The online revolution is (finally) coming to Sky

Sky’s bold new strategic plan reveals ambitions to offer unbundled content, online only access and an Apple TV-style box – all while keeping its pricey satellite service.

After the commerce commission denied it permission to merge with Vodafone New Zealand, Sky outwardly appeared defeated and deflated. The merger was its technology play, its strategy and its hope for the future all wrapped into one. And yet a year on, a media presentation today at its sprawling Penrose headquarters reveals a rejuvenated business, one which is still subject to all the same threats and issues as have plagued it in recent years – but now has a vision for moving beyond satellites and pricey subscriptions, and opening up to customers it has previously shunned.

The core of it is a move to a far more diverse product offering, with price points to match the smaller wallets and narrower interests of younger consumers. Group head of strategy George MacFarlane talked about a focus on “incremental customers” and, tellingly, a “transition to a VOD-centric world”.

Slides from an investor presentation

A group of senior executives at the business talked openly about the end of linear television – not in the immediate future, but in years rather than decades. There were a number of critical breaks from Sky’s prior thinking revealed, which I’ll analyse in detail in a future feature, but the critical elements are these:

  • Sky will offer online only linear packages.
  • There will be a service delivered by ‘puck’ – an Apple TV-style and Android-powered device.
  • They are turning to embrace other services, and future packages could include the likes of Lightbox, Netflix and MLB or NBA league pass.
  • The satellite business will remain as a premium product and way of providing service to their valuable and lucrative legacy customer base – maintaining revenue and preserving access to customers who are less technologically adept or have poor internet.
  • All new services will be significantly cheaper: there was talk of $30, $20, $15 or even less.
  • A parallel operating system will provide a Netflix-style interface for both linear and on demand television, while preserving the grid-centric style for the (mostly older) customers who prefer it.
  • The new HBO deal has full streaming rights to its entire catalogue, significantly strengthening Neon.
  • Neon will provide a TV-only option, at a discount to the full stack TV and movies offering.
  • Sports will remain largely bundled, but likely have more plausibly-priced options than has been the case with Fan Pass.
  • A new version of Sky Go launches Monday as both a site and an app, which, based on a brief test drive, fixes much of what has been a comically poor quality service for much of its existence.

The vision was a radical one for the company, which has strongly resisted any moves which might risk cannibalising its existing customer base. This has meant younger people – who’ve grown up without or transitioned from a linear environment, and gotten used to venture capital-subsidised services like Netflix – will now have cheaper and more familiar ways of interacting with the pay TV giant.

The future plan, in dense tech acronyms

Huge question marks remain for Sky. The major international competitors are still out there, awash with cash and biding their time. A legacy of cynical behaviour towards their customer base has rendered them a hate brand for many, and this won’t vanish overnight. The year-long time frame before deployment is an epic one in the hyper-paced world of contemporary media, giving ample opportunity for competitors to emerge or events to overtake it. And hanging over it all are the next set of SANZAR rights, which could easily be split up or ripped away, thus crippling the legacy customer base which has allowed them the luxury of waiting this long before they’ve onboarded a new generation.

Still, today shows Sky is finally living in reality and making the kind of moves potential customers have long-begged for. John Fellet, who recently announced his retirement, now looks like he’s leaving a company with a path to the future, rather than the ‘Skytanic’, as it appeared recently. The outcome remains as uncertain as ever. But at least he and his team now have a plan.


This section is made possible by Simplicity, New Zealand’s fastest growing KiwiSaver scheme. As a nonprofit, Simplicity only charges members what it costs to invest their money. It already has more than 12,500 plus members who, together, are saving more than $3.8 million annually in fees. This year, New Zealanders will pay more than $525 million in KiwiSaver fees. Why pay more than you need to? It takes two minutes to switch. Grab your IRD # and driver’s licence. It really is that simple.

Related:


The Spinoff is made possible by the generous support of the following organisations.
Please help us by supporting them.