SKY TV NZ – An Outdated Business Model That Will Ultimately Fail

Sky TV has had a monopoly on the New Zealand TV market for years but their business model is dieing a slow and painful death and everyone knows it.

Just last year they lost 33,800 subscribers.

Why won’t Sky admit their business model is flawed and give people what they want?

Instead they continue to offer old content, charging a small fortune each month for 500 channels that no one watches, packed with the same ads every 15 minutes and still having the audacity to charge an extra $30 per month for sports or films.

Sky are notorious for offering new subscribers HUGE discounts while long term customers get absolutely nothing. Canceling and resubscribing to take advantage of discounts is an option but they make it nearly impossible to do so.

New Zealand is a small country and the rights holders will do anything to sell at the highest price but with few media buyers, Sky can literally buy whatever they like.

The perfect example is the English Premier League, for many years Sky was the only way to watch the games and the biggest headache was Sky chose to show 3 games a week instead of every game live.

Why would a company spend millions on rights to the world’s biggest sporting competition and only play a few games live? Believe it or not, not everyone in the country supports Manchester United, Sky.

Thankfully Colosseum Sports outbid Sky and for two years offered a live on demand service with all games live. Sporting nuts like myself could watch less popular games such as West Brom vs Stoke which Sky blatantly refused to show, Colosseum offered a service for under $4 a week.

Sky continue to show some football including the A League while ESPN retains the Champions League and Internationals. Again very few games are actually shown, proving that they have no idea what kiwi consumers actually want. ESPN don’t even a New Zealand website, they redirect you to their Australian one.

Sky’s defense might be no one watches football, but if all those die hard fans are streaming illegal Sky UK or Fox Sports streams online then it’s clear the market research is inconclusive.

Colosseum went bust last year with Qatari based Bein Sports finally stepping up and offering kiwi sports fans a football service they can watch from anywhere, online or on the TV for only $12 a month.

Speak to pretty much any kiwi who still has Sky Sports and they’ll tell you the only reason they have it is for watching Super Rugby, cricket or the All Blacks.

If Sky lose their rugby rights, it’s pretty much game over.

So why haven’t Sky offered a rugby only package? It’s obvious, everyone would unsubscribe from the basic package which costs $50 per month. But has Sky thought about for every person that did cancel their basic+sports package, would three people signup to a $29 per month sports package?

I can guarantee they would, it’s a numbers game yet Sky fails to see that.

That leads me to Netflix, Spotify, Pandora, Hulu, Lightbox, Neon, Bein Sports, NBA Fan Pass and Youtube. All these are household names that are destroying Sky’s flawed business model.

For less than $15 a month you can signup to these services and the value you get is exceptional. Once you become a premium member, you get full uninterrupted access. How pissed would you be if Netflix played an advert about Burger King during your blockbuster movie? Very.

You see companies like Netflix are bending the rules on content rights, giving people what they want at a price their willing to pay. Kim Dotcom, Hollywood’s biggest mistake has been saying this for years.

If everyone gets access to the same content at the same time, piracy is probably a thing of the past. Yes there will always be freeseekers but most people torrent or stream because they want it now, not two weeks after every American has seen it already and every news portal is sharing spoilers ruining it for us.

The same can be said about paid TV, if Sky gave consumers what they want, at the time they want, at a price they are willing to pay they will probably be growing their subscriber base rather than counting the leavers.

Hulu Plus, while not officially launched in New Zealand can be accessed with a VPN or DNS bypass, something the NZ Government is coming under pressure from Sky to block, gives you the ability to pick your own adverts.

Prior to every movie or show starting you pick one of three niches to view 4 ads about that specific niche. Just last week I could choose car ads, farming or a new sports drink before Shark Tank started.

I get it, New Zealand is a small place but if more small businesses like Tony’s Coffee Cart in Lower Hutt could advertise to Lower Hutt shoppers at a more affordable price, Sky would be far better placed to offer the this service.

The bottom line is Sky doesn’t have the infrastructure or capability to offer such a service. Instead they would rather pay the top lawyers in the country to try and block torrent and IPTV websites (bonkers).

What Sky fails again to see is that people that use such websites to watch content know exactly how a VPN works. Sky can pussyfoot around at an ISP level but ultimately techies will bypass the block in minutes.

Take China’s firewall, most sites are blocked yet China brings most of their traffic.

By going to court, Sky had started a losing battle already. A court order is far more difficult to obtain than a new Russian server deployed instantly 9000km away.

Until Sky pull their finger out of their arse and realign their strategy by ditching the basic package and offering niche only packages, offer on demand ads, remove blocks and stop wasting the courts time, we can all queue up to attend Sky TV’s funeral.

Rather than bitch and offer no help, here’s my proposed changes to Sky NZ.