Sky chief executive John Fellet has always defended the company's slow rollout of digital services saying he did not want to win the race to have the most popular service in a market sector that still loses money.
He believes the company will survive the breaking of the dam and that Sky will remain dominant because it has access to "the best content paying the best price".
Yet Netflix claims a similar advantage and says it sees New Zealand as a small part of its fast growing global empire. It claims it will not even be tracking the returns from its New Zealand operation compared to the cost of TV show rights.
Spark is budgeting for Lightbox as a promotional tool to attract customers to its broadband package.
By contrast there will be limits on how much Sky is prepared to run Neon as a loss leader.
For consumers the wide array of internet TV services on offer make for a complicated purchase with applications for different devices and sometimes tie-ins with broadband packages.
In my opinion, Sky TV is most vulnerable when it comes to non-sports subscribers who must currently pay $10 extra to get its premium drama channel SoHo. To compete Sky needs to make the SoHo channel part of the basic package.
The likelihood of that seems zero, given its financial value to Sky.
The high price point it charges for its satellite service creates a major dilemma for Sky if it makes Neon too attractive and leads Sky subscribers to reduce how much they spend. Fellet says (rightly) that people will look at price in relation to content.
That makes it doubly important that Sky continues to secure the quality product it has thus far paid dearly to hold exclusive rights for.
That makes it doubly important that Sky - and Lightbox for that matter - ensure that Hollywood studios act on policing the exclusive deals they sell against virtual private network users who use US services and get backdoor access to shows.
Netflix is not worried - it gets its money whether people spend on the NZ or the US service.
