Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
than Sky on DSat. However, we noted in our Second Pay TV Consultation 400 that a
disparity between the attractiveness of Sky by Wire and Sky’s products on satellite
was borne out in subscriber numbers to Tiscali’s platform. Of a total [ � ] Tiscali TV
subscribers in June 2008, only [ � ]% took the Sky by Wire product, while [ � ]% of
Sky DSat customers, and around [ � ]% of Virgin customers, took Sky Sports or
Movies.
6.87 Sky Player, previously only made available to DSat subscribers, is now also available
on a standalone subscription basis, without a dish. Therefore it is now, in theory, a
competitor to Sky’s DSat service, albeit one that is transmitted over the internet and
offers a significantly lower picture quality, and one that is available for viewing on
PCs rather than TV screens. As discussed in paragraph 6.119 in the context of HD
services, we consider that, while content is a key driver of demand for pay TV
services, where the same content is available on two platforms, other features,
including picture quality and the means of viewing content, are likely to be important
in driving the platform choice.
6.88 As illustrated in Figure 53, Sky Player packages closely mirror Sky’s DSat packages,
both in structure (buy-through from basic) and in pricing (£1 to £1.50 cheaper than
similar DSat packages).
Figure 53 Retail prices for Sky Player and Sky’s DSat service
Sky Player offer Sky Player price Sky DSat offer Sky DSat price
Entertainment Pack £15 1 Mix £16.50
Entertainment Pack
+ Movies Pack
Entertainment Pack
+ Sports Pack
Entertainment Pack
+ Sports Pack +
Movies Pack
6.89 As such, the evidence from Sky Player tends to support a view that if Sky retailed on
other platforms, it would take care not to offer a more attractive package (in either
quality or price) than was available on its DSat platform. An independent retailer
would not face such a constraint.
Summary
6.90 Wholesale supply of Sky’s Core Premium channels is currently limited to cable. Our
view, based on analysis of documents of Sky’s negotiations with pay TV retailers is
that Sky has strongly and successfully resisted attempts by other retailers to secure
wholesale deals. Sky has not [ � ] pursued wholesale supply on other platforms
even when there has clearly been no prospect of the retailer agreeing to let Sky retail
on its platform.
6.91 Our analysis suggests that in static commercial terms Sky may have an incentive to
wholesale to other platforms. However, the fact that it is not doing so suggests either
that this incentive is not present, or is outweighed by other factors.
400 Paragraph 6.127.
£32 1 Mix +
Movies Pack
£34 1 Mix +
Sports Pack
£41 1 Mix +
Sports Pack +
Movies Pack
£33.50
£35.50
£42
199