Spark looking for partner to grow Lightbox

Spark MD says Lightbox's continued success will require ongoing investment. Photo / 123RF

Spark New Zealand is seeking expressions of interest for investment or partnership with its Lightbox streaming video service, which operates separately from the recently-launched Spark Sport.

The country's biggest telecommunications company wants to focus its own content spend on streaming sports broadcasting, but also wants to cash in on the strength of the Lightbox brand, which is second in the New Zealand market for streaming video content after global provider Netflix.

It has an open mind about whether that means taking on a major content partner or a new shareholder

Lightbox has 355,000 subscribers and Spark says the streaming service has been an effective part of a bundled package to customers - although it won't say how many of the 355,000 get the service free by dint of being a Spark broadband customer, and how many pay for it. Spark has around 700,000 broadband customers who qualify for Lightbox free.

Spark will appoint an adviser for the global hunt, which is open to local and foreign firms.

"We believe that Lightbox's continued success will require ongoing investment, especially in content. Spark is therefore seeking to work with an existing media player to leverage their entertainment content with the strong marketing and distribution platform that we have built already with Lightbox," marketing director Matt Bain said in a statement.

"Given strong competition for the best shows, it makes sense to partner so we continue to secure the quality line-up they've become used to."

Industry insiders suggest a tie-up with Disney, Sony or another global content house could make sense.

The proliferation of online streaming video has driven up the cost of content as firms such as Netflix and Amazon Prime build up their libraries. That's undermined incumbent pay-TV operators such as New Zealand's Sky Network Television, which have relied on maintaining a tight grip on premium entertainment and sports when it was easier to restrict broadcasting rights.

Spark is challenging Sky as a sports broadcaster, having secured rights to this year's Rugby World Cup in Japan, an event Sky has traditionally dominated and which its recently appointed chief executive, Martin Stewart, has made clear he's determined to win back.

Spark launched its Lightbox service in 2014 as one of several stand-alone start-up-style internal ventures in an attempt to find new income streams as traditional fixed-line phone connections became increasingly obsolete. Lightbox has been offered free to Spark customers and as a paid subscription service for others. It recently introduced a pay-per-view service.

The telco initially used Lightbox to test the premium sports market in a joint venture with Coliseum Sports Media to stream English Premier League football matches.

Spark grew more aggressive in its pursuit of premium sports, mounting a successful raid on rights not only for the Rugby World Cup, but also Formula One motor racing, English Premier League football, and NBA basketball.

The telco is partnering with state-owned Television New Zealand for the Rugby World Cup to meet the free-to-air obligation and provide a backstop if there are any question marks around the technology.

In the six months ended December 31, Spark's capital expenditure on Lightbox fell in the $12 million envelope that included store refits, and other standalone digital divisions Qrious and Morepork. That was down from $21m a year earlier.

Spark shares fell 0.5 per cent to $3.80 today.