Rugby is a major drawcard for Sky consumers, and Sky are reportedly not the preferred bidder for Rugby World Cup 2019 rights.
A media expert says Sky may be at risk of losing other sports rights as digital technology opens the playing field to new competitors.
Alex Lawson, the general agency at media agency Carat, says that while Sky will continue to have a strong hold over the content it produces, thesame cannot be said for sports content created elsewhere.
"It will be interesting to see how many more sports drop in the next 12 months," Lawson told the Herald.
"For instance what happens if New Zealand Rugby decides to sell the end-of year tour to the highest bidder? Or what if the Warriors go for a split model, with all the away games going to another bidder in Australia?"
The media agency boss said that Sky remains in a stronger position when it comes to local content, largely because of its production infrastructure that allows for the delivery of quality content.
Lawson said the emergence of Spark in the local market shows that Sky is no longer only competing with the struggling traditional broadcasters and that a new breed of contenders are posing the biggest threat to the status quo.
Lawson pointed to the UK, where the telecommunications giant BT launched sports-dedicated channels, specifically to compete for Premier League Football rights.
Fierce competition between the rivals led to a significant inflation of the cost of the rights – so much so that the pair signed a cross-licensing truce last year, allowing BT and Sky to offer each other's sports packages to customers.
Lawson said that along with the growing threat of telcos, sports broadcasters also face the prospected increased competition from tech multi-nationals, such as Google, Facebook and Amazon, in coming years and that this will likely push up prices even further.
Ultimately, the money for the burgeoning prices of content has to come from somewhere – and that's normally from the pocket of the consumer through subscription fees.
And while unbundling of sports and entertainment rights (something which is still in its early stages) might offer consumers the opportunity to cherry-pick what they want, all those individual choices could potentially become expensive when combined over the course of a year.
Even without the added intrigue the international juggernauts, the increased competition appears to have had an immediate effect in this market.
Speaking to the Herald earlier this month, Sky director of sport Richard Last said the cost of the 2019 Rugby World Cup rights stretched well beyond the figure the company paid for the 2015 edition.
Last said negotiators should always have a walk-away price, and this instance it got to the stage where Sky had no other choice but to let the rights go.
The Herald understands Sky went as far as seeking board approval for the release of additional funds, but even this wasn't enough to secure the rights.
A media expert believes other sports rights held by Sky could also be at risk of going to the highest bidder as competition increases. Photo/File.
Spark still hasn't revealed what was paid for the rights, but the indication from Sky is that the figure was much higher than the amounts paid in either 2011 or 2015.
While the 2015 figure remains undisclosed, the 2011 free-to-air broadcast rights for 16 games were awarded to a syndicate formed between Maori Television, TVNZ and TV3 after a bid that included a $3.2 million contribution from Government.
To recoup the investment spent on the rights, Spark will selling digital subscriptions at $100 for the whole tournament or lower one-off prices for single games.
Spark's head of corporate relations Andrew Pirie said the company was confident the approach would work.
"We are comfortable that the business case for our bid stands on its own two feet," Pirie said.
Pirie said that while the rights for a global tournament might be expensive, he believes Spark will be able to offer pricing options that give more people access to games.
"We hope this will mean a significant number of Kiwis, who previously choose not to have or couldn't afford a lengthy Sky subscription will have a chance to watch," he said.
