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Chris Barton 's Opinion

Technology columnist for the NZ Herald

Chris Barton: Confusing times at Telecom

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Telecom chief executive Simon Moutter. Photo / NZ Herald
Telecom chief executive Simon Moutter. Photo / NZ Herald

So Telecom is to become Spark, launch ShowMeTV and become "the Netflix of New Zealand".

What a confusing confluence. Yet so typical of a company that has made an art form of shooting itself in the foot as it forays into our lives. Think the XT mobile fiasco, the "confusion as marketing tool" gaffe, the Xtra Go Large rort, the Yahoo!Xtra Bubble farce, the AAPT disaster, the over counting cock-up the "Abstain for The Game" ad blunder and ongoing email failures to name a few.

Little wonder the company wants to change its name and shed decades of consumer outrage baggage that has seen it routinely dubbed "telecon" and much worse.

Telecom chief operating officer Jason Paris tells us the name change is "an acceleration of changes" it has already made in a new direction.

Apparently the idea developed internally because Telecom's asterisk scribble logo created in 2009 is affectionately know as the "The Spark" by Telecom staff. Odd, because it has always reminded me of splattered bird guano on a car windscreen.

Still, good luck to them, although things haven't exactly got off to a sparkling start. Commentators have pointed what you get if you spell Spark backwards. News of the announcement was greeted with a share price drop and there seems to be host of other companies already using the name.

"Herein lies ShowMeTV's greatest challenge - getting the right content to be taken seriously."
Chris Barton

Far more intriguing is Telecom's, er Spark's, plans for ShowMeTV and chief executive Simon Moutter's goal to become the Netflix of New Zealand. It's the kind of sweeping statement laced with swaggering arrogance we've come to expect of Telecom ceos. Yet it reveals precisely the opposite - that Moutter is already in short circuit territory.

First, despite Netflix not being officially available here, New Zealand already has quite a few Netflix subscribers. Quite how many we don't really know, but given that Australia has at least 20,000, it's probably reasonable to guess it's around 4,000-5,000.

Not huge, but a number likely to grow especially as more providers like Orcon and Slingshot make it easy to bypass the infuriating corporate geoblocks that restrict New Zealanders access to internet content.

This is the impatient vanguard of consumers here, many of whom have already watched, in binge viewing mode, the second season of House of Cards, while the most of us have only just seen the first episode of season one on TV3.

Secondly, Netfix has 44 million subscribers, some 10 million of whom are outside the United States, making it quite a force and certainly in a different league to Telecom.

Thirdly, to play in the subscriber video on demand (SVOD) space, ShowMeTV will need SVOD rights to movies and compelling TV shows like Netflix's House of Cards and Orange is the New Black or HBO's Game of Thrones and True Detective. As we all know Sky has the HBO content rights pretty well sewn up and is much better placed than Telecom to launch its own Netflix-style internet-based service using its SkyGo app and integrating it with MySky decoders.

Indeed, Sky's John Fellet has told NBR that the company is seriously looking at just such a possibility. Fellet argues such a service is unlikely to overly cannibalise Sky's existing pay-TV subscribers because, as seen in the UK, 80 per cent of all the Netflix subscribers there also take the pay-TV service BSkyB.

"...one can imagine some public outcry if the state broadcaster put some of its niche appeal TV shows behind a paywall."
Chris Barton

Fellet points out that MediaWorks and TVNZ are also looking at a Netflix-style service through their respective on-demand apps - and that both have trialled delivery of on-demand content via broadband through MyFreeview boxes. Then there's Quickflix, which is already functioning with a $14.99 per month subscription service and a not insignificant TV and movie play list.

Quickflix also has something vital to success in the New Zealand market has - seamless TV connectivity with its app embedded in Sony, Panasonic and Samsung TVs as well as a proposed MyFreeview app.

There are however a few signs that Telecom is serious about SVOD. In sports mad New Zealand, its partnership with Coliseum for English Premier League football makes sense.

There are also rumours that Telecom may have bought its first TV series - Vikings, described by a New York Times reviewer as "a mini-series about a band of professional pillagers with a disregard for human life and a relentless focus on gratifying material desires."

It sounds promising but is unlikely to having the pulling power of Game of Thrones. Herein lies ShowMeTV's greatest challenge - getting the right content to be taken seriously. One solution might be a partnership with TVNZ, thereby getting access to a range of Warner and Disney first-run rights. There's no doubt the state broadcaster wants to get into this space - see its underwhelming efforts with TiVo and Igloo.

It's worth noting that both companies share the same building at present and that Moutter and TVNZ ceo Kevin Kenrick, a former Telecom executive, are likely to have good rapport. But one can imagine some public outcry if the state broadcaster put some of its niche appeal TV shows behind a paywall. Yet that's exactly what TVNZ did with much of its back catalogue which is only available on Sky via its Heartland channel.

The other aspect of ShowMeTV's future that's unclear is the mechanism to throw TV content via WiFi from laptops or mobile devices for viewing on HD TVs. Sky has suggested it will get round this issue via a "dongle" plugged into a TV's HDMI port and one imagines ShowMeTV will do the same - perhaps giving the dongles away for free.

The leading force in this realm is Google's Chromecast, a US$35 thumb-sized device which works across multiple platforms and competes with other "over-the-top" devices like Apple TV Airplay.

Chromecast isn't here yet, but no doubt it will be one day, making life for NZ consumers - which dongle? - somewhat confusing. There's a long way to go before such a marriage between TVNZ and Telecom is consummated, but on the face of it, it could be a marriage made in heaven.

Then again, given the propensity for both these organisations to blunder - TiVo, Igloo and the fake abuse messages fiasco just a few TVNZ examples - it could be a marriage made in hell.

Chris Barton

Technology columnist for the NZ Herald

Chris Barton is a freelance writer with 28 years experience in newspapers and magazines. He's been writing about technology since 1986, was the founding editor of New Zealand PC World and has won numerous media awards, including, in 2009, journalism's top prize, the Wolfson Press Fellowship to Cambridge. He has a Master of Architecture, teaches part time at the Auckland School of Architecture and is an architecture critic, winning, in 2014, the Canon Media Awards Reviewer of the Year.

Read more by Chris Barton

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