TVNZ boss on latest igloo delay

UPDATE Sept 19: Sky TV and TVNZ's low-cost joint venture, igloo, has again been delayed - and this time no new target date has been given.

igloo was originally due to launch in June. After a series of hold-ups, its latest target date had been by the end of this month.

A spokesman for igloo told NBR "We still need to iron out a few technical creases before we announce a solid date.

"It is a frustrating situation but we simply have to get the product right before we put it into the hands of the New Zealand public."

NBR understands one faction inside TVNZ favours an ondemand pay TV channel developed by Freeview (and sidelined for now) over igloo. NBR has wondered if incoming CEO Kevin Kenrick has had second thoughts over igloo.

Although not a major commercial play for Sky TV, igloo has major strategic and polticial advantages, as it co-opts its only serious potential pay TV competitor (TVNZ). Punters frustrated by the lack of recording function in the low-cost igloo set-top box can always be up-sold to MySky. But for TVNZ, the lack of recording functionality makes igloo a dead end - a low-cost cul-de-sac for the state broadcaster to park its pay TV ambitions while partner Sky TV dominates middle New Zealand with its grown-up, full-capability product.

TVNZ did not make Mr Kenrick available for an interview but did forward a statement from the new CEO saying he was "totally supportive" of the delay to ensure igloo customers had a great experience.

NBR asked a follow up question: would TVNZ like to see recording functionality in a future version of igloo? A spokeswoman said he would not comment on that point. Questions on device capability had to be answered by igloo's CEO, or the igloo board (igloo has pledged to make CEO Chaz Savage available shortly; Sky TV CEO John Fellet has previously told NBR igloo is budget buyers. A hard drive would blow igloo's target sub $200 set top box price).

Forsyth Barr research director Rob Mercer has previously told NBR ONLINE the igloo delays would have no material impact on Sky TV. The analyst anticipated modest uptake, in line with Sky TV's projections, and the venture was low-cost, utilising spectrum Sky TV already owned, and customers bearing the cost of the set top boxes.

Sky TV says the delays are purely technical, and not related to the Commerce Commission's (now extended) investigation into its content deals and partner contracts.

igloo, 51% owned by Sky TV, 49% by TVNZ, will provide a mix of free-to-air channels, paid channels (accessed on a pre-pay basis for $25 a month) and on-demand, pay-per-view movies, TV shows and sports events.  The channels will be broadcast. Ondemand content will be delivered via broadband.

UPDATE July 25: igloo has confirmed it will miss its revised launch date of the end of July.

On July 10, NBR reported a Sky TV manager saying the launch would now take place in August (see below).

Today, igloo CEO Chaz Savage would not committ to a revised-revised start date, beyond "soon."

The pay TV service - 51% owned by Sky TV, 49% by TVNZ - is "95% ready" Mr Savage says. "Small tweaks" are being made following a customer trial.

igloo launch date drifts further out ... again

July 10: Sky TV and TVNZ's igloo joint venture, originally set for the first half of the year, is now delayed until August.

In December, Sky TV told the NZX the launch would happen in the first half of 2012.

Last month, igloo CEO Chaz Savage said there would be a "slight delay" for the new TV service, with its June commercial launch pushed out to July as final testing was carried out.

Today, majority shareholder Sky TV told NBR ONLINE the date had been pushed out again.

"We expect launch in August, earlier rather than later," corporate communications head Kirsty Way said.

Ms Way said there were now "100 igloo boxes up and running", compared to 25 at the time of the broadcaster's June 25 update.

Cynics see Sky in no particular hurry. With igloo set to yield little revenue (see below), some have seen its main function as tying up the only other major content rights holder (TVNZ) from politically agitating or partnering with a rival.

Analyst unfazed by igloo delay

June 25: igloo has confirmed it will launch its commercial service late July rather than the scheduled late June.

The delay has been pegged on the need to further test the service, rather than its recent political and regulatory flack.

Forsyth Barr research director Rob Mercer told NBR ONLINE the delay would have no material impact on Sky TV.

Igloo's pre-pay model and cost-plus structure mean it will be years, if ever, before the service makes a meaningful impact on Sky TV's bottom line, Mr Mercer days.

In the meantime, there's little cap-ex burden.

With igloo broadcast over UHF frequency already owned by Sky TV, its mix of paid channels drawn from Sky TV's existing pool, customers required to pay in full for their set-top boxes, and a Sky TV marketing manager (Chaz Savage) recruited to run the channel, it is shaping up as a low-cost, low-risk venture. 

Some Sky TV critics see igloo as a cynical move to co-opt TVNZ, and head-off potential competition.

Hint of rebellion at TVNZ
NBR has argued that igloo's lack of recording functionality means it is a useful tool for Sky TV (those who complain about the lack of hard drive can be up-sold to MySky) but a dead-end for TVNZ. (Sky TV CEO John Fellet countered a hard drive model would add an untenable extra $200 to the igloo box's cost.)

And NBR understands there are those inside TVNZ who would prefer the state broadcaster back a Freeview initiative for an on-demand Freeview channel that would include paid content (Freeview has a working model of the concept, which it recently demo'd to NBR). The pro-Freeview camp - a Quixotic minority - will be hoping new CEO Kevin Kenrick sees things their way.

On May 16, the Commerce Commission dismissed complaints igloo was anti-competitive, launched a new inquiry into Sky's contracts with ISPs and  "whether Sky’s agreements for the acquisition of content harm competition by denying actual or potential rivals access to a critical mass of quality content."

Sky TV and TVNZ have committed around $25 million between them to igloo - the majory ofr upfront costs associated with set-top boxes, which will be paid for in full by customers.

In a statement to the NZX earlier this year, Sky TV said it expects 50,000 customers in the service's first year, and a $3 million hit on ebitda, or $1.6 million after tax (to put that in context, in its last full financial year, Sky TV reported ebitda of $322 million and net profit of $120 million).

Igloo's paid channels will include Knowledge, UKTV, National Geographic, Animal Planet, Heartland, Vibe, Food Television, Kidzone24, MTV Hits and Comedy Central.

The on-demand part of igloo's service will work via broadband and feature around 1000 on-demand movies ($3 to $7) and TV series ($3 per episode), delivered over broadband, plus a pay-per-view sports channel.