It is going to be a very interesting time for subscription video on demand (SVOD) services over the next twelve to eighteen months as the market has moved from one player (Quickflix) to four (Quickflix, Netflix, Lightbox and Neon) in the space of six months.

Each of the players have their strengths and niches

  • Quickflix: Good NZ content, movies and great distribution
  • Lightbox: Building content focusing on hero TV shows, big budgets but no movies
  • Netflix: International brand with big content library but some limitations in NZ and digital rights held by others
  • Neon & FanPass: Strong catalogue of content with sports. However faces risk of canalizing it’s core business

Even from the short summary looking at it from a customer point of view there is going to be some confusion and frustration as:

  • It will be difficult to get the content that they want from one provider as the content will be fragmented over a number players I.e. If I want to watch you ‘Better Call Saul’ you need Lightbox, if you want ‘Orant is the new black’ you will need Netflix and if you want Game of Thrones (only past series) I will need Neon.
  • Content is one thing but how does the customer watch it is a whole different story and distribution will be key. If you look at the early days of Sky to get Sky physically turned up and put a dish up and gave you a set top box (for a 12 month contract).

It is early days so how do I see the market playing out. I am making the assumption that NZ is only really big enough to substantiate two profitable providers.

  • Lightbox – Spark has the most to gain as they transform their business and has banked a large amount of their future on this play and has deep pockets.
  • Sky – has the most to loose as customers migrate from core packages to other services however they own the customers the others want so can migrate customers to Neon as a churn save and they have Rugby
  • Netflix – already large installed base (using IP masking) and had a big depth of content and low marginal costs in NZ therefore they will be in for the long term.

The losers:

Unfortunately despite their superior distribution I think that Quckflix are going to be left behind and their best alternative maybe to sell their customer base and contract contracts to Lighbox.

Of course the other looser will be lineal TV, as more noise is made about SVOD while total viewer hours might increase it will be the SVOD services at the expense of lineal TV and they do not currently have a model to diversify their revenue streams and charge for online subscriptions therefore they will face increasing pressure of a loss of audience and resulting loss of revenue, and inability to replace this in the digital world.

If nothing else it will be it will be fun to watch from the sidelines…..


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