The ISP market has been buzzing lately with acquisitions, legal action and an explosion of streaming services. M2 Group’s general manager of consumer for Slingshot, Orcon and Flip lives up to his reputation of being a straight talker as he sits down for a
The inside scoop on the telco market from Taryn Hamilton.
ON M2 TAKING OVER
There’s always a risk of a big international company coming on and asserting themselves, but it has been a great experience thus far and they’ve been really supportive. So I don’t think you’d expect us to go into our shells at all. If anything, we’ve got more resource behind us to be more aggressive.
ON HOW HIS ROLE HAS CHANGED
I’ve now picked up responsibility for the whole portfolio across Slingshot, Orcon and Flip. It’s really interesting going from being a competitor of the other brands a few weeks ago to running them all now. It’s certainly an interesting position to be in running three brands when there are only six or seven brands in the market. It’s almost half the market’s profile.
ON WORKING FOR CHALLENGER BRANDS
I’ve never worked for the big guys. And it’s not about being a small fish in a big pond. But just instinctively, challenger brands resonate with me a lot more than working for a big corporate, where no matter how high up the chain you get, you just feel like you’re a worker bee. Whereas at a challenger brand, you can actually make some meaningful contributions and meaningful differences in the market. And Slingshot is a pretty good example of being able to do some exciting stuff … You know, we’re fighting for market share with comparatively tiny budgets with a lot to lose if we get it wrong. We don’t have a pot of money to dip into to correct things. It’s high energy, a lot more fast paced, a lot less bureaucracy and I’m only accountable to one person.
ON BEING A STRAIGHT TALKER
My bosses still remain the same. I still work for Mark Callander and he has a lot of trust in me. And this is something I really appreciate. He hasn’t ever filtered me at any point before or after the acquisition in terms of what I can and can’t say. The company is just a collection of different people and personalities and we try to speak as honestly as possible, because that’s what we want our brands to do. We want our brands to be perceived as trust-worthy consumer champions, and it’s important that the people who run the brands align with that.
ON THE EVOLUTION OF THE ISP MARKET
Although Vodafone and Spark have been the market leaders for quite some time, they’ve changed their brand personalities immeasurably. I mean, you’ve seen Spark with a concerted effort to look a lot more like the Vodafone of old. And I’m not too sure if anyone knows exactly what Vodafone is doing at the moment, to be honest. And now you’ve got 2degrees going from that really personable Kiwi brand to trying to pull themselves up the chain a bit, and they’ve created a new positioning that looks a lot like the traditional Vodafone or Spark. So we see an opportunity in our portfolio of brands to differentiate a lot.
ON BUNDLE DEALS
Slingshot took a really different approach with that, because we consider ourselves first and foremost as an enabler. We need to be experts at making sure that people have a great Netflix experience or that Youtube and Facebook work really well rather than necessarily clamouring to partner with these guys. Our strategy when Netflix entered the market was to make sure that we had our network infrastructure up to spec, because we knew how much volume it was going to command. This is quite a different strategy. You would’ve seen quite a lot of press over the last month or so about the big guys whingeing about how much Netflix was consuming, and we were sitting there going, ‘Well, shit seriously? Are you for real? You know, did you not anticipate that this was happening? And are you forgetting, first and foremost, that it’s your job to make sure that people can consume this content to high quality?’ So, our category, in the short-term, is to focus on being a good internet company. Content is sexy and Netflix is sexy, and it’s sexy to partner with these types of companies, but this can also make you lose focus of your core responsibility, which is just to make sure the internet works properly.
ON INCREASED BANDWIDTH USAGE
My usage has gone through the roof, and we’ve seen that from a network-wide perspective as well. It’s doubling every 12 to 18 months, and it’s driven heavily by what type of technology people have. Unlimited fibre customers, for example, are pushing 300 gigabytes of usage per month on average. So, imagine what your top five percent are using if your average is 300 gigs.
ON SKY’S BUFFERING ISSUES
I don’t know whether it’s an actual strategy that they’re taking to undercut the quality of their streaming services but they could’ve absolutely dominated the market if they’d put even a reasonable effort into investing in a proper content-delivery network. To use an analogy, they could’ve been the Trade Me of New Zealand. As you know, most other territories in the world are dominated by ebay, but Trade Me got in there fast and delivered a great product, and now pretty much no one mentions ebay— whereas, Sky have lost that opportunity in the New Zealand market. And now Netflix has come in and it’s done incredibly well.
Their long-tail stuff is nowhere near as good as anything on Netflix, but certainly in terms of the shorttail stuff, they’ve got much more high-profile movie content, in particular, than all the other streaming services do. It’s just built on a slightly shoddy technology platform, it’s priced at a premium and they don’t really market the product too aggressively. I don’t know if they’re doing that on purpose or not, but it will be interesting to see how they go.
ON WHY CALLPLUS GROUP (NOW M2) PULLED OUT OF THE GLOBAL MODE CASE
This might be a pretty short answer to the question, but I’m not really allowed to tell you why. We came to a settlement with the guys who took action against us, which is entirely confidential—so, as much as I’d like to wax lyrical about it, there’s not really much I can say.
ON LIVE SPORTS CONTENT DEALS
I think Sky will battle to hold onto [its sports deals] in the future, but I see that they have stitched up the hero content in New Zealand rugby for the next few years. But quite a lot of their content deals are done at the last minute. The NRL is a good example of this. They never seem to stitch that up until the 11th hour, so it definitely leaves the door ajar for other people to have a crack at it. I wouldn’t be surprised if Spark and Lightbox, through their partnership with Coliseum, have a really serious crack at NRL this year. So, as soon as Sky starts to lose cornerstone content properties, it could be a slippery slope for them. But because distribution models are so much easier and there’s such low barrier for entry these days, all they need is an appropriately sized cheque book to buy content and you can just distribute it over the top so easily. You don’t need satellite broadcast networks or to send out set-top boxes. The broadband infrastructure in New Zealand is good enough to go over the top. I think Sky’s hold on sports content is certainly going to be coming to an end, but they’ll protect the rugby content pretty fiercely.
ON MARKETING A CHALLENGER BRAND
You need to be pretty narrow in your focus. With a small brand, you can’t be the best at everything, so it’s really important that you identify upfront what you want to lean on and what you want to be the best in the market at. And that’s definitely what you’ll see brands doing more clearly in the future. Each brand will pick its area that it wants to be a specialist in and become an expert in that, rather than trying to be all things to all people—which Vodafone and Spark have to do based on their size. You just need to look at their websites to see this. You go to Spark’s site and you’ll have dozens of products that they’re trying to sell to you, and you have different parts of the business all pushing their own agendas. Whereas, if you go to the Slingshot website for example, it’s very clear and concise what the proposition is. It’s very tightly defined. We’re not putting ourselves out there as being all things to all people.
ON STANDING OUT
When you have a brand with a modest marketing budget, you do typically have to do something that lets you stand out from the other people. You need to do something that’s not necessarily controversial but it needs to be different to give you a bigger voice.
ON RECENT PRESS COVERAGE OF THE ISP MARKET
The Global Mode stuff is probably a great example of that with Slingshot. We got a huge amount of PR and positive sentiment on the back of all the goings on involved with the Global Mode product. And it was pretty much in our favour. We had a pretty clear consumer champion message, and it gave us a real kind of talking point-of-difference over the other guys. We cut through the traditional volume of media spend that the other guys chuck at their market. It’s also important to note that this wasn’t contrived. It wasn’t a case of, ‘How do we get sales? Okay, let’s work back from that and line up a positioning with Global Mode’. It was very much, ‘Shit, this is what we want as consumers’ and we felt really strongly about having the same content and being on the same terms as everyone else in the world.
ON THE MARKET SHARE OF M2
We’re sitting at about 15 percent [of total market share] across the three brands. But over the last few months, we’ve been picking up about a third of the new growth in the market, so we’re definitely boxing twice above our market share in terms of growth. We’re really happy with that, and in the short to long-term we hope to continue that for as long as possible.