Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
� Over the last five years, continued growth of Sky’s satellite service and of
Freeview, alongside very limited growth on cable. The key dynamic in recent
years has been between Sky, driving growth in pay TV, and Freeview, driving
growth in free-to-air multi-channel TV.
7.12 However, our forward looking assessment needs to take account of a number of
important developments recently, including:
� The consolidation and restructuring of the historically fragmented UK cable
industry under the Virgin Media brand.
� The emergence of new platforms for delivering pay TV services (BT Vision, Top
Up TV, Tiscali / Homechoice) based on new distribution technologies.
� The emergence of new platforms for the delivery of multichannel free-to-air
services; some of these also have the potential to deliver pay TV services (e.g.
Freesat, Canvas).
� The intervention by the European Commission to change the way in which
Premier League football rights are sold. The 2007/ 8 football season was the first
since 1992 for which Sky has not owned these rights exclusively.
� The increasing importance of convergence, and the bundling of pay TV services
with broadband and voice services.
7.13 We set out in our 2008 Communications Market Report 449 a number of ways in which
some recent innovations are already benefiting consumers:
� We found that penetration of digital television rose by around 7.5 percentage
points in the year, reaching 87.1% by the end of Q1 2008, making DTV as
prevalent as fixed telephony connections. We noted that this has in turn triggered
a surge of interest in new services to enhance digital television viewing. These
include digital video recorders (DVRs) which are now available for all TV
platforms and are in 23% of homes, and high-definition (HD) transmissions,
received in around 5% of satellite households, and in 11% of cable TV homes.
� The internet emerged as a popular platform for broadcasters for the distribution of
audio-visual content in 2007/08. Itv.com re-launched in summer 2007 with free
access to live channels, catch-up and archive content. The BBC’s iPlayer went
live in the same period, first offering downloads and then at Christmas streamed
content. By April 2008 it had a unique monthly audience of 1.4m and was dealing
with over 700,000 daily viewing requests; Sky re-launched its internet service as
Sky Player and Channel 4 began offering free access to its programmes from the
last seven days on its website.
� Consumers appear to be responding to this increased supply of internet-based
content. Seventeen per cent of those with broadband watched TV over the
internet, up by eight percentage points on 2006. This is particularly apparent
among younger people; twenty-six per cent of those aged 15-24 watched TV over
the internet, up by 16 percentage points in twelve months. A report by O+O – “TV
Enters The On Demand Age” (January 2009) – noted that iPlayer is almost as
popular as YouTube, with Sky Player some way behind.
449 http://www.ofcom.org.uk/research/cm/cmr08/
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