Published on the 29/04/2016 | Written by Donovan Jackson

Geoblocking, new competitors, and foundering Quickflix – how much room for SVOD in New Zealand?…

Immaturity of the streaming video on demand (SVOD) market means rapid changes can be expected – and there will be winners and losers. Those without the backing of substantial balance sheets are most likely to take the strain; the recent news of industry pioneer Quickflix going into administration in Australia is evidence of that and gives rise to the question: can New Zealand’s small market support the several options on offer today?

Kym Niblock believes so. In a chat with iStart, the Lightbox CEO said it comes down to the sheer volume of content available and the fact that the low cost of a SVOD subscription means viewers can, and do, choose more than one service provider. “There is enough content being made and watched to validate a number of services, whether those are generalist or niche providers.”

The recent implementation of geoblocking by Netflix – which was initially widely believed to be nothing more than sabre rattling – helps local content providers, said Niblock, as it has left more content on the table for them to license and deliver. “At face value, yes, geoblocking is good for Lightbox as it means our [content] rights are protected. You have to look deeper, though, at why Netflix is targeting geoblocking, as doing so isn’t obviously in its best interests. It’s serious about doing it because it has to bring the studios on-side.”

So, even though Netflix invests several billion dollars into content creation, she pointed out, like any other content delivery service, it needs even more to meet the insatiable demand for entertainment. “A number of studios won’t sell to Netflix because of the circumventing. Netflix has created its own content to get around that to an extent, but it still needs more. By demonstrating that it is serious about protecting the rights of the studios, it can open up that discussion to buy the content it needs.”

The upshot for a local provider, Niblock said, is that content can be licensed by territory in the somewhat familiar traditional way it has always been done. “We like that, as it means there is more for me to buy.”

Be that as it may, just a short hop across the ditch analysts say the Australian market is likely to support just two SVOD providers. Quoted in Mashable, Roger Colman, media analyst at CCZ Statton Equities was blunt: “Three major competitors is already uneconomic — we’re going to see it come down to two.”

Consumers in New Zealand, therefore, are spoilt for choice. There’s the macdaddy of them all, Netflix; Spark’s Lightbox and Sky’s Neon; and Quickflix, which despite the challenges faced by its Australian parent, is still an option. Outside of Neon, Sky also has MySky, while the free-to-air channels also offer free-to-the-internet broadcasts.

Then there’s the freebies like YouTube and Vimeo (and, of course, YouTube Red, the subscription service from Google).

Niblock, however, pointed out the importance of competition and choice in any market (and at least some analysts would back Spark’s involvement as a winner). “The low cost of subscriptions absolutely means customers can – and do – sign up to two or three providers, and that’s great. We’re under no illusion that we’re exclusive and nor do we seek to be.”

The low cost of subscriptions also has a benefit for consumers in that even if a loser is backed, there is very little downside should that provider founder.

And, while Lightbox doesn’t share its numbers, Niblock stressed that the business is performing above expectations; asked if the recent news that Spark broadband subscribers are to get Lightbox bundled ‘free’ is an indication of pressure, she said absolutely not. “It is going great guns, we are expanding, and have our next round of funding sorted out, with plenty of new content. What you can take from the broadband bundle is that Spark is moving with the market. The early adopters are on board, now we are looking at targeting the mass market, people who already use streaming services like YouTube, and making it easy for them to turn on Lightbox without [expressly buying and] paying for it.