It’s probably not news to you that Telecom (soon to be Spark) is launching a video-on-demand service called Lightbox later this month.
The paid-subscriber service will emulate other Internet TV services such as Quickflix, which already operates here, and Netflix, which operates in the US and UK and is threatening to launch here soon. Like many, my first reaction was ‘here goes another Xtra, or worse, Ferret’, the two previous efforts at non-core, content businesses. Let’s look at what Telecom’s up against.
The space is incredibly competitive, with TVNZ, TV3, Sky, Quickflix and maybe Netflix, all vying for the online TV viewer, let alone their dollars. And of course TVNZ and TV3 are free.
It gets harder. In this business there’s only one thing you have to get right: content. All those competitors are vying to buy the rights to the same blockbuster TV shows, such as Game of Thrones, House of Cards, Mad Men and so on.
That said, Lightbox has done a few things right. It’s quite rightly picked the mainstream to play in. This is where the most people are prepared to pay the most. It could mess about with long-tail programming such as archival material (think of Sky TV’s Jones) or ethnic or second tier sports programming.
Vikings, one of the shows set for the Lightbox service.
But let’s face it, the long tail in New Zealand is not very lengthy. It has also picked the right audience: middle-class parents, with disposal income who are too busy to wait for broadcasters to serve them linear TV. And it’s chosen the right technology. I think that VOD is a disruptive technology that will cause merry hell for set-top box providers. It offers multiple screens on multiple devices and has a much lower price point than Sky.
And finally I think Lightbox has just the right parent: Telecom, which has cash reserves and half a million active customers already. That’s a great head start for any new business.
So there’s really only one question that remains: how deep are Lightbox’s pockets? Because content, content, content ain’t cheap, cheap, cheap.