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10-10-2019, 01:21 PM
#1451
If you believe that all content providers are going to go direct to consumer for entertainment then yes, Sky will be doomed. They are a content aggregator after all - so if nobody is willing to sell them content they do not have a business.
It is far from clear whether this doomsday scenario will evantuate however. With Netflix, Disney+ and the new Apple TV service...the small NZ market is already saturdated with OTT SVOD providers. Kiwis who will enjoy Netflix, Disney and Apple content but also enjoy Showtime/HBO/FX etc will need to subscribe to NEON, Netflix, Disney+ and AppleTV+. That is already a lot of services to navigate between.
And it is yet to be seen how successful Disney and Apple are in NZ. Disney has some great content, but how many people will be willing to sign up? Their starting price is very cheap, but that just means they have to get a huge amount of subscriptions to justify their business model (versus the reliable income stream they had from Sky).
So with the market already saturated, does HBO keep going with Sky or do they go direct too with HBO Max? I can't know their thinking, but it is not clear to me (as it seems to be for some posters) that they will certainly break their relationship with Sky when their current deal expires in a few years time.
And with regards to sport... despite Martin Stewart's 'tough talk', Sky was never ever going to be able to outbid Spark for all A-List sporting content. It shouldn't really be a surprise.
John Fellet has pointed out on a number of occassions that winning content is the easiest thing in the world. Just keep doubling your offer and you eventually win! Except you don't actually win, if you pay way over the odds you ultimately lose.
No matter how wonderful a piece of content is, nothing is worth an infinite price. I suspect Spark have paid significantly over the odds again (like they did for RWC). The RWC has been a large financial loss to them, and I think cricket will be the same. There just won't be enough cricket fans in NZ with good enough internet speed willing to purchase a subscription from them to break even.
Sky will be bidding hard for key rights, but they will still have a line they cannot cross. A line where you are better off letting the other guy have it. And with their vast amounts of viewership data, I believe they are in the strongest position to ascertain how much each piece of content is really worth.
And, finally, missing out on NZ Cricket is far from ideal...but it does free up more cash to bid for other content. Spark will have given Spark Sport a generous budget to win sporting rights...but it will not be an infinite pool of money. SPK shareholders must also be wondering just how much of their money has been pumped into cricket, given their SP has also fallen by 1.63% ($137,778,370 off their market cap - approx double Sky TV's drop).
Last edited by mistaTea; 10-10-2019 at 01:35 PM.
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10-10-2019, 01:29 PM
#1452
![Quote](images/misc/quote_icon.png) Originally Posted by KiwiBuffett
Not all us watch or care about rugby/cricket, I too jumped on the cable cutting bandwagon last year and cancelled Sky and just went with Netflix and Youtube Premium, however I found myself missing all the channels I use to watch on Sky like ESPN, Discovery, CNBC, MTV, TLC, Fox, Comedy Central, plus a few others.. so I just re-subscribed and got all that again for under $100 a month which is still a good deal relevant to the hours of entertainment/information i'll get.
The only thing I didn't get again was the movies package as I'll use Netflix for that, but other than Movies and potentially sport into the future, Sky is still the place for Kiwi's to get a lot more quality content, especially the baby boomers who will be watching a lot of TV as somebody else here mentioned, also most business/hotel contracts will continue. Streamers will continue to grow and have stolen market share no doubt and Sky has deserved to be re-priced downwards in recent years, but it's overdone imo and the streamers won't own 100% of the kiwi TV content market, so there will still be a place for SKY entertainment for many many more years into the future imo.
For the penny pinchers out there I understand it still looks overvalued vs cheap streaming services who will be increasing their prices over the coming years anyway, and for sports fanatics just using Sky for rugby/cricket I understand spark could be looking better into the future but at the end of the day I look what I spend on an average lunch/dinner out and then think what's an extra $100 per month for way more quality content choice compared to the limited library of dated content on streamers and low quality of youtube content.
I'm long SKT and picked up a few more shares today, excellent valuation here imo.
Welcome to the forum. I get SKY basic, plus SKY entertainment (which is all their documentary and news channels and CNBC) and sky movies for $72.33 per month.
I own my My sky box so I can record and watch when I like in high definition and fast forward through the advertisements at 30x normal speed. Comes with high definition for free now and I think I get SOHO for free as well but I never watch it. Value isn't too bad in my opinion. There's only a limited amount of content on Netflix. Sport is vastly overrated, I wouldn't even pay $10 a month for it. Like you I think the model is durable for many years but if the new muppets running the show are going to throw VAST resources at sport and fail to understand that many people subscribe for reasons other than sport, then I think shareholders are on a one way hiding to nothing.
Last edited by Beagle; 10-10-2019 at 01:32 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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10-10-2019, 01:35 PM
#1453
![Quote](images/misc/quote_icon.png) Originally Posted by KiwiBuffett
Not all us watch or care about rugby/cricket, I too jumped on the cable cutting bandwagon last year and cancelled Sky and just went with Netflix and Youtube Premium, however I found myself missing all the channels I use to watch on Sky like ESPN, Discovery, CNBC, MTV, TLC, Fox, Comedy Central, plus a few others.. so I just re-subscribed and got all that again for under $100 a month which is still a good deal relevant to the hours of entertainment/information i'll get.
The only thing I didn't get again was the movies package as I'll use Netflix for that, but other than Movies and potentially sport into the future, Sky is still the place for Kiwi's to get a lot more quality content, especially the baby boomers who will be watching a lot of TV as somebody else here mentioned, also most business/hotel contracts will continue. Streamers will continue to grow and have stolen market share no doubt and Sky has deserved to be re-priced downwards in recent years, but it's overdone imo and the streamers won't own 100% of the kiwi TV content market, so there will still be a place for SKY entertainment for many many more years into the future imo.
For the penny pinchers out there I understand it still looks overvalued vs cheap streaming services who will be increasing their prices over the coming years anyway, and for sports fanatics just using Sky for rugby/cricket I understand spark could be looking better into the future but at the end of the day I look what I spend on an average lunch/dinner out and then think what's an extra $100 per month for way more quality content choice compared to the limited library of dated content on streamers and low quality of youtube content.
I'm long SKT and picked up a few more shares today, excellent valuation here imo.
i hope its your popcorn money and not your retirement funds
one step ahead of the herd
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10-10-2019, 01:35 PM
#1454
Member
![Quote](images/misc/quote_icon.png) Originally Posted by mistaTea
c will need to sunscribe to NEON, Netflix, Disney+ and AppleTV+. That is already a lost of services to navigate between.
Yeah if you subscribe to all services simultaneously then the cost adds up, but with no contracts you don't need to have them all at once. We had lightbox, binge watched everything we needed to and cancelled it, then did the same with Neon. We've had Netflix permanently and will have Disney permanently. The content on Neon/lightbox and SKY for that matter isn't refreshed frequently enough that I want it full time, and I definitely don't want to be locked in to a 12 month contract.
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10-10-2019, 01:36 PM
#1455
Sky still hold rights to Australian Cricket (Which includes the NZ tour) and apparently (so I'm told) overseas Black Cap games... So fans will now have to buy both... (or neither)
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10-10-2019, 01:39 PM
#1456
Member
![Quote](images/misc/quote_icon.png) Originally Posted by KiwiBuffett
Not all us watch or care about rugby/cricket, I too jumped on the cable cutting bandwagon last year and cancelled Sky and just went with Netflix and Youtube Premium, however I found myself missing all the channels I use to watch on Sky like ESPN, Discovery, CNBC, MTV, TLC, Fox, Comedy Central, plus a few others.. so I just re-subscribed and got all that again for under $100 a month which is still a good deal relevant to the hours of entertainment/information i'll get
You're right in that most Boomers won't adapt easily to the streaming market and there is still a lot of benefit in being an aggregator of content - but - question how long that will last. ESPN majority owned by Disney and they have their own SVOD service in the US. Content producers have realised that there is more money to be made in direct to consumer SVOD platforms than long term distribution deals. SVOD gives them the ability to operate internationally at scale relatively inexpensively.
I just don't think this business is future proof at all and don't see why anyone would invest in it
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10-10-2019, 01:43 PM
#1457
Junior Member
Quality insights @mistaTea and I agree, it's good to see SKT management with some capital prudence instead just bidding endlessly to secure everything, it's ok to let some things go and let the other guy overpay, could work out good in the long run anyway. And yes all these new streaming services have yet to be proven, there's bound to be a few losers which will upset lots of customers and shake confidence, then everything will be so fragmented having everything bundled up into one package will make sense again and there will always be content studios who don't distribute direct to consumers who can sell to Sky.
The current direction of the market and opinion on TV is like we would have to go to a different shop for your fruit, your vegetables, meat, wine, packaged goods, frozen goods, etc... you can do this for specific needs or you could just go to a supermarket. The reality is most markets are complex in nature and niche providers and aggregators will always exist in some shape or form imo.
Last edited by KiwiBuffett; 10-10-2019 at 01:44 PM.
Reason: update
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10-10-2019, 01:47 PM
#1458
Member
![Quote](images/misc/quote_icon.png) Originally Posted by mistaTea
If you believe that all content providers are going to go direct to consumer for entertainment then yes, Sky will be doomed. They are a content aggregator after all - so if nobody is willing to sell them content they do not have a business.
It is far from clear whether this doomsday scenario will evantuate however. With Netflix, Disney+ and the new Apple TV service...the small NZ market is already saturdated with OTT SVOD providers. Kiwis who will enjoy Netflix, Disney and Apple content but also enjoy Showtime/HBO/FX etc will need to subscribe to NEON, Netflix, Disney+ and AppleTV+. That is already a lot of services to navigate between.
And it is yet to be seen how successful Disney and Apple are in NZ. Disney has some great content, but how many people will be willing to sign up? Their starting price is very cheap, but that just means they have to get a huge amount of subscriptions to justify their business model (versus the reliable income stream they had from Sky).
So with the market already saturated, does HBO keep going with Sky or do they go direct too with HBO Max? I can't know their thinking, but it is not clear to me (as it seems to be for some posters) that they will certainly break their relationship with Sky when their current deal expires in a few years time.
And with regards to sport... despite Martin Stewart's 'tough talk', Sky was never ever going to be able to outbid Spark for all A-List sporting content. It shouldn't really be a surprise.
John Fellet has pointed out on a number of occassions that winning content is the easiest thing in the world. Just keep doubling your offer and you eventually win! Except you don't actually win, if you pay way over the odds you ultimately lose.
No matter how wonderful a piece of content is, nothing is worth an infinite price. I suspect Spark have paid significantly over the odds again (like they did for RWC). The RWC has been a large financial loss to them, and I think cricket will be the same. There just won't be enough cricket fans in NZ with good enough internet speed willing to purchase a subscription from them to break even.
Sky will be bidding hard for key rights, but they will still have a line they cannot cross. A line where you are better off letting the other guy have it. And with their vast amounts of viewership data, I believe they are in the strongest position to ascertain how much each piece of content is really worth.
And, finally, missing out on NZ Cricket is far from ideal...but it does free up more cash to bid for other content. Spark will have given Spark Sport a generous budget to win sporting rights...but it will not be an infinite pool of money. SPK shareholders must also be wondering just how much of their money has been pumped into cricket, given their SP has also fallen by 1.63% ($137,778,370 off their market cap - approx double Sky TV's drop).
Great analysis here and largely agree a part from the following points:
- Spark don't need to operate Spark Sport above water, and comparing their Market Cap drop to Sky's is misleading because of the size difference of the two companies. I'd be quite happy to see Spark Sport operating as a loss leader for the telco business. They are catching the wave in the right direction and that's all that matters at the moment.
- Saying that SKT now have more money free for other content is a bit of a fallacy because more money with less premium content available to throw it at is not a good thing - throwing a lot of money at 1.5 or 2nd tier sports is not going to be SKT's saviour.
I don't think the rats and mice channels will be enough to keep SKT afloat, premium drama and premium sport are what will do it and that looks less and less likely
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10-10-2019, 01:48 PM
#1459
Member
![Quote](images/misc/quote_icon.png) Originally Posted by KiwiBuffett
The current direction of the market and opinion on TV is like we would have to go to a different shop for your fruit, your vegetables, meat, wine, packaged goods, frozen goods, etc... you can do this for specific needs or you could just go to a supermarket. The reality is most markets are complex in nature and niche providers and aggregators will always exist in some shape or form imo.
That is a perfect analogy, and the exact thing SKY did wrong. A supermarket has everything in one place but lets you choose what you buy. Sky makes you pay for brocolli, hummus and tampons when all you want is a box of beer.
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10-10-2019, 01:51 PM
#1460
Junior Member
![Quote](images/misc/quote_icon.png) Originally Posted by Beagle
Welcome to the forum. There's only a limited amount of content on Netflix. Sport is vastly overrated, I wouldn't even pay $10 a month for it. Like you I think the model is durable for many years but if the new muppets running the show are going to throw VAST resources at sport and fail to understand that many people subscribe for reasons other than sport, then I think shareholders are on a one way hiding to nothing.
Thank you and glad to be here, and I agree 100%. Management can't bend over to a small group of sports fanatics, there's a lot more going on here and yes capital allocation and execution will be key. It's actually nice to see them turn down a bad number, instead of acquire at any cost, shows some discipline to the numbers. The future for Sky may not even involve sports, let's see how Spark sports goes I guess. Either way there's still a huge subscriber base, brand value and future for Sky as a aggregated content provider. I can easily see myself still being a subscriber and shareholder 10 years from now.
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