Spark offers Lightbox free to its 600,000 broadband customers, complicating life for rivals

Spark [NZX:SPK] is offering Lightbox free to its 600,000 or so broadband customers.

The $15/month, all-you-can-eat video streaming on demand service is open to customers of any ISP; up til today, Spark customers could get it at half price for six months.

Spark CEO Simon Moutter says his company wants 70,000 Lightbox subscribers by June (the service launched on August 28 last year). Today, his company refused to comment on how many paying customers it has so far. Cynics will say that means slow uptake. Even if so, it's better to make a big move than sit on your hands.

At its annual results briefing, Spark said Lightbox's launch-year budget was $20 million; presumably that sum just headed north, especially given existing Spark customers who are already paying for Lightbox can now claim a free 12 months, and those on the six-month half price deal will be switched to the free 12 months automatically (UPDATE: Spark says the $20 million launch-year budget has not changed. Spokesman Richard Llewellyn says "customer growth does not correlate with cost growth").

This is the second big play by Lightbox recently. Just ahead of Christmas, it formed a 50:50 venture with Coliseum Sports Media called Lightbox Sport, which includes all of the erstwhile Coliseum's English soccer, French rugby and US and European golf channels (the Lightbox Sport channels are not included in the free deal. The two services will integrated, but that's going to take a while, and charging will likely remain separate).

Both moves complicate life for rivals.

It will be particularly tough for Quickflix which, unlike Spark can't use video content as a loss-leader to boost its core broadband business (which, as NBR has previously noted, has been British Telecom's tactic in the UK as has bid hundreds of millions of pounds to secure and maintain rights to Champions League football). Lightbox might be free, but it's also a data hog, which will encourage Spark customers to upgrade to more expensive unlimited plans.

And it also complicates life for Sky TV [NZX:SKT]'s Neon (already running late) and the pending launch of Netflix NZ in March. Both will have better lineups of TV series and films than the TV series-only Lightbox. Still, a free service will blunt their growth. And moving into sports — traditionally a weak area for streaming video on demand services of all stripes— is a savvy move by Spark. Sky has to be wondering if it will develop All Black-level ambitions.

Last year, NBR's free advice to Spark was don't dabble in streaming video; go hard or go home. It looks like it's doing the former.

ckeall@nbr.co.nz

Follow @ChrisKeall