Pay TV phase three document - Stakeholders - Ofcom

Premium customers on cable
Pay TV phase three document – non-confidential version
7.64 We do not have a significant concern that there is a distortion of consumer choice in
relation to the [ � ] consumers currently on cable and purchasing Core Premium
channels. It is possible that these consumers would have purchased Core Premium
channels on DTT or IPTV had they been available on these platforms, but the fact
that they have chosen the cable platform over DSat, despite their interest in Core
Premium content, suggests that they do value certain features of the cable platform.
Other households
7.65 While households with a very strong demand for Sky’s Core Premium channels are
likely to subscribe to DSat or cable, there is evidence, described below, of substantial
unmet demand among other households for Core Premium channels, This unmet
demand might arise for a variety of reasons including:
� Inability to access existing satellite or cable platforms. Such consumers may live
outside cable areas and be unable or unwilling to have a satellite dish
� A preference for content to be delivered via DTT or IPTV-based platforms, on
which Core Premium channels are not currently available, for example because
of a preference for ‘Video on Demand’ services.
� A preference for entry-level premium content bundles, of a type which are not
currently available. Such consumers may be unwilling to pay for a full package of
premium content at current prices, but would be interested in the types of entrylevel
packages introduced by Setanta 491 .
7.66 This raises a specific concern that a proportion of the 13.7m households that are not
currently on either DSat or cable would subscribe to Core Premium channels if these
were widely available on DTT or IPTV platforms, but that they are currently unable to
do so.
7.67 Research carried out by Freeview in November 2007 found that around 22% of
Freeview users would definitely or probably consider paying either a monthly or oneoff
fee to access more channels / programmes in addition to Freeview's channels 492 .
While this research did not specify which channels consumers would particularly like
to take up via DTT, our own consumer research indicates that sports and movies are
the two most popular genres where there is a high degree of exclusivity to pay TV
(see section 3).
7.68 Further evidence comes from Sky’s proposed Picnic service. Sky estimated (in April
2008) that around [ � ] current DTT households would subscribe to premium
content on its proposed Picnic service within three years of launch, and equivalent to
around [ � ] per cent of DTT households, and [ � ] within five years. This suggests
that a significant number of households who do not subscribe to DSat or cable would
491
Although following Setanta’s exit from the market, it remains to be seen to what extent ESPN’s
packaging and pricing will follow Setanta’s.
492 462 face-to-face interviews were conducted between 14 and 25 November 2007 by Taylor Nelson
Sofres on behalf of Freeview. 70% of respondents were Freeview viewers and 30% were non-digital
viewers.
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