Spark boss ditches *another* Sky decoder

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Just to rub salt in yesterday's wounds, Spark boss Simon Moutter took to Twitter to announce he was ditching his Sky decoder.

Wait, didn’t NBR report back in September that he had dumped his MySky box?

We did.

So just how many does he have?

"At one stage he was paying for four across himself and family members," a member of Spark's comms team tells NBR. "The last one is still sitting on his desk."

So Sky is going to suffer a little more on social media before this is over.

And yet, in a way, it also highlights the pay TV provider’s lingering strength in sports, and its ability to still draw a fair whack of money from those like Simon who want to bin their hardware.

Monthly costs for a MySky-free household

• Fanpass (month option): $56
• Neon: $20
• Netflix: $10 (SD), $13, (HD, 2 screens), $16 (4K, four screens)
• Lightbox: $13 (free to Spark broadband customers)
• Hulu: $11 ($US8) with ads, $12 ($US16) no ads

Total:  $117 ($76 going to Sky)

For starters, as a real New Zealander and head of a company with many sports sponsorships, Simon will want to watch top-flight rugby, cricket, league and netball games.

And given Sky TV holds local rights to all those codes – Spark having been too cheap to mount serious bids and killed off Lightbox Sport – that means heading for Sky’s online, no-contact service Fanpass, which streams Sky Sport channels 1 to 4.

Fanpass offers daily ($10) and weekly pass ($20).

But even if he just follows rugby and cricket, the two codes’ extended seasons mean Simon is best off with a $56 Fanpass monthly pass.

He wills want to sign up for Spark’s Lightbox streaming service, of course (free to the telco’s broadband customers, $13 a month non-contract to others).

But, because Lightbox only features TV series, he’ll likely want to tap Netflix ($10 to $16 a month) for movies – and just for the sake of having another “channel” and broader selection.

Speaking of selection, Sky owns local rights to HBO content. The US network makes so many good shows (because, as we know, subscriber-funded content incentivises quality). Assuming Chez Moutter can’t go without HBO programmes, it could sign up for the direct-to-consumer HBO Now app ($US15 a month through Apple TV and other platforms). That would be, arguably, legal as virtual parallel importing, and then Commerce Minister Paul Goldsmith told NBR in April 2016 no one is about to get prosecuted for viewing an offshore service from New Zealand.

But with Lightbox part of Spark, that’s not a tenable router. That means signing up for Sky’s Neon service, which features all the top HBO shows like Game of Thrones. Chalk up another $20 a month.

For UK shows, the Moutter household could sneak the BBC’s (no-cost) iPlayer into the mix.

For series *currently* showing on US TV, they might also want to slip in Hulu ($11 a month), the US service co-owned by the major networks and studios to allow them to better compete with Netflix and Amazon Prime.

Speaking of Amazon Prime, it recently launched in New Zealand (it’s  on a half-price promo for six months but ordinarily it will cost $US6 or about $NZ8 a month; it charges in US currency).

 But most of Amazon Prime’s A-list content is geo-blocked to Kiwis, bar The Grand Tour (aka the new Top Gear), and Amazon Prime US has little killer content that’s not also available through Netflix or Hulu. A single month’s sub would probably be all Simon needed to a mop it all up.

So: after ditching his decoder (or when he finally gets around to ditching all four), Mr Moutter could be paying around $120 a month for content.

Of that, $76 would probably go to Sky ($56 in the bag with Fanpass, $20 possible for Neon).

That’s not optimal for Sky.

But it's still a decent chunk of change, within cooee of its average subscriber revenue per user per month (which was $83.58 for the six months to Dec 30, 2016). And as Sky TV chief executive John Fellet is so fond of pointing out, there is no decoder or installation cost for streaming video-on-demand customers and the more platforms he can spread content across, the more he can amortise his costs.

How can Simon make things better?
Far bet from me to tell Spark's board and management what to do. 

But here's what they've got to do:

• Lobby the Commerce Commission to re-open its investigation of Sky TV's wholesale contracts
   
• In parallel, lobby the government to give the ComCom more teeth as it reviews the Commerce Act (so any new investigation doesn't turn out like 2013, where the regulator found Sky's contracts undermined consumer choice, but also that it lacked the tools to do anything about it)
   
• Planning for the worst (that the ComCom and government ignore it), Spark should also lobby the Rugby Union to split online and broadcast rights next time they come up for grabs (online). Same with other major sports codes. There is nothing radical here. It has already happened with major sports in the US, UK and Australia, and New Zealand now has better broadband than any of those countries. If the Rugby Union won't split rights, Spark could partner with TVNZ or MediaWorks on a combined bid, with the telco handing the online element and the free-to-air partner the broadcast segment (and the tricky who's going to handle the outside broadcast issue). The technology is no issue. Sky's Fanpass has solid performance, thanks to all elements of its platform being outsourced to US company NuLion (which also handles NFL Pass and many other sporting apps in the US). It's a joy next to Sky's inhouse-developed SkyGo.
   
• Once Spark wins sports rights, it should put them on a decent app. NuLion's platform offers great features, as we saw with the PremierLeaguePass, which offered every single EPL game on-demand. Sky could offer on-demand via Fanpass (and it did, briefly) but it chooses not to, presumably for fear it would cannibalise MySky too much.
   
• Start conditioning investors to the reality that if Spark wants to be in the content game, where sports are so key, it needs to spend serious money. Sky spent $182 million on content rights last year, and then there's the cost of filming games in a country where Sky TV (cleverly) bought the only independent outside broadcast company. If that sort of money spooks the board, or investors, then give up and go home. Don't push and prod around with single digit million spending on Lightbox entertainment content and expect it to change anything. 
   
• Optional extra: sell yourself to Telstra (remembering its non-compete restriction with Vodafone is expiring), so you've got a bigger war chest.