For years, top-tier sport has been comfy viewing for couch potatoes. To watch it, you picked up your Sky remote.
Now, suddenly it's all-on, with Spark grabbing the Rugby World Cup and force-marching a chunk of middle New Zealand into streaming, then seizing domestic cricket rights too.
Spark Sport has had a few well-documented wobbles with the RWC, and slabs of rural New Zealand have been furious they simply don't have good enough broadband to view its content.
And Sky has gone all-out to ensure Spark won't get near any more major rugby, at least any time soon.
A new Sanzaar deal, revealed earlier this week, saw Sky secure All Blacks, Super Rugby and Mitre 10 Cup games through to 2026. Sky forked over a mountain of money (the Herald understands $400 million) to secure the new deal. And it gave NZ Rugby 5 per cent of its shares (worth some $22m) in what Morningstar analyst Brian Han called a canny deal because it saw Sky and NZ Rugby "joined at the hip" (NZR does have the option to sell its holding after two years).
The deal - especially the share element - showed how hard Sky will fight to defend its only business: selling content. Han said it would simply have been "fatal" for Sky to lose rugby.
But overseas experience indicates that telcos pushing into streaming content - especially sports - is the new normal. We should get used to it.
Spark's new chief executive, Jolie Hodson, sounded initially cautious on sport, but it proved a feint as the telco announced it had bagged domestic cricket rights for six years from 2020.
The insurgent already has Formula One (for which it paid north of $6m), English Premier League Football (an estimated $12m to $15m) in its portfolio for the next three years, plus WTA tennis, the World Rally Championship, FIH Hockey and a portion of US basketball content.
Expect Spark to push hard for netball and NRL rights as they come up for renewal over the next 24 months, too (update: Sky has just extended its deal with Netball NZ through to 2024).
And while Sky has rights for Tokyo next year, Morningstar's Han expects Spark will make a play for future Olympic rights.
"Spark appears hell-bent on dismantling Sky's position as the 'House of Sport'," Han says.
The Spark vs Sky fight is a bonanza for sporting bodies. For NZ Rugby alone, it's meant a windfall of around $70m (the difference between its last five-year contract with Sky, plus the value of the share component).
But at the end of the day, the money has to be recouped.
Jarden analyst Arie Dekker warned earlier this week that having won the prize, Sky now needs to monetise its new rugby rights.
The worst-case scenario would be Sky Sport price rises for punters, but Dekker says Sky could also increase its margin by moving more customers to less capital-intensive broadband delivery.
But for sports fans, there's still the problem that they now need multiple services.
During the RWC, rugby fans have had to shell out up to $90 for a Spark Sport Tournament Pass on top of their usual Sky tab.
For other sports, it will be an ongoing issue. NBA games are now split between Sky and Spark Sport, for example
Domestic (Spark) and international (Sky) cricket will be carved up from next season.
Motorsport fans will have to split their loyalty.
And while Spark won rights to the marquee English Premier League, Sky has just signed a four-year deal with beIN Sport that gives it rights to almost every other football competition on the planet, including the FA Cup and Uefa Champions League competitions that include the top EPL teams, plus A-League games featuring the Wellington Phoenix.
Morningstar's Han sees a "mad scrum" of "likely confusion among consumers, having to choose between so many platforms to access different sports and programming."
Spark Sport head Jeff Latch has consistently rebutted the arguments around cost and usability. Streaming services give consumers more content than ever before, and more choice about when they watch it.
And he pointed out that before Spark Sport launched, Sky's Sky Sport Now streaming service (formerly called Fanpass) cost $99.99 a month. Now it costs $39.99 a month and includes more content.
But it's not just sport that's splintering.
Sky recently said it would close its two Disney channels before Christmas as a result of Disney's new $9.99 a month Disney+ streaming service, which is set to launch in New Zealand on November 19 (Stewart says Sky will fill the gap with a new children's channel taken from the BBC, plus a new family movie channel, details of which are still being sorted).
November will also see Apple's new $8.99 a month Apple TV+ streaming service launch in NZ. The tech giant is spending around $6 billion.
Next year, HBO is set to launch an expanded streaming service called HBO Max.
And of course, the likes Netflix, Amazon Prime Video and UK TV specialist Acorn are already available to New Zealand viewers.
Faced with this globalisation of the entertainment market, Sky and Spark are, quite sensibly, putting most of their energy into sport, particularly that involving local teams (Sky recently changed its main slogan to "Life needs more sport," while Spark has said it's looking for a partner for its Lightbox service - widely seen as code for wanting to flick it off).
On the face of things, the sports battle seems an uneven fight.
Spark has always been a larger company than Sky, but with Sky losing around 80 per cent of its market cap over the past five years, the difference in weight class is now stark (see "How they size up.")
And its taste for sport is only likely to increase.
Its management team is well aware that British Telecom, which won a slice of English Premier League rights in 2012, is now onto its third rights cycle.
The Financial Times recently noted that BT's share price was 212 pence when it first started streaming EPL games. and that it soared to 4.99p by 2015 as investors saw the A-list sports content drawing more BT customers, and the base upgrading their plans (over the past few months it's taken a Brexit hit).
And across the Tasman, Optus initially stumbled in streaming as it stuttered with the opening game of the 2018 FIFA World Cup and had to transfer coverage to the free-to-air SBS (sound familiar?).
But since then, the Aussie telco has turned in a solid streaming performance. And in August, said it now has 700,000 subscribers for its Optus Sports service, which is built around English and European football and costs A$15 a month ($16), but is also free for some new or upgrading customers to its mobile and broadband services.
Optus, which reportedly paid A$187 to wrest football rights from Foxtel, credited its sports streaming service, in part, for the addition of 150,000 new broadband customers and 51,000 contract customers in its June quarter as it booked healthy A$105m net profit on A$2.2b.
It's easy to imagine Spark feared political backlash if it bid for Sanzaar rights on the heels of its at-times substandard World Cup performance - but that it will be looking to prove its chops over the next few years, and will be ready to mount a huge bid next time the national sport comes up for grabs.
In the interim, broadband will have got better, and Joe Sixpack acclimatised to Chromecast.
Sky boss Stewart is pursuing two strategies to counter Spark's deeper pockets, and potential to use sport as a loss leader to pull people to its broadband and mobile (a clear and present threat, given World Cup Tournament Passes have been dished out free for Spark broadband and mobile customers).
One is to look move beyond the tiny New Zealand market, which Sky has already done with its purchase of global streaming player Rugby Pass in a deal worth up to US$40m. Rugby Pass holds Sanzaar rights in 60 countries. None of them are territories that will get anywhere near a World Cup final, but they hold their fair share of fans and ex-pats. Only around 20,000 pay for Rugby Pass's US$15/month service today, but it's founder Tim Martin (who has just exited) earlier told the Herald he saw a paying audience of up to two million (you may have heard Sky touting a 40 million figure, which is an estimate of the number of people who read rugby news and other free content on Rugby Pass's website each month).
The other is partnerships. Sky already has a major wholesale deal with Vodafone for Vodafone TV (although Vodafone has also added Netflix and other apps to its service, and has ambitions to add Spark Sport). Stewart says to expect more wholesale deals. And talking to the Herald after Sky's annual meeting on Thursday, he even hinted that his company could team with Chorus to offer its own broadband and move onto Spark's turf.
That would be tricky to execute, but it could work.
The problem for Stewart, however, is that even if he successfully sees off Spark, others are likely to come over the hill.
Sky already has a free-to-air vehicle that works well, Prime, so I don't know why it would want to swap it for one that loses buckets of money. Spark already has a free-to-air-partners, TVNZ, which kicks in cash and kind and production wherewithall.
— Chris Keall (@ChrisKeall) October 17, 2019
In the UK for example, the latest round of bidding for Premier League rights saw Amazon move in on incumbents BT and Sky. The US tech giant - which earlier locked down exclusive US rights to the US open - will stream every Premier League game this Boxing Day. UK soccer fans were quick to complain as the all-Amazon broadcast schedule for December 26 was announced on Thursday. It was to no avail. Streaming, and usually through multiple services, is simply the way most sport is going.
We've seen wild gyrations in Sky's share price over the past fortnight. Its stock fell nearly 20 per cent as it lost domestic cricket only to rebound the same amount just days later on the news it had renewed its Sanzaar deal.
Interestingly, Spark's shares also fell - by nearly 3 per cent - on news of its domestic cricket rights win. That would be read as investors having limited enthusiasm for streaming; a market where losses or huge debts see to be the norm, from Netflix to the Disney-owned Hulu and ESPN+ (the king of online sports streaming is expected to lose US$650m this year and the same in 2020).
But the much more muted Spark shareholder reaction to the past fortnight's various streaming developments also reflects that Spark Sport is a tiny part of the telco's overall business. To make any meaningful impact on Spark's bottom line, it will have to grab top rugby too. Expect a battle royale when Sanzaar rights next come up for grabs.
Lead image: Photosport