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Spark [NZX:SPK] confirms it has won rights to the 2019 Rugby World Cup.
Some games will screen free on support partner TVNZ, Spark managing director Simon Moutter says.
However, the managing director will not at say at this point which games will be live and free-to-air beyond the opening game and the final.
Nor will Spark say how much the cup will cost for people who are willing to pay to see all games, although on RNZ Mr Moutter said a tournament pass might cost in the region of $100.
"This is an expensive tournament to buy and we need to monetise it."
He elaborated to NBR that "The challenge here is that these rights cost a lot of money, so you have to have a model that gets a little bit of funding from advertising with a free-to-air component. But the vast majority of revenue has to be earned from pay subscriptions."
The Spark boss says market research will be used to set the final charges for games.
He added, “So if we have too much free-to-air, then the chances of earning back our investment reduces.
Live games will not be interrupted by ads, he says.
The NZX-listed telco has also yet to reveal to shareholders what it paid for Cup rights.
Mr Moutter has said Spark bought the rights, finalising a deal with World Rugby over the weekend. TVNZ is a support partner.
Another potential pain-point is that not all of the country has good enough broadband for streaming games to a PC, phone, iPad or (via wi-fi and a gadget like Apple TV or Google Chromecast) a regular TV.
Spark says it is aware UFB fibre and broadband rolled out under the Rural Broadband initiative does not reach all New Zealanders. "We want to do our best to give as many New Zealanders as possible to watch – so we are looking at a range of options. We’re not able to give any details right now," the company says.
Mr Moutter says the number of people who can't get good enough broadband now is down to "single digits" and that his company has 18 months to solve the rest. Satellite broadband is one option, he says.
Tens of thousands of households can't get good enough quality for internet streaming, versus hundreds of thousands of homes that don't have a Sky decoder, he says.
He acknowledges a wider issue is households that have good enough broadband but are unfamiliar with content streaming services.
Mr Moutter can confirm people won't have to be a Spark customer to buy games.
Packages will include a tournament pass and passes for individual matches, he says.
While Mr Moutter says Spark has 18 months to prepare for the 2019 Rugby World Cup, a memo at a rival broadcaster notes the package Spark brought also includes the Women’s Rugby World Cup 2021, the Rugby World Cup Sevens 2018, and the World Rugby U20 Championships 2018 and 2019.
The 2018 Sevens World Cup starts in just weeks. What's Spark's plan?
Mr Moutter brushes off that question, saying partner TVNZ will screen the Sevens and U20 World Cup tournaments in conventional fashion.
NZ First threat
It seems most or all of the money from the bid came from Spark. Speaking to NBR on March 29, Communications and Broadcasting Minister Clare Curran said TVNZ had not asked the government for any money to fund a World Cup bid, and she indicated she expected the state-owned broadcaster to fund any bid from commercial operations.
A potential complication for Spark is that during the last parliament, NZ First MP Clayton Mitchell put forward a private member's bill calling for games of "national significance" to be screened free-to-air.
The bill died at its first reading after Labour joined National in voting against it. And Ms Curran recently confirmed to NBR that free-to-air sport is not part of the coalition agreement. However, if Spark does decide to charge for the final, that could re-focus and perhaps even change Beehive minds.
The appeal of Mr Mitchell's bill was diminished by the fact that Sky — no doubt mindful of political pressures — screened all the major World Cup 2014 games through its free-to-air channel Prime.
Sky: tournaments don't appeal
Sky TV [NZX:SKT] shares slumped (again) after the pay-TV broadcaster revealed on March 28 that it was not the preferred bidder for the 2019 Rugby World Cup, which will be held in Japan (three hours behind New Zealand).
Speaking to NBR on March 27, departing chief executive John Fellet emphasised that Sky has a dozen rugby contracts.
And on April 5, Sky head of Sport Richard Last said Sky would not pay over the odds for a tournament that lasted just a few weeks, with attendant political heat to show games involving the All Blacks for free. The broadcaster's focus was on season-long rights.
Mr Last also reeled off statistics he said proved people preferred to watch big games through a regular TV. February's Super Bowl was the most streamed even in US sports history but still only had 3.1 million people watch the game over broadband vs of a total viewing audience of 103 million.
For its part, Spark will be looking to the UK, where British Telecom has spent billions of pounds to secure rights to top-flight soccer (the equivalent to bagging All Blacks and Super Rugby rights here). Since 2013, the English Premier League has been able to play BT and Sky TV UK against each other to drive up rights revenue. At times, BT has offered games free to customers on its own network.
The strategy has presumably worked for BT going by the fact the telco has just secured its third three-season deal, running through until 2022 (in each of the two previous three-season deals, rights have been split with Sky TV UK, with each company getting a package of exclusive games; on a side-note it is notable that the bidding frenzy cooled somewhat with the 2019 to 2022 deal, with Sky and BT able to spend 16% less than they did for the last three-season package).
This morning, Mr Moutter said Spark would offer its own customers "a few advantages" but stressed single games or the whole tournament would be available to everyone.
Expanding portfolio, and at what cost?
When Lightbox Sport folded, Mr Moutter said one lesson Spark learned was that you need a portfolio of A-list sports to gain momentum.
The amount Spark must be spending on this exercise indicates future plans, but Mr Moutter was playing his cards close to his chest this morning in terms of whether his company will shoot for more rugby, more top sports.
For shareholders, the appeal will depend on how much Spark paid for World Cup rights.
The MD says that won't be revealed until the end of the financial year containing the World Cup. That is, probably not until around August 2019.
Pay-per-view upgrade for Lightbox
As Spark announced its interim result in February, Mr Moutter revealed the telco's streaming service, Lightbox, is due for a major upgrade this month.
Movies and kids' features will be added. But most germane to the World Cup, a re-platforming from Xtream to Brightcove will support streaming of live sports and pay-per-view events. And although the Spark MD did not include the feature in his presentation, Brightcove also supports the insertion of advertisements into a livestream.
Been there before
Spark has been in the sports broadcasting game before.
In 2014, Spark's Lightbox formed a 50:50 joint venture with NBR Rich Lister Peter Cooper's Coliseum Sports Media, called Lightbox Sport,
All of Coliseum's media properties (English Premier League soccer, US golf, European golf and French rugby) shifting to the JV, and TVNZ came on as a partner, screening some content free-to-air.
But Lightbox Sport spluttered in 2015, and the joint venture ended in 2016 as Coliseum split off again to found its RugbyPass service.
This time around, streaming technology has become a lot more reliable, and New Zealand broadband has come along leaps and bounds, with many households now acclimatised to it through Netflix and other services.
But will it still be too jarring to have some World Cup games available via internet streaming options only? It's likely they'll be long, deep talkback radio howl this morning saying "no."
Spark has not helped its cause by releasing so little information so far.
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