Can Sky survive without sport?
SEAN MCCREADY CO-FOUNDER & OWNER MBM
Unfortunately the answer is probably not. Live sport is Sky’s unique content offering. It’s the programming that can’t be easily replicated or substituted.
In fact, the question really is, can Sky survive without rugby? The top 30 Sky programmes in 2018 for the all important 25-54 demo are mostly Super Rugby with a few cricket and Warriors games to make up the numbers. So the crucial contract for Sky is the Sanzaar rights that expire in 202o and covers Super Rugby and The Rugby Championship. This deal is much more important than the Rugby World Cup rights.
Regular, ongoing competitions like Super Rugby and NRL are the backbone of Sky’s offering. Sky needs a strong Super Rugby competition which in recent years has lost some appeal with the expansion to new teams (from Argentina and Japan). It is only held up by the New Zealand teams performing exceptionally (aside from the Blues) and great local derbies. The Super Rugby format is weird with a month-long break before the semi-finals when the All Blacks play a touring side. And now there’s talk about South African sides potentially leaving Super Rugby to play in a European competition. Super Rugby has a few problems.
So sport is less substitutable than other content. An All Blacks fan needs to see them live and won’t get the same buzz watching a different sport instead. However, a person that likes HBO drama Westworld could probably live without it and watch a plethora of other great dramas or find a way to watch it illegally. Non-live sports content is just not as sticky, and without a monopoly on key sports, Sky ends up competing on general programming where Netflix and Amazon offer consumers amazing value.
Sky profits remain strong and they are effectively the only local broadcaster making significant money out of TV. However, the latest results were on the back of cost control rather than subscriber revenue growth, and the trend is more people moving to online subscription services, primarily Netflix. There’s tough times ahead and sports rights remain the profit engine for now.