Sky TV considers adding SoHo, Super Rugby passes to struggling igloo
UPDATE Nov 11: A survey that closed today (see screen grabs right) indicates Sky TV may soon bolster the struggling igloo with new sports and entertainment content.
The survey says igloo is thinking of "throwing SoHo into the current channel mix." It also floats the prospect of day, event or season passes for major sports like Super Rugby - and asks people what they would be willing to pay.
Sky has been in the igloo driving seat since joint venture partner TVNZ sold down its stake a couple of months ago (see below).
While the content moves would not address igloo's main drawback (an igloo settop box can't record anything), the addition of SoHo would add to the service's content appeal (igloo offers the usual line up of Freeview channels free, plus a selection of Sky channels for $25 a month pre-pay if you buy a set-top box, or on a 12-month contract if you get an igloo decoder free).
And depending which major sports events are added, a day or multi-day pass would address another key social media gripe - that igloo doesn't have m.
SoHo costs $9.99 a month for Sky TV subscribers. The igloo survey asks people if they would rather pay an (unspecified) price for Soho only, or have it available if they paid $15 a month for pick-and-mix pack of other channels as well.
Super Rugby is uses as the example for for a question on day, event and season-pass options for major sports. The survey seeks to establish how much people would be willing to pay for such pay-per-view "passes" (NBR was sent static screen grabs from the survey, if you were surveyed by Sky and want to blab about the pricing options offered in the survey's drop-down menus, by all means email email@example.com).
While igloo already features pay-per-view sport, it appears ad hoc. It's never clear how many All Blacks or Super rugby games will appear (though a cynic would say it will never be many, since Sky TV would rather upsell people to its fully-owned My Sky and a Sky Sports package proper).
The sequence of the igloo survey hints that Sky has already decided to add SoHo and more sports options to igloo, and is now at the stage of trying to gauge what subscribers would be willing to pay for them.
But apparently that's not the case. Sky TV spokeswoman Kirsty Way tells NBR, "We have no plans to add SoHo to Igloo, or for sport day-passes as we stand today. The future could be different, I’m not ruling anything out."
Ms Way declined to comment on igloo subscriber numbers. The service's first-year customer target was earlier downgraded from 50,000 to 19,000. It will celebrate its first anniversary in December as the digital TV switchover ends.
igloo's failure to gain traction is politically awkward for Sky TV. Success for the joint venture would have given the appearance of more competition the market. But analysts say igloo's stumbles won't have any material effect on Sky TV. igloo is low-cost, utilising existing spectrum and content rights, and (intially at least) requiring customers to pay for settop boxes.
igloo's latest price: free
UPDATE / Oct 4: The igloo decoder - launched at $199 and later chopped to $99 on slow sales - is now available free to those who commit to the $25 a month service for 12 months.
Last month, joint venture partner TVNZ sold down its igloo stake (see below).
It did not want to bankroll a shift in retail strategy suggested by partner Sky TV.
Pundits also see TVNZ seeking more flexibility to introduce paid ondemand content via the Freeview platform - which, unlike the stunted igloo, supports recording functionality.
Neither Sky TV or TVNZ will comment on igloo numbers, but both have taken multi-million write-downs on the service, whose initial target was 50,000 subscribers in its first year. That target has now been revised downward to 19,000.
What's behind the power shift at igloo
Sept 6: An interesting footnote to Sky TV and TVNZ's annual results: TVNZ has sold down its stake in igloo.
The underperforming pay TV venture was previously 51% owned by Sky TV and 49% by TVNZ.
Now, Sky TV has paid $5.75 million to lift its stake to 66%.
The change in igloo ownership points to a power shift between the pay TV operator and the newly assertive state broadcaster.
Who initiated the shift?
"Here’s how it went: the igloo board made the decision to refine the business and retail model, which made an upfront capital injection necessary. Sky offered and TVNZ accepted that Sky will provide all of the extra funding in exchange for an increase in its interest in Igloo," TVNZ spokeswoman Megan Richards told NBR.
Sky TV CEO John Fellet told NBR that $5.75 million was a relatively small amount to pay for lifting its stake in igloo (both Sky and TVNZ also took impairments of around $5 million on the joint venture, which is projected to have 19,000 subscribers by the end of this year, well under half the initial number).
So what was the refinement in the busiiness model?
Simply that igloo wasn't selling at $199. The igloo team gave it a shot, but it just didn't work, Mr Fellet said. The price of the set top box was chopped to $99, and only Sky TV is bankrolling the move (which will presumably see it selling igloo decoders at a loss).
Although a shift in retail strategy is behind the shift, it's a positive overall for TVNZ.
As NBR has written before, igloo is all good news for Sky TV. The $24 a month pre-pay service is a good way to attack the budget market who won't stump up for Sky's full-blooded service. And if customers don't like igloo's lack of recording capability, or its hazy sports on-demand schedule, they can always be upsold to a MySky decoder. More, it gives the appearance of competition, and coopts TVNZ, otherwise a potential competitor.
But for TVNZ, igloo's always looked like a dead-end.
Both Ms Richards and Mr Fellet emphasise the state broadcaster has the option to lift its stake back to 49% in two years. It's hard to see why it would take it.
TVNZ (and MediaWorks) need to join Quickflix in backing Freeview's proposed ondemand channel, which could provide a mix of free and paid content, delivered to televisions via broadband. There's already a critical mass of Freeview setup boxes and compatible TVs in the market. It's an oppotunity waiting to happen.
New TVNZ CEO Kevin Kenrick has already proved quite front with ondemand content via the web and apps. But addiing ondemand content via Freeview - accessible via your TV remote, no internet know-how required - would really shift the balance of power.
And it needs to be done before Sky builds iSky capability into its next decoder upgrade, coming some time before the end of next year.
Some of that ondemand Freeview content needs to be paid, too. TVNZ is starting to make money from ads around ondemand content, it's so far only bringing in $1 for every $4 in lost broadcast advertising.
It's also interesting that TVNZ's igloo selldown comes on the heels of it partnering with newcomer Colesium Sports Media, which recently outbid Sky TV for rights to English Premier League soccer.
A Sky TV spokeswoman told NBR that its igloo partner's involvement in Colesium's bid came as a surprise. The way Mr Kenrick is shaping up, there could be more surprises ahead.