Spark partners with Netflix to boost flagging broadband share

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Spark has announced a year-long marketing partnership with Netflix, confirming last week's rumour.

The telco will offer those who sign up to a 24-month unlimited data plan a year's free access to a Netflix NZ standard plan that usually costs $15 a month (HD and access from two screens). Alternatively, $178.88 can be put towards' 10 months' access to Netflix top plan, which offers 4K (ultra HD) and access from up to two screens).

The gambit isn't new. When Netflix first launched in NZ, it partnered with Vodafone to offer customers on high-end "Red" plans six months' free access. But it's duration is unprecedented.

Spark refuses to disclose the cost of the deal.

Slipping share
At Spark's recent half-year result briefing, managing director Simon Moutter identified his company's slipping broadband market share as a weak point. 

It was over the 50% mark at the time of the Chorus spin-off in 2011. For the six months to December 31, it slipped two points to an all-time low of 42.3%.

Mr Moutter said his company would win back share with a new focus on price competitiveness (and we will presumably still see that approach), but a rival tipped off media that his company was also looking to boost its value-add strategy via a Netflix hookup.

Spark was careful to namecheck its own streaming video on-demand service, Lightbox, several times in this morning's statement — presumably anticipating questions about its commitment to its inhouse product -- which has seen a couple of high-profile departures recently (including CEO Kym Niblock and marketing manager Kerryanne Nelson) plus the axing of Lightbox Sport.

Suspicious timing?
One rival whispered darkly last week that Spark's last-minute legal bid to delay the Sky TV-Vodafone merger was to give it time to complete negotiations with Netflix -- the better to compete with the looming new competitor (ultimately, of course, a stay was not required as the Commerce Commission nixed the deal).

Spark said it would not comment on rumour and speculation.

Sky was not slow in raising questions about the timing of the deal. But if it was master manoevering, someone forgot to tell Spark investors. Shares [NZX:SPK] closed down 1.53%.

State of the SVOD market
With none of the parties releasing subscription numbers, estimates of SVOD market share are thin on the ground:

Mid-way through 2016, Roy Morgan estimated the following:

• Netflix:  264,000 subscribers
• Lightbox 128,000
• Sky’s Neon: 22,000

Sky claimed its number was too low, but conceded that was the general shape of the market, with its service a distant third.

At its recent half-year update, Spark included the line "Lightbox progressing well towards 250k subscribers."

The telco has consistently refused to say how many pay for Lightbox, which costs $13 a month for those who are not Spark broadband customers.

Spark reported a total of 675,000 broadband customers as of December 31, 2016, meaning a majority have not taken the opportunity to access Lightbox, even for free.

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RAW DATA: Spark offer

Customers can get the Netflix Standard plan (usually $14.99 RRP per month) for 12 months with any 24 month Unlimited Data Broadband plan (Fibre, VDSL and ADSL). Offer ends 23/02/18, and is provided as a credit of $179.88 which can also be applied towards a different Netflix plan (but length of time customer will get Netflix on us will change i.e. could get Premium on us instead for a little under 10 months). Existing customers on eligible broadband plans can also take up the offer when they sign up to a new Unlimited Data 24 month plan (no matter what stage they are at in their existing contract).

For eligible broadband plan details and Spark’s Netflix offer terms, see www.spark.co.nz/Netflix. For Spark’s Lightbox offer terms, see www.spark.co.nz/lightbox.   

Asked to clarify current customers' eligibility, a Spark spokeswoman added:

This deal is open to both new and existing customers. New customers simply need to sign up for a new 24 month unlimited data Spark broadband plan. Existing customers just need to recontract to Spark for a new 24 month unlimited broadband plan, no matter what stage they are at in their existing contract. So anyone can get the deal, today.