Seriously though, hooooow

All the winners and losers after Spark’s ‘abject disaster’ of a weekend

Assessing the fallout – for better and for worse – from Spark’s RWC debut.

The worst fears of Spark came true over the weekend, as issues impacted its stream of the All Blacks’ pivotal matchup with South Africa, leading to it transferring the livestream to TVNZ’s Duke. The following day it maintained the Duke service, and offered refunds to all tournament pass subscribers, while the acting PM Winston Peters branded its performance an “abject disaster”. 

At this point, even if the remainder of the tournament goes off without a hitch – a very large if – Spark Sport’s big coming out party will likely be remembered more for an awful opening weekend than anything else. Unfortunately for Spark, now that it’s become a news lightning rod every time social media lights up with issues – often as not due to user or device errors – it will lead news sites irrespective of where the fault lies. 

It’s impossible to overstate the magnitude of this for Spark, which made a hugely ambitious move to acquire the RWC rights in April of 2018. The audacity was not just in the cash outlay – which cost anywhere from $13m-$20m on rights alone – but also the reputational risk it implied. The grand promise of a transition from the ‘dumb pipe’ of the Telecom-era into a diversified digital services titan under the Spark name was never so purely expressed as in this very public bet. Spark’s executives believed that it was now as much a tech company as a telco, and there was no better way to prove that than by taking the biggest sporting event in the country and delivering it on a brand new platform. 

That ambition always contained the possibility of an epic public failure to launch. Unfortunately for Spark, that’s what seems to have transpired. Yet for everyone who suffers through Spark Sport’s calamitous opening round, another will be significantly advantaged. Below I’ll assess the winners and losers of this extraordinary weekend, based on my own assessment, along with conversations with senior media industry sources.

LOSER: Spark

Every minute of the 18 months since it acquired the rights to the RWC was spent working to avoid just this scenario. Spark knew that this specific game was its greatest test, coming early in the tournament as it was onboarding tens of thousands of fans, and the most significant game not simulcast live on TVNZ this side of the quarter final. 

A Spark source says company took this incredibly seriously, building a “situation room” with every combination of devices streaming simultaneously. For the first games, and the first 30 minutes of the All Blacks–Springboks game, it worked flawlessly. Then those watching started seeing “significant fluctuations in video frame rate quality”. 

The source maintains that the platform has worked flawlessly, and believe they have subsequently tracked the problem down. My Spark source refused to name the provider, but The Spinoff understands it is industry giant Akamai. The source maintains that an “internet gateway got overloaded”, due in part to the game’s timing – Saturday night is already a moment of heavy streaming for New Zealand – and that the streams will be split over multiple gateways in future. 

Regardless, Spark admit that it’s a terrible customer outcome. The company was ecstatic as the game kicked off, with new customers pouring in, peaking at over 90 every minute between 6pm-7pm. Within a couple of hours, its worst fears had been realised. Yesterday it offered refunds to all tournament pass holders, and suffered the indignity of having the acting PM Winston Peters bawl them out due to his having had to watch the game on his phone (admittedly a hilarious image for the rest of us).

WINNER: TVNZ

“Kevin Kenrick and TVNZ struck the deal of the century”, said a media exec I spoke to, and it’s hard to disagree. They are rumoured to have contributed just 10% of the NZ$20m a source suggests Spark outlaid for rights to the tournament, yet will end up screening many of the key games live and free. The state broadcaster has revitalised its sports coverage through the process, recruited the country’s best sports broadcaster in Scotty Stevenson (disclosure: a shareholder in the Spinoff), and will end up with a ratings bonanza on TVNZ 1. Meanwhile Duke has gone from a ‘???’ to huge brand penetration within a matter of hours. It’s a huge credit to TVNZ CEO Kevin Kenrick, in striking a great deal at the top, while also acting as a safety net in case the inevitable happened. 

WINNER: Sky

They went from market legends to pariahs in a few short years, and have watched as their shares halved in value since Spark’s acquisition of the RWC was announced. Analysts have already priced in the loss of the next major tranche of rugby rights, to Super Rugby and the Rugby Championship from 2021. Yet all that was predicated on Spark’s bold entry to the sports streaming race, with their acquisition of the EPL, F1 and RWC. 

How much can change in a weekend. “You’ve got to imagine Spark is out of the game,” said an industry source. If that’s correct – and Spark strongly deny it: “I think that’s frankly wishful thinking” – then not only is their biggest challenger potentially neutralised, but the inflationary pressure on sports rights will significantly ease, potentially allowing it to regain some of the margin which has eroded over the past 18 months. New CEO Martin Stewart has had a brutal start to his job since taking over from John Fellet, but he has just had his best day at work without doing a thing.

LOSER: Simon Moutter

The former Spark CEO was the architect of the move into Spark Sports, and was set to be around to wear the result, good or bad. Yet a sudden resignation earlier this year means it’s his successor, former CFO Jolie Hodson, just months into the role, who has to lead the company through one of the most challenging battles since its name change. A source suggests the total cost of the Spark Sports strategy, once transmission, tech, media, talent and other rights are factored in could easily top $50m. Hodson seems to not have been nearly so enamoured of the strategy, yet it is she who will have to front to investors and the board to explain the outcome. And, depending on how many take up the offer of a refund – which could be tens of thousands – the costs associated with it could materially impact earnings well into the future.

WINNER: World Rugby

They sold the rights at a premium to an unproven sports debutant in Spark, yet will end up with a significant chunk of the tournament playing live and free on linear television. It’s a perfect case of having your revenue cake and eating the largest possible audience too.

LOSER: NZ Rugby / SANZAAR

They are in late stages of negotiation for the 2021 rights package, and had a competitive market for the first time in decades. Yet it’s entirely possible that this one weekend will have the effect of chasing Spark out of the race. A source who has negotiated multiple rights deals suggested that the next SANZAAR package might be in the region of NZ$80m per year. A $300m plus four year commitment requires major self-confidence at the best of times – but after this weekend it would be understandable if Spark’s executive lost their appetite for sports – or at the very least, blink at the cost of the biggest prizes.

WINNER: Vodafone

New CEO Jason Paris left Spark less than two years ago, and when he arrived at Vodafone took on a brand in something of a holding pattern. Like Sky, it had been waiting on a merger decision which never came. Its big bet is on Vodafone TV, a platform for other people’s apps – meaning it clips the ticket without paying hefty rights fees up front. The Spinoff has seen a beta version of the device, which launches next month, and it functions better than Sky’s own EPG with any need for satellite. When coupled with its beating Spark to the launch of 5G, it suggests a burst of energy for a brand which has significantly lagged its major competitor for years. The Spark Sports issues will only help its corporate rebirth.

LOSER: NZ Sport

Rugby will be fine, one way or another. Cricket too. The big sports always get by. But further down the food chain is where Sky’s quasi-monopoly on the broadcast of Sport really impacted. Both Spark, through its early addition of hockey rights, and Sky, which placed local sports at the centre of its strategy, had signalled an appetite to compete for sports which previously just had to take what Sky offered. If Spark withdraw or significantly shrink their engagement it could mean a return to the status quo for local sports organisations – which is to say: hard to get funding, hard to get young eyes.

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WINNER: Duke

A channel which was a very distant fourth (behind 1, 2 and OnDemand) for TVNZ suddenly has hundreds of thousands tuning in. It has long had a quality sports offering – this burst of energy might be enough to convince TVNZ to further invest. 

LOSER: New Zealand sports fans

If Spark does blink after the weekend and withdraw from sports – not without precedent, as the de-powered Lightbox shows – then the New Zealand sports fan will be the poorer. Competition brings different commentary teams (Stevenson wasn’t getting an All Blacks game without it), lowers prices and brings innovation in both sports covered and style of coverage. Having TVNZ, Spark and Sky all meaningfully involved in sport brought new energy to a sector which had lacked for it for some years. Spark is talking tough – ” sports streaming is growing exponentially”, my source said, while citing Optus’ recovery from ‘floptus’ to a much larger 2019 streaming business. But it will take real grit for Spark to tough out this tournament and stay in sports. If they don’t, we all lose.


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