Spark looks to convert Rugby World Cup try
Spark has made its move into sports coverage before the US online giants get here, but the immediate beneficiary is TVNZ. Mark Jennings reports.
At first glance Spark looks to have pulled off a major coup winning the TV rights to the 2019 Rugby World Cup in Japan.
The All Blacks are the defending champions and their campaign to make it three World Cups in a row will generate an unprecedented level of interest, not just with rugby fans, but the whole country.
If anything can get a Sky subscriber to watch sport online then surely this must be it.
Spark CEO Simon Moutter enthusiastically told TVNZ’s Breakfast programme the deal meant “that the new world was coming at us”.
Sitting alongside Moutter was a surprisingly sombre-looking Kevin Kenrick.
TVNZ’s CEO was almost downbeat when he told host Jack Tame, “We are very much in a support role to Spark.”
Kenrick didn’t want to take the focus away from a clearly excited Moutter, but under the surface he must be very happy.
This is a good win for TVNZ and getting onto the coat-tails of Spark is a smart move.
Essentially, as Sky boss John Fellet likes to point out as often as he can, the Rugby World Cup is a free-to-air television event.
The International Rugby Board’s rule that the finals must be carried live on free-to-air TV sucks most of the value out of the event for a pay-TV operator.
On top of the big tournament in Japan, Spark has sublicensed to TVNZ the rights to the Under 20 Rugby World Cup, which starts next month in France, and the Rugby World Cup sevens in San Francisco, which just became a lot more valuable after the All Blacks and Black Ferns won gold medals at the Commonwealth Games.
Given that all the major All Black games in Japan will be free on TVNZ (with the bonus of no advertising during game time) why would anybody sign up with Spark?
Devoted rugby fans will want to see the pool games which include a match against the Springboks, as well as lesser teams like the African qualifier and Italy.
But if you can buy “one-off” games, as seems likely, then the revenue opportunities for Spark are limited.
Moutter says he is aiming to make a profit but it is hard to see that happening. TVNZ’s financial contribution will not defray much of the cost. Kenrick would have been gun shy after having to cop some big write-downs on his Hollywood studio deals. Plus, he would have had a very good idea of what he can recoup in advertising dollars.
Spark will also need to be careful on pricing as most die-hard rugby fans are still (and will be for some time) coughing up for their Sky subscriptions.
If it is seen to gouge fans the PR backlash will be withering.
Spark sources say its coverage will carry adverts but the “intensity” is likely to be low and not off-putting for viewers.
The reality, of course, is that Spark isn’t overly concerned about making a profit on the Rugby World Cup. The company’s revenue last year was $3.6 billion, so a small loss will seem little more than a rounding error.
The telco’s aim will be to win more customers for its broadband, mobile and wireless products. Expect to see Spark customers get discounts on tournament streaming passes – something in the order of 50 percent.
Offering any more could be considered anti-competitive and draw the attention of the Commerce Commission.
Spark will also be looking to see if the country has reached a 'tipping point' for viewing sport online.
It already knows from its own data that hundreds of thousands of its customers are streaming Lightbox and Netflix dramas every evening.
But there is a risk – House of Cards fans are more likely to be younger internet-savvy customers, not older sports fans who are used to the simplicity of a Sky remote.
Spark has been here before – three years ago it carried the English Premier league, French Rugby and US PGA golf on Lightbox sports.
After change in the rights-holders those sports went back to being carried on Sky and life became easier for many older male fans.
For Spark, it was a case of being “ahead of its time”, but it would have learnt a lot from that experience.
And the telco will have been anxious to make its move before Amazon or other big American online outfits enter the local sports market.
If the rugby goes well, then the indications are that Spark will look to set up an 'uber' platform to distribute sports coverage.
It might buy some rights itself but it could well partner with the likes of the New Zealand Rugby Union, which has long been considering retaining the rights to its own competitions like the Mitre 10 Cup.
Hugely important will be Spark’s ability to get through the cup coverage with no technical hitches.
Dealing with big one-off sporting events like the Rugby World Cup final is different to streaming a big drama such as the premier of a new season of Game of Thrones – these get downloaded to local servers well ahead of screening time.
Even the biggest operators in the US have been unable to prevent streaming problems with high-demand events like the Super Bowl and the UFC Mayweather/McGregor fight.
Normally, Spark would not want to do Vodafone, Slingshot or any other ISPs a favour but it will be anxious to make sure that this time its competitors’ customers don’t experience any problems like buffering or latency.
Still, as Moutter was quick to stress in interviews, “We have 18 months to sort all this out.”
One way or another, most of New Zealand will be watching to see if he can add a conversion to the try he has just scored.
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