Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
4.268 Each of these delivery mechanisms has different characteristics which will influence
the degree of substitutability between them. For example, Sky’s research found that:
“Whilst watching films on television is enjoyed, it lacks the glamour
and sense of occasion of the cinema or the novelty and appeal of
owning DVDs. Films on TV are an interesting proposition in that their
competition is not just other windows, but all other TV programmes
that happen to be on (including first run drama etc.)” 206 .
4.269 The studios carefully manage the timing of film release across these different
formats, as we explained in further detail in Annex 11 of our First Pay TV
Consultation. The timed availability of films across different formats (known as ‘film
windows’) is a form of price discrimination. It enables the studios to exploit
consumers’ different willingness to pay for content in order to maximise revenues and
recover the fixed costs of production and marketing.
4.270 New films are often valued more highly by consumers than older films. This is in part
because significant marketing occurs around the time of the initial cinema release
which increases the awareness of a film. The value of this marketing will diminish
over time. The value of newer films is reflected in the higher audience received for
Sky Movies Premier compared with the other channels (see Figure 25). Furthermore,
once a consumer views a film in an earlier window its value to that consumer in later
windows is likely to be diminished.
4.271 As explained above (paragraph 4.259), Sky’s movie channels provide access to a
wide range of new films. By contrast, FTA channels and other basic tier subscription
channels show a wide variety of older films. In 2007 there were 2,182 film
transmissions on the PSB channels in 2007 and 20,271 film transmissions on other
digital channels and 34,782 transmissions on subscription movie channels 207 .
4.272 The table below sets out the available film windows.
206 Sky’s third response to Ofcom information request of 29 May 2008.
207 UK Film Council Statistical Yearbook 2008 figure 11.6 p92, figure 11.7 page 95. PSB channels
refer to BBC1, BBC2, ITV1, Channel 4 and Five.
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