Orcon's FreeMyRugby petition won't cause riots, but it draws attention to the growing trend of sports broadcast bidding wars

  • TV
  • September 18, 2014
  • Damien Venuto
Orcon's FreeMyRugby petition won't cause riots, but it draws attention to the growing trend of sports broadcast bidding wars

Orcon is taking a leaf out of the ‘Politician’s Handbook’ by attempting to mobilise the Kiwi masses through a petition, which aims to break Sky’s hold on the broadcasting rights for live rugby games. 

The petition is hosted at a microsite called FreeMyRugby.co.nz and draws attention to the fact that only New Zealanders with a Sky subscription—available for $74.75 a month on a Sky basic and sport package—are in a position to watch the All Blacks play live ($99.74 refers to more premium packages).  

“Kiwis are fanatical about their rugby and many don’t want to be locked into an expensive SKY subscription to see their favourite games live,” said Orcon’s general manager Michael Shirley in a release. “If you look at comments online or read the forums, you’ll see Kiwis are sick of not having the same options as people living overseas and want to be able to stream games live in HD online.”

In New Zealand, Sky holds exclusive broadcasting rights of all rugby matches from school level right through to international tests. 

But this isn’t the case in various international markets, where rights holders are diversifying the sale of rights by segmenting them across channel lines. In the US, for example, the NFL penned a $1 billion deal for its mobile streaming rights with Verizon Wireless. In addition to this, the NFL also holds more traditional TV deals with News Corp's Fox unit, CBS, Comcast, NBC Universal, Walt Disney, ESPN and DirecTV.

According to the Wall Street Journal, the deal with Verizon is only limited to smartphones, meaning that the TV rights holders are still permitted to stream their content via other devices.  

This unique deal has also come with benefits for consumers, who can access the live NFL games for only $5 per month. Such options are still not available to Kiwis, and Orcon’s head of marketing Jeremy O’Hanlon says the point of the campaign is to help Kiwis voice their concerns in this regard. 

“We love rugby, and think this is important,” says O’Hanlon. “Orcon has long advocated for access to content on the internet so we decided to help Kiwis have their say on this matter that is so close to their hearts. The FreeMyRugby petition allows Kiwis to help persuade the NZR to open up rugby games to live HD online streaming, freeing them from the restrictions of a SKY subscription.”

NZR’s current deal with Sky for exclusive rights is set to expire in 2015, and negotiations are currently underway to determine if these rights will be renewed. 

NZR was questioned on the likelihood of segmenting the sales of its rights, but the comms team declined to comment on account of the negotiations currently taking place. 

Given that Sky last year lost the rights to the Premier League and more recently also lost the rights for certain PGA tournaments, it seems that a continuation of the status quo is no longer a guarantee for the broadcaster.

One thing that Sky does have on its side is the fact that 71 percent of its 865,055 subscribers are signed up to a package that includes Sky Sports.

These numbers offer commercial partners a guarantee of eyes, something that a relatively young streaming market still doesn’t have. And in this sense, the NZR will also have to determine what kind of deal would best support the sponsors, which demand high viewership numbers.    

Furthermore, Sky’s recent financials showed a year-on-year profit increase of 20.9 percent, which indicates that its model is still highly lucrative. 

However, when the results were released, Sky’s head of corporate comms Kirsty Way played down the significance of this jump in profit by saying that Sky’s costs were lower over the course of the last year.

“It’s a good result, although we’d always prefer a higher net gain,” she said at the time. “Costs can’t be looked at for the year in isolation, there are often exceptions (this year appears lower with no Olympic or Commonwealth cost), the following years we expect content as a percentage of revenue to increase.”

And given that a diversified media landscape places NZR in a better bargaining position, Sky will possibly have to fork out extra cash to secure exclusive rights.

The NZR would likely also have kept a keen eye on the Premier League and PGA moves, and will now have to decide if a similar approach could be more rewarding.    

In its annual review for 2013, the NZR said that one of its objectives for 2014 was to “identify and evaluate non-traditional business opportunities”.

Further to this objective, NZR broadcast a live All Blacks game via YouTube in certain countries at the end of last year. And though this experiment was not repeated, it indicated that the organisation is open to using the online channel for commercial purposes.

The willingness of the NZR to segment its broadcast model and sell streaming rights discretely will largely depend on what interested parties bring to the table. 

If a bidding organisation offers something capable of driving profits while increasing viewership, then the NZR would at least be tempted to make such a move.

“Splitting out contracts across broadcast and online should result in increased competition and increased NZR revenue, which we’re all about,” says O’Hanlon. 

And while this is possible, it’s unclear how profitable this would be for the party investing in these streaming rights. 

If the international model were followed in the way that O’Hanlon suggests it would require subscribers to pay around $5 per month for the streaming rights—which in turn would necessitate a huge number of subscribers to render a profit. 

For this reason, several international companies are instead using the investment in streaming rights as a point of difference that aims to attract more users to their services. 

In the UK, British Telecom bundles its Premier League Streaming rights with broadband packages in the hope of attracting the nation’s avid sports fans to the company. 

Similarly, Verizon uses its mobile streaming rights as a means to attract new customers and to extract more money out of existing account holders through increased data usage.

The recent entrance of Lightbox and Coliseum into the market has also contributed to a blurring of the lines between broadcasters and telcos on a local level. And while Spark’s subscription video on-demand (SVOD) service is still only in its infancy, it offers an alternative to the traditional TV model and is already gaining some decent viewership momentum.

From a sporting perspective, Spark’s Coliseum is also starting to increase the level of local competition for Sky. Following on from last year’s win of the Premier League streaming rights, Coliseum also made a bid for the 2015 Rugby World Cup rights and recently confirmed that it bid $6 million to cover Formula 1 for four years.

Coliseum is backed by Britomart developer Peter Cooper, who the NBR’s rich list estimates to be worth about $650 million, and this places the company in a good position to go toe to toe with Sky, which is spent around $289 million on programming across the board last year.    

So, although Orcon’s latest PR stunt is unlikely to trigger a mass boycott of Sky or cause disgruntled fans to occupy Auckland’s Queen Street, it does draw attention to the impact that the changing media landscape is likely to have on the way broadcast rights are sold—and this means that Sky’s hold on sports broadcasts might not be as concrete as it once was.       

As a side note, Orcon's parent company Callplus has also launched a similar campaign called FrontUp, which requires businesses to explain the disparity in price between products sold here and abroad. However, thus far the campaign hasn't gained much traction with most companies not responding to the site's requests for comment. Of the almost 30 products and services reviewed on the website, only a handful of brands, including Samsung, Steinlager and NZ Beef and Lamb, responded.    

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