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SkyTV to extend its monopoly to the Net?

18 June 2014

SkyTV is something of an enigma.

The company has pretty much a monopoly on subscription-based broadcast television in this country and if you speak to its customers and former customers, the levels of satisfaction seem to be incredibly low.

However, one of the advantages of having a monopoly is that you simply don't have to worry about delivering value or quality of service -- people have nowhere else to go.

Right now, Sky must be well aware that their dominance of the subscription TV market is coming under increasing threat -- not from other broadcasters but from overseas Net-based services such as Netflix, Hulu and illegal download services.

Like all those who have enjoyed the extreme benefits that come from being a monopoly, Sky look as if they're going to work very hard to preserve their stranglehold on content by setting up their own video-on-demand service here in NZ.

According to this NZH story, Sky is in the final stages of tying up content and creating the necessary branding before a launch later this year.

The big question is -- will they team-up with a big player from overseas (such as Netflix) in an attempt to "own" all non-theatre TV/movie content that flows into this country?

They will, of course, be facing competition in the form of the VOD service that Telecom is reportedly working on - but will that competition really be such a threat?

Sky already has a huge portfolio of content rights which I'm sure it can leverage to give it priority access to the online rights for same.

By comparison, it's probably unlikely that Telecom will partner with a major offshore player to deliver a comprehensive range of high-demand content. Telecom's prior experience with big-name partners (such as Microsoft, Yahoo, TiVo, etc) have proven to be very problematic for the telco and have ended up doing far more harm than good to the company's image and brand. They're unlikely to want to repeat those fiascoes.

So what will happen in a worst-case scenario -- if Sky effectively partners with Netflix?

Almost certainly, Netflix will stop accepting NZ-based credit cards for subscriptions outside NZ and this will make it much harder for those who currently buy-direct to continue doing so. Instead of paying $10 a month for all you can eat, chances are that you'd be paying Sky $99 a month for the same (or less).

Sky won't want any partnered service eating into its broadcast TV revenues so they'll ensure that the pricing of any streamed service is not as attractive as it should be -- and NZers will have no choice but to pay up or go without (as is the case right now).

Should the Commerce Commission reject any attempts by Sky to also create a virtual monopoly in the Net-based movie/TV marketplace?

Normally I'd say "no" - and allow competition to prevail, with the company offering the best value prevailing. However, when it comes to the situation where other companies can't compete because Sky owns all the content rights then I think it becomes essential that steps are taken to level the playing field by way of regulation.

One thing's for sure... the next year or so will see some very interesting changes in the TV/movies market here in Godzone.

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