Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
4.313 Sky also presented an analysis based on 434 Sky customers who downgraded by
removing Sky Movies from their subscription between April 2007 and March 2008.
The results showed that these households watched more movies on FTA channels.
Sky also found that the downgraders’ overall television viewing increased when they
dropped Sky Movies. Sky said this was strong evidence that FTA movies and other
types of programming were substitutes for Sky Movies.
Our current view
4.314 The evidence that Sky presents on subscriber numbers does not materially change
our analysis. As in our previous Consultation, we recognise that the decline in
demand for Sky Movies could reflect an increasing competitive constraint 232 –
although it is not clear from Figure 27 that there is any significant amount of switching
to alternative ways of watching movies.
4.315 As noted, we recognise that product characteristics do not need to be identical for
products to be included within the same relevant market. We have specifically
analysed the potential substitution away from Sky Movies to various products:
� Movies shown on basic and FTA channels.
� Movies shown on SVoD / PPV.
� Purchases of DVDs.
� Rented DVDs.
4.316 Movies shown on basic and FTA channels: In response to our first consultation
Sky specifically noted 233 that the number and variety of films on FTA TV had
increased considerably since 2001. For example it stated that in 2001 there were
about 8 films screened per day on terrestrial channels 234 , but in 2007 there were 27
films screened per day. It stated that the constraint from FTA and basic tier TV (along
with other constraints) had increased significantly 235 .
4.317 Figure 33 shows viewing of films on TV. It shows that:
� There has been a decline in viewing of subscription movies channels equivalent
to about 330 million views (or 40%) since a peak in 2003.
� Over the same period there has been a sharper absolute fall (of around [500
millions views]) in viewing of movies on basic tier and FTA channels.
232 An alternative explanation is a decline in quality. Sky told us that [ � ] (response of 9 July 2008 to
Ofcom’s information request of 29 May 2008 question 6).
233 Sky response to First Pay TV Consultation Annex 2 paragraph 3.78.
234 PSB channels and sister digital channels.
235 Ibid 3.79.
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