Sky confirmed on the stock market this morning the purchase of Lightbox.

A statement says the pay TV broadcaster has entered into a conditional agreement to buy the streaming service from Spark, which first launched the service in 2014.

The deal is conditional on commercial, legal and regulatory approvals as required, and Sky and Spark anticipate completion by early 2020.

Neither Sky nor Spark have disclosed at this stage how much the deal is worth.

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The deal enables Sky to merge Lightbox with its own entertainment streaming service Neon.

"Sky will bring our Neon service together with Lightbox during 2020 to offer New Zealanders an outstanding range of entertainment content from New Zealand and around the world in a proudly kiwi way," said Sophie Moloney, Sky's chief legal, people and partnerships officer.

Lightbox was launched by Spark in 2014. Photo / File
Lightbox was launched by Spark in 2014. Photo / File

"With the increasing arrival of the mammoth global players in the New Zealand market, the purchase of Lightbox allows Sky to offer an enhanced, highly appealing and competitive entertainment service, delivered by kiwis to kiwis.

The move comes off the back of the arrival of Disney Plus in the local market, which led to Sky losing the Disney and Disney Junior channels from November 30.

Sky says the new service will combine the best features of Neon and Lightbox.

Asked what the move would mean for Spark subscribers who get Lightbox as part of a package deal, a Spark spokesperson said there would be no immediate changes,

"We'll be in touch in the new year with customers to explain the process, but the intention is to ensure that customers who use Lightbox have a smooth transition through from being a Lightbox customer with Spark through to the new service on Sky," the spokesperson said.

"Of course, if there are changes to your plan in future, you will always have at least 30 days' notice and the option to cancel your contract."

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Spark's Marketing Director, Matt Bain said he was happy to have found an ongoing home for Lightbox.

"Following the completion of the deal, we'll be working closely with Sky to ensure that all existing Lightbox fans have a positive experience through this transition period, and we look forward to partnering with Sky to offer the enhanced new service to Spark customers," Bain said.

An independent survey conducted by Horizon Research earlier this year revealed that 636,000 New Zealanders had access to Lightbox, compared to 251,000 to Neon.

Netflix was the most widely used SVOD, with 2 million Kiwis having access to the service.

These numbers do not, however, indicate the number of individual subscriptions, given that one subscription could be used by multiple people and even across multiple households.

Spark has been seeking expressions of interest for investment or partnership with its Lightbox since the beginning of the year.

In March, the company announced it was on a global hunt to find either local or international parties interested in investing in the streaming business.

The decision to sell Lightbox sees Spark depart the entertainment space, but the company remains committed to sports streaming through its Spark Sport service, which recently held the rights to the Rugby World Cup.

Spark also has Formula One, English Premier League Football in its portfolio for the next three years, plus WTA tennis, the World Rally Championship, FIH Hockey and a portion of US basketball content.

Questions remain

Forsyth Barr senior analyst Matthew Henry says it's difficult to gauge the impact of the deal without further information.

Even if Spark and Sky had disclosed the sale price, Henry says the value of the deal would still depend on how much Spark had invested in Lightbox over the years and what its continued involvement with Lightbox would entail in the coming months.

Henry did, however, add that consolidation between Neon and Lightbox did seem to make sense at a strategic level, given the pressures of the streaming market.

"With Netflix, Amazon and Disney, there's really only room for one local player," he said.