Feasibility Study of a Digital Platform for the delivery of UK ... - BFI

UK FILM COUNCIL
rental firms, third party operators (CinemaNow being one), ISPs and even Apple (whose iTunes is now offering video downloads, albeit
only on short form and TV content).
Service providers tend to fall into two broad categories:
• Third party service providers -- such as online DVD rental companies, pay-TV operators and technology companies;
• ISPs –- such as AOL, Yahoo! and Tiscali -- who are acquiring content and rights as a means of using ‘value-added’
entertainment services to attract more broadband customers.
Importantly, these two categories of service provider are not mutually exclusive. For example, it is perfectly feasible for an ISP to strike
an alliance with a third party service provider on a co-marketing basis (as Tiscali has so far chosen to do with CinemaNow in the UK).
Also, services take two forms. They are either available via web-based browsers, as CinemaNow is, or require an application to be
downloaded to the user’s computer (as is the case for Apple’s iTunes or the upcoming Sky Movies Broadband service).
The result is that as pay-TV operator Sky plans to launch its movie download service in the fourth quarter of 2005 on a free basis to Sky
Movies subscribers (profiled above), DVD rent-by-post specialists LoveFilm and Video Island have been strengthening their online
positions. Indeed, both have agreed strategic partnerships with ISPs (LoveFilm with Tiscali, Video Island with Wanadoo), and are already
offering short form video content alongside their core business. LoveFilm has gone a step further and has expanded its business portfolio
with a full VoD service.
Meanwhile, US-based service provider CinemaNow is due to set up a UK site in 2006. Yet, even if Internet VoD services are able to
establish a marketplace in the UK, Sky Movies Broadband could stifle the competition. The development of a PPV VoD market is not
necessarily under threat because – for now at least – such services would have a release window advantage but services could find it
difficult to rival Sky’s value-added offering which is effectively free for subscribers to Sky’s premium movie channels package. Also,
despite the fact that Sky’s proposition will initially be within the standard pay TV window (12 months after theatrical release), Sky plans
to offer movie content in the earlier pay-per-view and video-on-demand windows (eight months after theatrical release) and – although
there is no guarantee that the studios will consent – Sky is attempting to renegotiate some of its rights deals accordingly.
The most notable consequence of Sky’s foray into Internet delivery is the fact that it will overnight switch on the Sky Movies subscriber
base (of whom there are currently 5m) to Internet VoD. The key aspect of the service is that all titles will be offered within the pay-TV
window, given that BSkyB in some of its new deals is now gaining control of the subscription SVoD rights by virtue of its existing pay-TV
contracts with the studios (although there are some momentary hold outs, such as Warner Bros, this is unlikely to last long).
Feasibility Study for a Digital Platform for the delivery of Independent UK films and Specialised films to the Home
UK Film Council © 2006
56