Sky TV starts the fightback against sports upstart Spark

Spark has issued a blunt invitation to Sky TV to get into the ring over the fight for Kiwi sports fans and their eyeballs. This week Sky’s CEO took that up.

There were moments at Sky TV’s relaunch of its sports product which felt like those famous Apple annual conventions the late Steve Jobs used to preside over.

It wasn’t just Sky CEO Martin Stewart’s more than passing resemblance to Jobs, right down to the relaxed attire of black jeans and black zip-up jersey.

Nor was it necessarily the expensive and swanky new studio set from which Sky’s talking heads will present the company’s product, and where Stewart had assembled an eclectic mix of former All Blacks, Silver Ferns and other retired sports stars, “fish-heads” (sports administrators), TV hosts, various other Aucklanders of influence – and, of course, the media – to hear his future strategy.

The Briton has quite the job on his hands. He has inherited a brand that, as kindly can be put, has been going down the toilet for years. It has been one of New Zealand’s most loathed brands, which Stewart discovered, as company lore has it, on a three-week tiki trip of the country where he asked various locals about Sky without revealing he was the new boss about to start there.

What’s more he has an upstart insurgent named Spark Sport trying to cut his lunch. Only Spark is not really small fry. They can seriously fuck with Sky’s business and have stated an intention to do exactly that.

So what Stewart had to say, how he said it, the stage he presented on, what broad hints he might drop and what his long-term strategy is for a beleaguered but still powerful broadcaster was of significant interest.

The timing couldn’t have been better in a number of senses. Basking in the reflected glory of a heady week of World Cup cricket and netball drama, brought to you by Sky of course (we won’t mention the Rugby World Cup rights), was an intoxicating reminder of how sport can grip and move a nation like nothing else.

For Sky, that is its lifeblood. Not surprisingly we saw that reflected in unveiled marketing messages like “Life Needs More Sport”. We all agree on that one.

So if you were a shareholder or an employee, the message could not have been more positive as Stewart lightly prowled the stage.

He has a plan. He believes passionately in it. He has assembled a team who can execute it. He has the opposition covered.

On that opposition: “We welcome the competition. Tell me when it arrives.”

On the 2019 RWC rights being lost to his opponent: “We dropped the ball … We won’t drop it again.”

If you were an administrator from a sports body (and several were there with beaming smiles), Stewart’s enthusiasm might have made you practically giddy with expectation.

On his determination to retain top tier sports rights: “If anybody out-bids us, they’ll go broke.”

On why he is now sponsoring so many of their teams: “I want to partner with good people.”

Stewart has the build of a long distance runner, but he’s looking to set a mean pace. Since taking over the Sky reigns over from John Fellet late last year, he has turned Sky on its head at warp speed.

Some long-time staff at Sky use a motoring metaphor to describe the surreal pace of change. “We’ve gone from years of being stalled at the lights to Martin wanting us to be a Maserati that can reach 100 miles an hour in five seconds,” said one. This was expressed as a compliment not a complaint.

Stewart’s tenure began unexpectedly as he burned down the house his famed predecessor created before focussing on the Spark Sport challenge. On Thursday, he ramped it up a whole new level with a string of announcements, broken down here.

In its entirety, it reflected a strong riposte to Spark and last month’s taunt to get into the ring over sports rights.

In reality, though, Sky is only still catching up with the real world. A decent streaming app has been massively overdue. Sky was in danger of becoming the complacent fat cat of broadcasting that TVNZ was when the pay-TV network was launched in 1987. In other words, ripe for Spark to do the same thing to it.

The commitment to develop more supporting content around its premium live sport product, including news services and documentaries, is welcome. But it’s only now that Sky is doing what other international broadcasters like Fox Sports in Australia and BSkyB in the UK have been offering for years as part of your monthly sub.

Stewart has had to catch up from behind and will understand Sky needs more than showy PR exercises to prove to younger viewers that it has truly shed the company’s grumpy uncle image and can get down with those fancy-boy telco streaming types as well as anybody. Twelve channels for sport and a new app are a good start.

Encouragingly for now, the Spark-Sky war has had an immediate upside for Kiwi sports fans, something Stewart acknowledged. What used to cost around $100 a month now can cost less than $40 and can be watched on more than the rectangular box in your living room.

But add in the $20 a month for the Spark Sport app (necessary if you’re a F1 or English Premier League diehard) and the one-off cost of a Rugby World Cup pass, and it’s easy to understand the rising anxiety among fans over what splintered sports offerings and providers might create. The fear is that we might end up all paying more for our fix of sport via multiple providers.

Stewart seems determined to ensure there is no real fight by ensuring this choice doesn’t have to be made. This is where the real and deep work, behind the PR blitz curtain, is going on at Sky’s Mt Wellington headquarters and what Sky’s long-term survival is dependent upon.

If Stewart can maintain his pace of change, and hold his nerve around the necessary investment required to revitalise the brand, there is a good chance Spark may blink and throw in the towel. At worst, he might be able to force a scenario where the two companies eventually partner up around sport, but with Sky having their hands on the steering wheel and the larger share of profits.

To do this, Stewart needs to take away Spark’s advantages and sell his own. This mission was at the real heart of Thursday’s relaunch.

With its streaming app, Sky is now at least on an even playing field with Spark around technology but has an advantage of a wider menu of top live sport now being fleshed out with a commitment to sports news services, new shows and documentaries.

That’s only part of the challenge, though. A company like Sky has to keep both sports bodies and sports fans happy to secure its future.

Spark believes Sky is vulnerable around its relationships with sports bodies, claiming years of finding its premium content locked behind a paywall has soured their appetite towards the network and resulted in a lower profile for its sport. Spark frequently talks up its “freemium” offering with sport offerings both in front of and behind a paywall.

There is global research to support this claim. International sports bodies are being urged to move away from pay-TV exclusivity and explore other distribution methods and models to maximise their audience growth. This comes off the back of research revealing younger generations are increasingly favouring and seeking out digital and social media sports content.

To survive, Sky is going to need to ensure it wins the battle with Spark for all top tier rights of interest to New Zealanders, and keep the bulk of them behind a paywall but at a subscription level Kiwis will not rail against and that also delivers solid shareholder growth and reward rather than red ink.

It will need to counter Spark’s freemium model and assuage sports bodies – and customers – who are worried too much of its content is behind a paywall. That will mean using its Prime free-to-air channel even more effectively around freeing up some big events to be live and free like it did with the recent World Cup cricket and netball finals.

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Opening up the news services as a free element of the streaming app may also have to be considered. Stewart talked of using Prime and the new Sky Sports Now app as a way to “nurture” existing audiences and encourage “future” customers. The best way to do that is give them free stuff.

Astute use of social media and interactive services will also be critical, given social is the fastest growing area of sports content consumption worldwide and a key to not just retaining customers but adding them.

Encouragingly for Sky shareholders, Stewart seems to have seen all this coming. He successfully conveyed a method to his madness and frenetic pace at the relaunch, and many of Sky’s long-suffering employees have unquestionably been re-energised by his arrival.

There are no illusions, though, that the tough work lies ahead.


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