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Amazon to buy Sky TV NZ?

22 November 2018

Just about every Kiwi loves to hate Sky TV.

For decades, Sky TV has held NZers to ransom after obtaining a near-monopoly in the subscription TV market throughout the country. If you wanted to watch pay TV, Sky was usually your only option.

Although things started well enough, with a monthly subscription meaning you got to watch several channels of uninterrupted content without advertising, the corrupting influence that is a monopoly stranglehold on any market soon began to kick in.

Most channels began to carry ads and the best content was shifted to "premium" channels which carried an extra cost as Sky tightened the thumbscrews on subscribers.

Even those Sky customers who felt that they'd had enough were forced to stay... if they wanted to watch key sports events that Sky had cleverly tied up the rights for.

Rugby, cricket, Formula 1, Supercars, Netball... many of NZ's most popular sports were only broadcast live on Sky so even when other subscription-based providers of movies and TV programs began to appear, Sky's vise-like grip was still strong.

Even so, Sky has been losing customers very rapidly over the past couple of years, most likely due to the effect that Netflix has had on those who seek only some good old evening entertainment.

To try and arrest the subscriber-flight, Sky rejigged its pricing structure a little and offered "fan passes" which give temporary access to various sports events.

Alas, this was to little avail and the exodus continues.

There has been much speculation that if Sky loses the screening rights for the crucial sporting codes that allow it to maintain a monopoly in this market sector, the company will be done-for. And, with the announcement that Spark had outbid Sky for some key sporting rights, it would appear as if we're seeing the beginning of the end for the former monopoly that is Sky TV.

Now, as if to add fat to the fire, Amazon has gone on a sports-rights shopping spree in the USA and has been seen to be bidding heavily to purchase 22 cable TV sports channels to beef up its own sports offerings.

Perhaps the speculation that Amazon could buy key sports rights right here in New Zealand have some substance after all.

In fact, I believe we're going to see something very interesting happening in our sports and entertainment broadcasting/streaming market sometime over the next 12 months.

In the UK, Sky TV UK did a deal with Netflix to effectively carry Netflix programming on its own broadcast networks and to sell subscriptions to that service.

Look for something very similar to happen here (if Sky's board has its head screwed on properly). I'm betting that we'll either see Sky TV NZ teaming up with Netflix... or we'll see an offer from Amazon to purchase Sky TV NZ outright, thus giving them access to sporting rights and (perhaps more importantly) locking Netflix out of any form of "deal" with the broadcaster.

All the parties I've mentioned have a sound awareness of the importance that market dominance and defacto monopoly status has in driving profits. Far better to spend hard and become that dominant or monopoly provider than to waste money trying to compete for a "share" of that same market.

I'd love to hear from readers on this. What do you think?

Is there a pretty good chance that we'll see Sky TV NZ either teaming up with or receiving a buy-out offer from Netflix or Amazon sometime in the next year or so?

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