Consumers could be the winners, and Sky TV the loser, as Australian pay-TV company Fetch eyes a move into New Zealand.
Based on its Australian deals, the company could offer significantly more content than Sky at a cheaper price. In Australia, its most basic packages cost as little as A$6 ($6.45) a month.
Fetch chief executive Scott Lorson says the timing is right. "We have been monitoring the New Zealand market for some time, but we were keen to build out our product suite and achieve scale and profitability in Australia before considering overseas expansion opportunities," he says.
"With those boxes now ticked, we will be aggressively looking at new market opportunities in 2018."
Founded in 2010, Fetch is the second largest pay-TV provider in Australia behind Foxtel, and operates a set-top box model similar to Sky.
As well as offering subscription channels and catch-up services as Sky does, Fetch also has integration with Netflix and streaming video on demand (SVOD) service Stan — similar to Lightbox — and offers the option to rent or buy more than 7000 movies including new releases, and buy TV shows by the episode or by the series.
In Australia, the company has distribution partnerships with three of the top four telcos and most of the major retailers.
Lorson says Fetch has succeeded by investing heavily in technology, and providing "all entertainment in one place".
"Customers now have access to more content than ever, but the user experience in accessing that content has not kept pace," he says. "Fetch has filled that void, and done so with pricing and packaging that the traditional monopoly pay-TV providers simply can't, or won't, match."
Fetch has 650,000 subscribers and is adding 20,000 per month, says Lorson, next to Sky's 779,000. Last year, Fetch added 200,000 subscribers while Sky lost 37,000.
Since it launched in 1987, Sky TV has enjoyed a near-monopoly on the New Zealand pay-TV market, but has lately been bleeding subscribers.
In a bid to stem the flow, last month it announced price changes, offering two new plans including a Starter Pack with 40 channels for $24.91 a month.
Previously, all customers had to buy a basic package for $49.91 a month, then add options such as sport, movies and other premium channels. Sport previously cost fans just under $80 a month for the basic pack and sport add-on, and will cost $54.91 under the new pricing.
Sky TV chief executive John Fellet said he did not wish to comment on Fetch's plans.
Lorson says it is too early to comment on exact pricing or packages, but if Fetch did launch, it would aim to replicate the model it has in Australia.
This is likely to include all free to air channels, Netflix integration and as many channels available on Fetch Australia as possible. Fetch would also look at integrating with Lightbox, and offering local content.
In Australia, the company offers four A$6 ($6.45) packs — kids, knowledge, entertainment and vibe, which includes sports channels — as well as an Ultimate pack combining the four, comprising 50 channels at a cost of A$20 a month.
Compared with pay-TV models where content such as sport or movies is additional to a basic package, Fetch operates on a pay-for-what-you-want model, where customers can choose what they buy without needing a basic pack first.
That could be especially attractive to sport fans: under the Fetch model, they would be able to pay roughly $6.45 a month for sport, compared with $54.91 on Sky.
The obvious catch is that Fetch currently doesn't offer rugby - the main drawcard for Kiwi sports fans.
The company has secured several high profile sporting partnerships in recent years, including UFC and Premier League football.
Lorson would not be drawn on whether he had considered bidding for rugby rights, although Fetch has significant backing from its international parent, so a bid for those rights would not be out of its price range.
The company is 85 per cent owned by Astro Overseas, which itself is owned by Usaha Tegas group — one of the largest telco and media businesses in Southeast Asia.
Fetch has won industry awards for its technology, as well as for its customer service, which Lorson says will help it win customers.
"Certainly, we believe our packaging and pricing would prove extremely attractive in the New Zealand market, but we also seek to differentiate on user experience," he says.
"We're not just trying to be a low-cost provider."
Lorson was formerly the chief executive of Ticketek and ACP Magazines — now Bauer — in Australia and New Zealand.
"In this industry, scale is critical," he says. "Success in New Zealand would give us additional scale in our content discussions and there are clear operational synergies which support the business case.
"It's effectively half-time in the battle. The first half was defined by an explosion and fragmentation in the availability of content, and the second half of the battle will be all about the user experience."
A competitive environment
Competition has been heating up in New Zealand's television and streaming video on demand (SVOD) market, with international players Netflix and Amazon Prime entering New Zealand, and local players such as Lightbox offering more options for customers.
Just last month, Spark-owned Lightbox, which has more than 300,000 subscribers, announced that it was launching pay-per-view movies on demand.
The service will allow anyone to rent new releases as well as a library of older movies without a subscription and regardless of whether they are a Spark customer.
Pricing has yet to be confirmed, but it is understood that new releases would cost about $7, and less for older movies.
This is in addition to Lightbox's SVOD, which is available free for some Spark customers or for $12.99 a month.
Netflix offers a wider range of TV series as well as some movies, but only those that are at least two years old, due to screening rights.
Its cost ranges from $11.49 to $18.49 a month, depending on the number of screening devices.
Spark also offers a Netflix subscription for users on certain broadband plans, and Sky TV chief executive John Fellet has previously had talks with Netflix about a partnership.
Sky's own SVOD service, Neon, has a selection of movies and TV shows including local content, but analysts say it has been slow to gain traction, and at $20 a month it is more expensive than its competitors.
Starter package (24 premium channels plus free to air, no sport or movies): $24.91 a month. Neon video on demand service and Box Office movies at extra cost.
Ultimate package (50 premium channels, including sport, plus free to air): A$20 a month. Movies and TV series available to rent or buy per movie, episode or series. Integration with Netflix, Stan (Lightbox equivalent) at extra cost.
650,000 (Australian) subscribers.
Unlimited streaming of TV series and some older movies. Minimum: $11.49 a month.
434,000 subscribers (reach of 1.2 million).
Movies and TV shows: $20 per month.
(Subscriber numbers not disclosed)
Unlimited streaming of TV shows: $12.99 a month. Launching Lightbox Movies (rental service) this year.