Sky won’t be too rattled about losing the Rugby World Cup (RWC) rights to Spark and TVNZ. These would have been a nice-to-have but are not critical for Sky. However, this is the thin end of a wedge when it comes to possible long-term broadcasting wins for fibre providers and retailers. Or not…
Sky’s financial model – as with most Pay TV providers – is based on annual revenues that flow from events taking place throughout the year such as live All Black test matches, rather than one-off revenue spikes from events like the RWC and the Olympics. Indeed, Sky said as much when commenting on the Spark/TVNZ win.
Sky also confirmed the critical role live sports rights play when it said it had a “strong lock on the key sporting rights that are significant drivers of subscription activity.”
These are the rights to live rugby test matches and cricket that don’t expire until the early 2020s. Move that “strong lock” on to fibre (and VDSL and, perhaps, 5G later on) and we can expect consumers to be clamouring for fast internet connections so as to get premium live sports. This is the content many regulators say is key input content that can be used to get a strong market position and harm competition.
Last year, the Commerce Commission said “the vast majority of Sky subscribers watch Sky’s premium live sports content on Sky Sport.” Live sport dominates when it comes to why consumers buy Pay TV services. If that content were provided over the internet this would result in a radical jump in fibre uptake.
However, as the Spark–TVNZ deal shows, footie followers without fast internet will be left out in the cold when it comes to RWC 2019. And plenty will still not have fast internet come renewal time in the early 2020s. That’s a problem and there is no easy solution for these rural rugby followers wanting to view live sports. You can’t realistically broadcast over free-to-air television just to these regions. So, Sky, or another satellite provider, may still have leverage because it can reach everyone.
So far, regional New Zealand’s reaction around many areas not being able to view RWC games has been fairly muted, but when the reality hits next year people will be more vocal.
Even if the broadcasting rights go to fibre and other fast internet services, much will depend on who gets these rights – and what they must do to get them.
This issue is set to dominate the telecoms industry in the coming years, and it will impact hugely on the revenues of all telcos, both network and retail.