Sky hikes Fanpass pricing, narrows options

Move on the eve of the Lions tour and America's Cup shocks sports fans. UPDATED: Spark's Simon Moutter weighs in with both fists. 
Sky TV chief executive John Fellet (Tinaz Kharbari for NBR)

LATEST: Sky TV insider talks Fanpass numbers

Sky TV got a backlash on social media this afternoon after it emailed Fanpass users, telling them it was axing the $15 day and $20 weekly pass options, and hiking the price of a monthly pass from $55.99 to $99.99.

The no-contract Fanpass lets you stream Sky Sport channels 1 to 4 over the internet, watching via a web browser or (via wifi devices like Apple TV) on a regular television.

Sky has never released Fanpass user numbers but it seems the online service might have been a bit too successful, and reached the point where it was cannibalising its parent a little too much for comfort (the official reason is cost; see Sky’s email to customers below).

The changes will kick in on May 24 – that is, on the eve of the Lions tour. It will also narrow options for America's Cup fans.

Sky is also introducing a $320 six-month pass.

And for those who want to return to the fold, the email also offers a $150 Sky TV credit.

This is the second major change to Fanpass, which was launched in 2015.

The service originally offered $299 “season passes” to all of the major sporting codes, with watch-later options in the manner of PremierLeaguePass and other online services. In June last year, it switched to streaming Sky Sports 1-4, and day, week and month passes.

There was no immediate word on the fate of the Fanpass Apple TV app [UPDATE: Sky says it will remain.]

Sky faces a delicate balance as it seeks to protect its core decoder business but not alienate those who would rather pursue new media options. Its multi-year, exclusive deals for top rugby, cricket, netball and league give it some wiggle room – and today it has taken it.

On Twitter, many threatened to cancel their Fanpass subs. But if they want to continue to see A-list sports live, there’s only one place to turn (and Spark chief executive Simon Moutter will have to re-do his cord-cutting sums).

Lance Wiggs was one of the few to offer a neutral reaction, saying "It's still $55 per month if you pay for six months up front. The price change sends a signal that there was a lot more short term/one-off subscription than they had planned and that the cost model didn't match up." Mr Wiggs also noted that those on recurring monthly payments can hold the old pricing until February.

Ironically, Sky might not have behaved so aggressively with Fanpass had its merger with Vodafone been approved; the deal might have made the combined company more sensitive to watching its back, politically.

Spark boss: monopolistic pricing power
Mr Moutter was one of the first rivals to react, telling NBR this afternoon, "This is an extraordinary demonstration of backward-thinking and monopolistic pricing power."

The Spark boss added, "It reduces options and raises prices for New Zealanders wanting to watch sports online when everyone knows that consumers want the opposite – more options that let them watch the particular sports they are interested in online, without having to pay exorbitant prices or pay for other content they don’t want.  A 78% price hike is extreme even by old Telecom’s standards.  New Zealanders can be thankful the Commerce Commission stopped them from extending this behaviour into broadband and mobile, as we now see their real intentions, despite all the rhetoric about better value if the Voda-Sky merger had proceeded.

"As you know, I’ve ditched all my Sky boxes but was intending to sign up for Fanpass for the Lions Tour and America’s Cup.  I’m not going to after this move."

Some sports fans will be wishing Mr Moutter's company persisted with its own online streaming sports platform, Lightbox Sport, instead of scrapping it last year.  Mr Moutter said Sky's multi-year lock on rights to top sports hindered new services. Mr Fellet said there was nothing to stop Spark and others from bidding for sports rights as they became available. It will be interesin to see if NZ Rugby follows other major sporting codes in the US, UK and Australia and sells broadcast, online and mobile streaming rights separately.

Sky investors responded positively. Shares were up $1.89 to $3.77 in late trading post-announcement. Sky shares have fallen 27.68% over the past year.

RAW DATA: Sky TV's email to Fanpass users


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