive premium content arrangements, Quickflix said in a submission on the Commerce Commission's investigation into the drivers of broadband uptake.

US pay TV broadcaster HBO invested $A10 million in Quickflix, which operates on both sides of the Tasman.

But Quickflix New Zealand launch, in March, was a flat affair with CEO Chris Taylor pointedly noting that his service would feature no content from its backer HBO.

Mr Taylor agreed the situation was odd. "Sky TV's got them wrapped up," he told NBR ONLINE (the pay TV broadcaster features Game of Thrones and other HBO shows on its Soho channel).

Quickflix scotched suggestions by Sky that video content won't be a major driver as "illogical and highly unlikely.”

"Given the widely-held view that content will be a primary driver of uptake of high-speed broadband services (as has been shown to be the case internationally), it follows that Sky's exclusive arrangements in respect of certain content represent a barrier to the uptake of such services in New Zealand," Quickflix said.

Video content was singled out as the biggest attraction for consumers to seek fast broadband in a survey conducted as part of the regulator's investigation into demand-side review of barriers to UFB uptake for end users.

Quickflix said internet service providers are "highly relevant" to boosting demand for fast broadband, with "the data caps they impose and the amounts they charge for data consumption" key to uptake to Over The Top propositions, where video is delivered over third-party broadband networks, and UFB generally.

The company said all major ISPs except Orcon, a subsidiary of state-owned Kordia, have agreements in place with Sky to sell or retransmit the pay-TV operator's content.

"Quickflix believes that there are provisions in the ISP contracts that restrict ISPs from bundling third parties' content into its services" and those provisions are "harmful to the development prospects of OTT providers, detrimental to consumers, and ultimately, therefore, a barrier to the uptake of high speed broadband services," it said.

The company said its service has been hindered by Sky's exclusive content rights and arrangements, and that is also "problematic for new and prospective entrants into the market."

Sky failed in its bid to have content excluded from the commission’s review, which it had argued could become a quasi-regulatory inquiry if content arrangements were found to be a barrier to uptake.

In its February submission, Sky said it was "too early to say that there are any barriers on the demand side of the market" because of its infancy, and that new and emerging technology will continue to impact on consumer behaviour.

Communications and Information Technology Minister Amy Adams has expressed a reluctance to wade into the market, telling the Future Broadband conference in February that it's too early to stifle industry with heavy regulation.

Beyond the online market, Quickflix rents DVD and Blu-ray discs in Australia, taking orders through its website then dispatching titles by mail.

Mr Taylor told NBR Online his company would not enter the online disc rental market in New Zealand, because it was already dominated by Sky TV-owned Fatso.co.nz. 

Sky TV bought Fatso's two rivals, Movieshack and DVD Unlimited, in 2008.