‘One in five people are likely to drop their Sky subscription in the next 12 months’ – Lightbox chief executive Kym Niblock

At a presentation held yesterday, Lightbox chief executive Kym Niblock said that recent research conducted for the SVOD provider indicated that a fifth of current Sky subscribers said they were likely to leave the service after the Rugby World Cup and one in four are likely to add a streaming service in the near future.  

“Moving away from Sky TV to an SVOD provider or to free services such as YouTube means there is $100 or $150 (per month) which can potentially be freed up,” says Niblock. “These folk are making decisions on what they think is right for their families.”

This statement resonates with its research, which shows that 40 percent of those who have cancelled their Sky subscriptions did so because the service was too expensive. 


But Sky’s director of communications Kirsty Way is skeptical about the figures quoted by Lightbox. 

“Of course there will be some customers who leave after the World Cup, but those numbers are outrageous,” Way says.

Way argues Sky continues to have a very strong TV business of more than 800,000 subscribers and that the validity of these claims should be measured against Sky’s annual report released in February next year.

Sky’s latest AGM report said that the company expects an 11 percent drop in profits in the 2016 financial year due to investment in new products and increased programming rights costs associated, in part, with the Rugby World Cup. 

Profits were expected to sit at between $153 million and $158 million in the year ending June 30 2016, down from the $172 million it reported this year.

And while this is a sharp dip, Way says the TV broadcaster is investing heavily in digital to prepare for the future, with the rollout of its broadband offer planned for 2016.    

SKY On Demand | Launching soon

SKY On Demand, launching this summer. For all SKY customers.

Posted by SKY TV on Friday, 18 September 2015

Way also pointed out that Lightbox’s research seemed specifically aimed at Sky, but Niblock said yesterday that this wasn’t the case.      

“That wasn’t really the purpose of doing the research – it was just a by-product of what we found out at the same time,” Niblock said. 

She said Lightbox conducted the research to gain a better understanding of the changing media consumption habits of New Zealanders. 

“We decided to do some research, because quite early on, it seemed the early adopters had been picked off. And we actually needed to change our style and language when talking to the mass majority. And so, we set out to do a piece of work that set out to find out what people know about it in New Zealand.”

One thing that is clear about the research, which was conducted by Perceptive Research* (see demographic breakdown below), is that Sky subscribers aren’t only sticking to their paid services, with the research showing that 56 percent of Sky subscribers surveyed use TVNZ Ondemand and 48 percent use 3Now. 

As is to be expected, Netflix led among the SVOD services attracting 18 percent of current Sky subscribers, followed by Lightbox on 13 percent. Neon and Quickflix were further behind on two percent apiece.

It is, however, worth noting that Sky initially launched Neon with the aim of winning new subscribers who didn’t use its subscription services and also that Lightbox is still benefitting from giving all 600,000 of Spark’s broadband customers a year’s free access to the service. 

“What we found was that the average Kiwi watches about three hours of TV a day,” says Niblock. “Within that three hours was a significant change. Traditionally, people were watching those three hours on free-to-air TV, but what’s happened over a period of time is that it has started to be encroached upon by these other services, whether paid or free.”

She says that additional research commissioned by Lightbox suggests that linear television viewing has dropped significantly due to the emergence of online alternatives.   

“All linear channels in New Zealand, whether they’re free to air or subscription are down by 40 percent year on year. That’s just come out of other work that we’ve done.”

A TVNZ spokesperson says no one at the organisation is aware of any research showing such significant year-on-year drop and points to Nielsen’s data showing that total average TV audiences for the period running between January and September are down only 6.2 percent on the numbers recorded over the same period last year.  

“It’s important to note there is a difference between surveying people and asking them how much TV they think are watching compared to Nielsen’s Television Audience Measurement data which monitors actual TV viewing behaviour,” says the spokesperson. 

Lightbox’s research is also at odds with Nielsen’s multi-screen study released earlier this year, which said that 92 percent of New Zealanders watch an average of 20.5 hours of television a week on their home TV sets.


“[Our research] doesn’t gel with what we hear from the free-to-airs, but it does gel with what we know is tanking in the advertising market,” says Niblock. “So, somewhere in there is the truth. Look, it’s probably not 40 percent but there’s something going on.” 

Niblock says there has also been the emergence of two separate peak hours over the course of an evening, during which consumers behave very differently. 

“What they’re finding is that there’s a leanback model, which is when people come home from work, watch the news, find out what happened with the All Blacks and watch My Kitchen Rules or X Factor. And that’s while I’m feeding the kids, doing the washing and getting ready for tomorrow. But then there’s a period in the evening that’s more lean forward, and it’s about watching what I want. It’s about watching Seinfeld, Game of Thrones, where people are making a choice to cut out time.”

The maturation of the digital video market has also led to Lightbox changing its approach to marketing its products (and even moving away from using the term binge-watching, which she says has negative connotations and focusing more on using the the more inclusive term television instead of online streaming). 

“When we first started marketing Lightbox, we marketed all our hero titles, like Better Call Saul. What we’ve found now that we’re a year old is that we’ve had to flip our marketing to hub content. Hub content is the Inbetweeners or Seinfeld. It’s those things that are bringing people to the service. It’s interesting that we’re having to rethink how we position ourselves and talk to people, in that we now have to talk to them about what they know rather than what they don’t know, whereas our first route was to point out all the new stuff.”

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Marketing its products will become increasingly important to Lightbox as free user subscription perks start to come to a close over the next few months.

“Clearly we can meet the [content] need [of consumers], but what we’re looking to find out is whether we can get people to pay for it and this is something we’ll find out over the next few years.”

The emphasis on Sky is important for Lightbox, because its subscribers comprise a group who are already comfortable paying for content if they deem it worth the investment. And because Kiwi viewers are starting to dabble in online TV, it presents an opportunity for Lightbox to snap up customers who might see Sky as being too expensive.

And while Niblock admits that one of the major advantages of SVOD services is that they don’t have advertisements, she is not completely averse to the idea of incorporating advertising onto Lightbox in the future (Lightbox Sport does, after all, already feature advertising).    

“I personally am very interested in advertising,” she says. “What people told us is that they don’t have a problem with advertising. What they have a problem with is rude and intrusive advertising—advertising that makes the assumption that they have to watch things to get what they want. And when you spend time talking to people, they understand of the quid-pro-quo transaction of watching something to get what I want, but what they really object to is being forced to continually watch things … We don’t plan to start stuffing ads all over Lightbox, but advertising could certainly be something we consider in the future.”

Whether Sky does in fact lose a large chunk of its subscribers or whether Lightbox does introduce advertising is yet to be seen. But one thing that is certain is that competition will continue heating up as the various players in the TV space continue grappling for those three hours of TV time that Kiwis spend on average every day.      

* Perceptive Research surveyed 500 New Zealanders with the intention to assess SkyTV current and unsubscribed customer opinions with an emphasis on sport. The margin of error was 4.5 percent. 

Here’s the full report from Lightbox:

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