Originally Posted by
mistaTea
If you believe that all content providers are going to go direct to consumer for entertainment then yes, Sky will be doomed. They are a content aggregator after all - so if nobody is willing to sell them content they do not have a business.
It is far from clear whether this doomsday scenario will evantuate however. With Netflix, Disney+ and the new Apple TV service...the small NZ market is already saturdated with OTT SVOD providers. Kiwis who will enjoy Netflix, Disney and Apple content but also enjoy Showtime/HBO/FX etc will need to subscribe to NEON, Netflix, Disney+ and AppleTV+. That is already a lot of services to navigate between.
And it is yet to be seen how successful Disney and Apple are in NZ. Disney has some great content, but how many people will be willing to sign up? Their starting price is very cheap, but that just means they have to get a huge amount of subscriptions to justify their business model (versus the reliable income stream they had from Sky).
So with the market already saturated, does HBO keep going with Sky or do they go direct too with HBO Max? I can't know their thinking, but it is not clear to me (as it seems to be for some posters) that they will certainly break their relationship with Sky when their current deal expires in a few years time.
And with regards to sport... despite Martin Stewart's 'tough talk', Sky was never ever going to be able to outbid Spark for all A-List sporting content. It shouldn't really be a surprise.
John Fellet has pointed out on a number of occassions that winning content is the easiest thing in the world. Just keep doubling your offer and you eventually win! Except you don't actually win, if you pay way over the odds you ultimately lose.
No matter how wonderful a piece of content is, nothing is worth an infinite price. I suspect Spark have paid significantly over the odds again (like they did for RWC). The RWC has been a large financial loss to them, and I think cricket will be the same. There just won't be enough cricket fans in NZ with good enough internet speed willing to purchase a subscription from them to break even.
Sky will be bidding hard for key rights, but they will still have a line they cannot cross. A line where you are better off letting the other guy have it. And with their vast amounts of viewership data, I believe they are in the strongest position to ascertain how much each piece of content is really worth.
And, finally, missing out on NZ Cricket is far from ideal...but it does free up more cash to bid for other content. Spark will have given Spark Sport a generous budget to win sporting rights...but it will not be an infinite pool of money. SPK shareholders must also be wondering just how much of their money has been pumped into cricket, given their SP has also fallen by 1.63% ($137,778,370 off their market cap - approx double Sky TV's drop).