Pay TV phase three document - Stakeholders - Ofcom

Sky Core Premium customers on DSat
Pay TV phase three document – non-confidential version
7.55 The restricted availability of premium content on other platforms is likely to distort
platform choice for those consumers who have a strong interest in premium content,
even if they also have a preference for a non-DSat platform. This creates a specific
concern that a proportion of the [ � ] million Core Premium consumers who are
currently on DSat are not on their preferred platform.
7.56 Premium content is clearly an important driver of platform choice: in a survey for
Ofcom 485 , 64 per cent of Sky premium customers, when asked about reasons for
choosing their current TV provider, mentioned being able to watch particular
programmes or channels as among their top three reasons (compared to 43 per cent
of Sky basic customers and 20 per cent of Virgin Media customers 486 ). In contrast,
Virgin Media customers were much more likely to mention price and availability of
bundled services as reasons for choosing their provider – few Sky customers
mentioned these factors.
7.57 In areas where both DSat and cable are available, consumers with a strong
preference for pay TV content have at least two choices of provider, although the
lack of incentive on Virgin Media to market Sky’s Core Premium channels may mean
that some are unaware it is carried by Virgin Media. Another possible reason for
some Sky customers choosing to watch Core Premium channels on DSat rather than
cable may be access to Sky’s HD and Sky’s interactive services 487 .
7.58 We are concerned that some subscribers may have chosen DSat because of the
restricted availability of these services, rather than out of a preference for the DSat
platform.
7.59 Although the platform differences between Sky and cable operators have arguably
shrunk in recent years, as Sky has increasingly offered bundled products, there
remain substantial differences between the two types of platforms, which are likely to
influence consumer choice. For example, quite apart from differences in the extent of
bundled services, Virgin Media’s platform has been able to provide true VoD for
several years, unlike satellite; in addition, it avoids the need for a satellite dish.
485 Pay TV research Phase 3, TNS Media Division, September 2007.
486 We note that this research took place in late 2007, and results are likely to have been influenced to
some extent by the dispute – ongoing at the time – between Sky and Virgin Media which led to Sky
basic channels being removed from Virgin Media’s platform.
487 Survey evidence from 2007 (Pay TV research Phase 3, TNS Media Division, September 2007)
indicated that Sky customers were more likely than Virgin Media customers to mention recording
features (Such as Sky+, Telewest TV Drive or V Box) and on-screen programming guides as reasons
for choosing their TV providers. These features were mentioned by, respectively, 10 and 8 per cent of
Sky customers, but only 2 and 3 per cent of Virgin Media customers. While this is clearly of less
importance than other aspects of the service, the difference suggests a perception that Sky has better
recording and programme guides than Virgin Media, and this may explain some of the preference for
Sky’s platform among those with a strong preference for Core Premium channels. Sky premium
customers were twice as likely to mention recording features as a reason for choosing Sky (12%) as
Sky basic customers (5%) or Virgin Media premium customers (6%). Other features were seen as
less important by both Sky and Virgin Media customers – for example HDTV, interactive services and
pay-per-view or VoD services. However, this is likely to reflect that HDTV and VoD were just being
introduced into the market at the time of the survey.
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