Spark latches on to sports but it is a tough game

Mark Jennings
Auckland, August 15, 2018
Spark is upping its game in the sports market by buying more content, offering some of it free and promising competitive pricing similar to Netflix.
The war over sports rights is heating up although the two main protagonists are playing it cool – at least in public.
Spark fired another shot yesterday when it announced it had won rights to the English Premier League (EPL) for three years.
SKY will return fire in a few days when reveals it has secured the European (UEFA) Champions League.
No comments from Sky
Spark, which earlier this year scooped up rights to the 2019 Rugby World Cup, says it is not trying to take on SKY.
SKY says it is not commenting on Spark winning the EPL rights because that is a ‘Spark story’ but it quickly added that it has many ‘exciting announcements in the wings.’
The battle so far has been mainly behind the scenes.
Sky has been carrying the EPL through an arrangement with ‘beIN Sports,’ a Qatari-owned company which, until now, has owned the New Zealand rights.
Market knowledge
The EPL has its fanatical fans and it’s likely many only subscribe to SKY to get their fill of English football.
Spark already knows a lot about those fans because it was involved in a joint venture with the previous rights holder Coliseum Sports Media from 2013 to 2016.
It will welcome these customers back to a much more advanced streaming service in 2019.
Spark was always going to chase more content to go with the Rugby World Cup and in the next few months it will come out with more sports offerings.
They will all be international codes that are packaged and ready to go. Spark has no local production so can’t yet compete with SKY on covering local sports.
The Latch advantage
The man who has been scouring the world for the telco is Jeff Latch. His appointment as head of Spark Sport is highly significant and a pointer to the seriousness of Spark’s plans.
Latch is the former director of content at TVNZ where his brief included the acquisition of sport. Latch has all the right connections in the international marketplace and is highly competitive.
While Spark’s media release is carefully crafted so as to not spook its investors with thoughts that it is entering a high-cost, high-stakes game, it is Latch’s job to quickly build a quality sports streaming service.
Latch told Newsroom: “Streaming is the future of sports delivery, it allows people to get what they want, when they want it, on any device they want it. You only have to have a look at the NBA game pass to see what is possible.”
Of almost equal importance to the content on Spark’s platform is the platform itself.
Any major technical problems that disrupt ‘viewer experience’ and you can kiss a nascent business goodbye as Optus in Australia recently had to do with the FIFA World Cup.
Keeping up livestream
Spark will buy an off-the-shelf solution from a US or European supplier. It will be proven to cope with streaming live sports events to large numbers of viewers.
Latch believes this gives Spark a major advantage over the competition.
“We are starting with a clean sheet of paper and can design something that is totally fit-for-purpose in an area where technology is moving incredibly fast. We avoid having any massive fixed cost infrastructure.”
This is a reference to the legacy infrastructure such as satellites, dishes, boxes and transmission towers and associated equipment that burdens SKY and the free-to-air TV networks.
Connection with broadband providers
Also, key is the interconnection between Spark and other broadband providers. Spark confirmed to Newsroom that an industry working group has already been set up and is already operating, well ahead of next year’s Rugby World Cup.
Latch is confident that Spark Sport will be profitable in the medium term and managing director Simon Moutter has made it clear that he sees it as a “standalone” business.
“Although of course, there will always be wider brand benefits to Spark from its involvement with high-profile sports events, we’re keen to secure sports rights that can stand on their own two feet – this is not about using sports content simply as an acquisition or retention tool for our broadband or mobile base,” said Moutter.
Pricing crucial
Pricing of the streaming packages will be crucial, but Spark has been able to watch and presumably learn from the strife SKY has found itself in over claims it was milking its subscribers.
Newsroom understands that Spark is likely to pitch its sports offering close to what a Netflix or Lightbox subscription costs – about $13 a month. Some content, like highlights packages, will be free (at least initially) to drive awareness of the new product.
At this level, signing people on won’t be an issue but the key to profitability will be what Spark ends up paying for sports rights.
One way of de-risking its strategy is to offer the major sporting codes, like Rugby, the chance to keep ownership of their own rights but access to the Spark’s platform for a percentage of the revenue.
Spark will also try to position its service as a way sports codes can connect with younger people who don’t own or use TVs but watch sport on their phones.
SKY can still dominate local coverage with its fleet of outside broadcast vans, but Spark will be keen to encourage entrepreneurship in this area and break down another key part of its rival’s business in the next few years.
Mark Jennings is the Co-Founder and Co-Editor of Newsroom based in Auckland. The above article, which appeared in the Newsroom on August 15, 2018, has been reproduced here under a special arrangement.