Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
4.321 We set out our views on the implications of the Seabright econometric study for
market definition above in paragraphs 4.172 to 4.184. Those arguments apply
equally here: we do not believe the Seabright study provides evidence that FTA
channels and premium movie channels are in the same market.
4.322 Movies shown on SVoD and PPV: Sky told us it considered that the relevant
market included FTA, pay TV services, DVD sales and rental and pay-per-view/video
on demand services.
4.323 Movies from the pay TV subscription window are not available on any SVoD service
at present. As such we have seen no direct empirical evidence as to whether such a
service would be a competitive constraint on linear premium movie channels.
However, it seems reasonable to expect that if a similar range of premium movies (at
a given time) were available over both a linear channel and an SVoD service, there
would be scope for some customers to switch from the former to the latter.
4.324 Virgin Media told us 237 that it had been unable to secure non-exclusive SVoD rights
with any of the Major Hollywood Studios. [ � ].
4.325 Sky noted 238 that Virgin Media’s pay-per-view VoD proposition includes movies from
the Major Hollywood Studios, via the Filmflex service, both before and after their
availability on Sky’s linear movie channels. Whether this has had a direct impact on
demand for Sky’s linear channels is unclear. The similarity of content between the
two delivery mechanisms may be seen as a supporting a view of premium movies on
PPV as belonging to the same market as linear movie channels.
4.326 Figure 34 shows total cable subscriber numbers from 2000 to 2008. FilmFlex –
cable’s on demand system for PPV movies – was launched in January 2005,
replacing the Front Row nVoD service. FilmFlex was a joint venture between OGD,
Walt Disney and Sony Pictures.
4.327 The figure is consistent with the view that FilmFlex may have had an impact on
demand for Sky’s linear movie channels on cable. The number of subscribers to Sky
Movies and Sports has declined, with more customers subscribing to a sports-only
offer (perhaps switching from the Movies and Sports offer – i.e. dropping movies),
and fewer customers subscribing to the movies-only offer.
4.328 Data on subscriptions to Sky’s DSat service also shows a reduction in subscribers to
the Sky Sports and Movies package, again with an increase in subscriptions to Sky
Sports Mix. However, in the case of Sky’s DSat service, unlike Virgin Media,
subscriptions to the Sky Movies Mix have also increased 239 .
Figure 34 Subscribers to premium channels on cable, 2000 - 2008
[ � ]
Sources: Sky response to Ofcom information request of 29 May 2008 and Virgin Media response to
Ofcom information request of 2 July 2008
237 Virgin Media response, paragraphs 4.19 to 4.22.
238 Sky Response, Section 2, paragraph 2.10.
239 See for example Figure 31.
121