Monday 24 February 2014


NZ's big telco, Telecom, is pushing into Internet TV; the Spark rebranding signals the change. @JamesMeager asked what I thought about it.

Setting up a streaming TV/Movie service in New Zealand has huge fixed costs relative to the size of the market. Quickflix streams within NZ for $15/month, about what Netflix + Hola! Premium costs, with a smaller range of content than Netflix but with rather a few titles that Netflix doesn't have. They supplement it with pay-per-view access to recent films. Their 2013 Annual Report lists operating costs just north of $11 million, including all the costs of their DVD-by-mail service and digital content fees, for about 100,000 customers. Telecom says they're going to spend $15 million next year buying content.

There are plenty of folks who haven't signed up to Netflix because figuring out Hola! has proved a bit too tough or because they don't want to list a US Zip Code. So there's a large potential market of people who haven't figured out Netflix. But since, at least initially, Spark's ShowMeTV service will be running through your browser rather than via a set-top box or a dedicated app in your TV, their market would be those folks happy to watch TV or movies on their laptop or tablet, and those few people who have been able to figure out how to hook their computer up to the TV but who haven't been able to figure out Hola, and those whose TVs have a decent inbuilt browser app. That's the same market Quickflix is serving (barring the DVD-by-mail part). ShowMeTV would have one strong advantage over Netflix: the technical hurdles for streaming Netflix from NZ using your TV's inbuilt browser are much higher than streaming something that isn't geoblocked.* And, they're working on an HDMI port dongle.

The Herald cites unnamed analysts saying ShowMeTV's success would depend on lining up content like Game of Thrones or Breaking Bad. I'd be surprised if they could buy the rights to that kind of content on their current budget, but I'm also not sure it would be critical: just having a great stable of on-demand shows that are better than anything currently playing on TV can worth a subscription. CEO Simon Moutter addresses this in his NBR AMA; they'll be building up content.

Paul Brislen notes a few interesting features. I'd expected that Spark's offering would be a top-up for subscribers to their broadband packages; Brislen says ShowMeTV won't be restricted to Spark broadband subscribers.

I won't be subscribing unless they're offering a better content selection than Netflix. I'm pretty price insensitive: I'd be happy paying three or four times what Netflix is charging for a substantially augmented content package. But I expect I'm not ShowMeTV's current target audience.

* I doubt you could run the Hola! plug-in using your smart TV's inbuilt browser; you'd then need to move to router-level solutions.

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