Sky joins Telecom in the race to become the ‘Netflix of New Zealand’

Sky TV plans to increase its digital offering before the end of the year with the introduction of a subscription video on-demand service (SVOD), which will stand alone from Sky’s pay television services and be available to both Sky and non-Sky customers.

This marks a change in direction for the broadcaster in the sense that its Sky Go on-demand viewing service has only been accessible to those who have Sky subscriptions.

“This is a really exciting new development for Sky,” said Sky’s chief executive John Fellet in a release. “This new service will appeal to many Kiwis who want the flexibility to watch movies and TV series when they want on a variety of devices. We love great content at Sky and this new service will provide another really convenient way to watch the shows and movies Kiwis love. Our team has a huge amount of experience working with local and international content suppliers. We are working hard to secure a top quality selection of content for this service.”

The content offered on the service will also be available to paying subscribers at no additional charge.

When asked whether Sky was attempting to emulate Netflix by adding this service to its offering, director of communication Kirsty Way openly admitted that the success of the American-owned is definitely a driving force.

“​Netflix is probably the inventor, or at least the most well-known provider of the SVOD business model,” she says. “So, yes, Sky’s plan is to launch the same style of service as Netflix in New Zealand.”

At this stage, Way says that Sky has not finalised the cost structure of the offering, but she expects it to “be a flat monthly fee [which allows] customers to view as much as they like as often as they like”. She says that such services are typically charged at between $10 to $20 overseas.

Given that this is markedly less than what a standard Sky subscription goes for, Way admits that it might serve as the impetus for some users to switch over but she doesn’t necessarily view this as a bad thing.

“We expect this will be the case for some Sky customers. The good news is that those customers if they only want what is on the SVOD service will get better value and hopefully stay with us longer. That is a good result. They could go to a competitive service too so we’d rather fill that gap.”

Way also says that the service could potentially attract new clients to Sky.

“We’ve noticed that this type of service doesn’t seem to be popular at the detriment of pay television, rather it is attracting new customers or customers are taking both pay TV and SVOD.”

The addition of the SVOD service will also result in an expansion of Sky’s partnership with Vodafone, in the sense that the new offering will be bundled with broadband packages that Vodfone currently offers.

According to a release, this partnership, which was formed in 2009, has already seen more than 100,000 kiwi homes taking Sky and Vodafone services together.

This announcement from Sky comes just before Telecom is expected to launch its SVOD service. In February, upon announcing the venture, Telecom chief executive Simon Moutter told the Herald that he was hoping to launch a Netflix for New Zealand—an identical narrative to that which is being used by the Sky PR team.

The ability of either company to become the ‘Netflix of New Zealand’ will largely depend on the programming available, and this will be determined by the amount of money spent acquiring broadcasting rights.

When Telecom first announced its service, it said that it would spend $20 million on programming and promotion in the first year and, while this might seem substantial, it’s pocket change when compared to the $289 million (see page 27) that Sky spent on programming last year.

Add to this the fact that Netflix might enter the Kiwi market next year and that Quickflix and Ezyflix are already operating in a comparable capacity, and the SVOD space starts to look very competitive.

StopPress sent several questions to the Telecom team on its thoughts about Sky’s move, but the response from the telco was relatively cagey.

“Clearly there is a growing appetite in New Zealand for on-demand content delivered via the internet,” said Simon Hoegsbro of Telecom Digital Ventures. “That makes the upcoming launch of our internet TV product very timely and we look forward to revealing more on that soon.”