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 (Photo by Phil Walter/Getty Images)
(Photo by Phil Walter/Getty Images)

MediaApril 16, 2018

What does Spark winning the RWC mean for Sky, and for rugby fans?

 (Photo by Phil Walter/Getty Images)
(Photo by Phil Walter/Getty Images)

The telco and TVNZ have outbid the satellite giant for the right to broadcast the 2019 men’s Rugby World Cup – and it marks a watershed moment for our media and audiences

What’s all this then?

“Spark New Zealand announced today it has secured the rights to bring to New Zealanders the Rugby World Cup 2019”, a press release told us this morning, the biggest domino to fall yet in the TV versus internet war. TVNZ are listed high in the piece, and will provide major technical and talent support – but just seven games (including the final) will screen live on free-to-air TV.

Spark? Aren’t they a Telco? What do they want with our beloved sports?

Spark are a Telco, short for Telephone Company, but they’re a lot more than that, and would like both you and their investors to know it. The term they and others who are evolving from copper wires to fibre and cell towers use is ‘digital services provider’.

What this means is rather than being network connection, they also sell you things you might like to do with that connection. ‘Spark Ventures’ is a kind of internal startup incubator, with units like SVOD (Subscription Video on Demand) provider Lightbox (declaration: Lightbox and Spark are section sponsors of Spinoff TV and music), home security firm Morepork and health monitoring service Vigil.

The Spark Ventures businesses (image: screengrab)

Sports is considered one of the best things you can sell online. It has a number of unique attributes: it happens live and people have a proven willingness to pay to watch it live or as-live; it’s heavily discussed in mainstream and social media, helping market your product; and is (relatively) hard to pirate due to its value being in seeing it live.

That, along with a huge influx of new bidders, has driven incredible inflation in sports rights prices over the past decade – leading to Sky saying ‘enough’, and letting Spark take it.

Makes sense that Spark would want it, then. But isn’t the internet bad? And didn’t Spark brick it last time it had sports?

The internet is obviously, provably, inarguably bad, yes. But our internet is actually quite good, especially compared to Australia, who have absolutely botched their national broadband network rollout.

There’s also a second internet cable currently being rolled out under the Tasman, which is expected to be operational by June. Between that and the continued expansion of Chorus’ fibre network we should have a pretty robust and fast system by the end of next year.

Of course, it’s definitely not great for everyone. Rural areas still struggle, and older people straight up do not want anyone to change anything, ever – especially their sports.

Spark’s record with Sports thus far is not great. A collaboration with Coliseum Sports never really gelled, perhaps because the sports – golf and English football – were, while premium, relatively speaking still niche in New Zealand. This is the big time – there is literally no bigger event for New Zealand than the Rugby World Cup.

What’s TVNZ’s role in all this?

TVNZ’s role is production and talent – they are being relied upon to deliver the product and make it entertaining. The SOE came under intense criticism during the just-ended Commonwealth Games for playing ads (which seems unfair) and for messing up some of the big events (which is entirely fair).

Yet, comparatively speaking, the RWC is a far simpler affair, and SVOD a simpler platform to deliver on. The logistics of covering dozens of sports with only four channels are brutal, whereas a series of games, with only rare overlaps, are a relative doddle. The talent side is perhaps trickier – the best rugby commentators are all with Sky, and have been for some time. Levering them away, with only a limited diet, will be costly, while going into big games without match-hardened veterans – or using real old-timers in their place – will freak the public out.

Luckily for Spark and TVNZ they have a couple of tournaments to sort both tech (likely an off-the-shelf Neulion package) and talent – later this year the Sevens RWC and the U20 tournament are folded into the same rights deal, as is the next women’s World Cup. After the Black Ferns’ sensational win last year, and given the major growth in interests in women’s sport worldwide, that could turn out to be another big and valuable part of this package.

Spark are now in the sports game. Sky must be sweating.

Well, yes. But no more so than usual. In many ways the RWC is the perfect property for them to lose. While it has huge interest, it runs over just six weeks, so few people sign up because of it (though some might quit early, knowing it’s not coming). Additionally, the performance of TVNZ during the Commonwealth Games will have them quietly praying for a disaster which sees sports bodies and sports fans alike flocking back to the familiar.

The other intriguing element will be whether Spark does a deal with Sky to allow them to on-sell the rights. While this seems on the face of it to defeat the purpose of acquiring the rights in the first place, it’s not as farfetched as it sounds.

This is because part of Sky’s genuinely bold new strategy is to turn itself into a platform for third parties to sell to its customers, using both its present tech and a new Chromecast-style device. They pointedly mentioned Lightbox as a service they might on-sell, and did so after news had broken that they were likely to lose the rugby rights.

What this means is that there remains a chance that the rural oldies who will be most furious about the internet stealing their rugby may yet be able to access it through their set-top boxes – a PR win for both Spark and Sky.

All Blacks coach Steve Hansen with then-ASB CEO Barbara Chapman and captain Kieran Read at the ASB Rugby Awards. (Photo by Fiona Goodall/Getty Images)

What about the rest of rugby – is that staying with Sky?

TBC. That’s the big sword of Damocles hanging over Sky: retain those rights and they’re likely to be able to hang on to their customers. Yet if Spark does well out of this, which will be measured by some combination of direct revenue and customer acquisition/retention, then they will likely be emboldened to make a real play for the SANZAR rights, which will soon be negotiated for the period following Sky’s current deal expiring in 2021.

That’s all the media Game of Thrones stuff out of the way – what will it mean for the rugby fan?

Spark CEO Simon Moutter suggested a full noise online package would run to a bit over $100 in an interview this morning on Morning Report. This is both cheap (compared to, say, the $50 we paid to watch Joseph Parker lose to Anthony Joshua a couple of weeks ago) and expensive (compared to the $50 a month it costs for Sky and a sport package currently).

Moutter emphasised, though, that there would be a number of ways of accessing it, including one-off games. This is in many ways the key pricing breakthrough sports fans have been asking for, and might help with the major problem NZ Rugby has had: its products being locked away behind a pricey paywall, and thus becoming invisible to a generations of younger and less wealthy New Zealanders.

If nothing else this deal is a fascinating experiment, and by the tournament’s end Spark, Sky, NZ Rugby, TVNZ and the rugby audience will know a vast amount more about where the sport is headed, and how it will all work.

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