The loss of English Premier League soccer to online broadcaster Coliseum Sports Media may signal the end of Sky's virtual monopoly of quality sports content.
An industry source estimated CSM would have paid around $600,000 a year for the rights to broadcast all 380 EPL matches via internet platforms such as smart TVs, iPhones, iPads and android devices. With season subscriptions starting at $149.90, break-even point would be 4000 subscribers.
CSM chief executive Tim Martin did not disclose the value of the company's investment at a press conference yesterday.
"A few", was Mr Martin's response when asked how many subscribers the company would need to make the venture successful.
"What we are going to find out very quickly is how many English Premier League fans there are," Mr Martin said.
Sky's share price dipped yesterday, however chief executive John Fellet isn't expecting too much long-term pain.
Even if CSM picks up the subscribers it required, there was no guarantee they would quit Sky, he said.
Sky's subscriber base had grown to more than 800,000.
Mr Fellet indicated Sky had pulled out of the bidding in third place after it went beyond the networks' maximum value. CSM then outbid free-to-air broadcaster Sommet - which recently captured the rights to the AFL - in the final round of bidding.
"At the rate they paid, I just didn't see a business case," Mr Fellet said. "The easiest thing in the world is to outbid. The tricky part is now that we have the rights, how do we recapture our money?
"I'm a big believer that at a certain price you walk away from anything. You don't want to be the best pay TV operator that ever went bankrupt."
CSM's entry into the market reflected the changing landscape of sports broadcasting, with internet-based specialist packages an increasing factor. NBA basketball and Major League Baseball already offer internet subscriptions in New Zealand.
Its broad base of sports content is its strength, however Mr Fellet indicated Sky would consider adopting a more targeted approach. The network is already testing the waters, offering Saturday's third test between the All Blacks and France through its Igloo platform for a one-off price of $9.95.
Given the high data demands of streaming high-definition content, it appears likely CSM will link with a telco. Early indications suggest Telecom is the preferred partner.
"We've got a point of view of who can deliver the best service for this and who delivers the best internet, and we are in discussions," Mr Martin said. "It's an interesting model for telcos because they are now the content delivery system."
Mr Martin was confident New Zealand's broadband network could support the company's service.
"We have spared no expense in ... the content delivery model. Our technology is mint. It will provide a level of service over the internet that really hasn't been seen before."
While homes with ultra-fast broadband would have no issues watching matches, an industry source questioned whether those with ADSL connections would be able to receive high-definition (HD) content. HD required a download speed of five megabytes a second, while the ADSL download speed was about 4.5mb/s.
Mr Martin insisted homes with ADSL broadband would have no problem viewing matches.
Broadcasts would be streamed at three different speeds to cater for lower-quality connections.
CSM's deal includes the broadcast of one delayed match a week on TVNZ on Sunday afternoons. The free-to-air network will also screen a highlights package.
Footy on the internet
• Coliseum Sports Media, a consortium of four Kiwi businessmen headed by Tim Martin and backed by rich-lister Peter Cooper, has purchased rights to broadcast English Premier League soccer for the next three seasons.
• All 380 matches will be streamed live via internet platforms such as smart TVs, iPhones, iPads and android devices.
• Broadcasts will be streamed at three different speeds to cater for lower-quality connections.
• Subscriptions start at $149.90. A "day pass" will be available for $24.90.
• One delayed-match and highlights package to be screened on TVNZ.