Pay TV phase three document - Stakeholders - Ofcom

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Pay TV phase three document – non-confidential version Figure 61 Innovations by Sky and other pay TV providers, 1997 to 2008 Year Sky Other providers 1997 Sky Box Office - shows movies and occasionally sporting events on PPV (nVoD). The movies are available for £3.91. Sky reported half a million unique users per month for the year ending in August 2008. 1998 1999 2001 2004 2005 2006 2007 2008 Sky Digital - the improvement in picture and sound quality, increased number of channels and an interactive service. PVR – Sky+ - results for the first quarter 2009 show that Sky+ has over 5 million users. From 1 July 2008, the standard cost to DTH subscribers of a Sky+ box is a one-off fee of either £75 or £150 depending on the services to which customers subscribe. Sky By Wire - TV services retailed directly by Sky over the fixed line networks. It was made available on the Tiscali platform. In March 2009 there were only [ � ] subscribers to Sky channels. Sky Mobile TV - over 25 channels contained in four packages are streamed to the subscriber’s mobile phone. Depending on the customer’s mobile network subscription to up to four packages which cost from £3 to £5 per month. 3G phone required. In November 2008 one of the mobile phone websites reported that the service (across all networks) had more than 200,000 monthly subscribers, at a cost of £5 per month or £1 per day. HD –requires a Sky+ HD Digibox. All HD channels available to those who subscribe to the Sky Movies and Sky Sports packages. Monthly subscription fee for HD is £10. Over 1 million Sky households took HD as at March 2009. Sky by broadband (a.k.a. - Sky Anytime on PC, Sky Player) - enables premium customers to download sports and movies to their PCs at no extra cost. Sky reported 49000 unique users each month between January and June 2008. Sky Anytime – VoD service available to some Sky+ and Sky+ HD customers (push-VoD). The service is intended to provide a catch-up of a selection of the last week's programming. Over 1.6 million homes used the service in 2008. Sky Player - online subscription TV service offering live TV and VoD on SVoD and PPV basis. Non Sky TV consumers can access online content without the need to subscribe to an existing TV-based service from £15 a month. Individual episodes are available from £1. Minimum contract is one month. For Sky digital satellite customers the service is at no extra cost. Tiscali TV (formerly known as Homechoice) - television and VoD service (pull VoD). It offers services on PPV and SVoD. Non-premium movies are available from £1.99. Customers can also sign up to PictureBox for £5. Customers must take Tiscali Broadband to receive TV service. In March 2009 Tiscali had just over [ � ] subscribers. Top Up TV – pay TV service via DTT. It offered Freeview viewers a number of extra channels on a subscription-basis. At the end of October 2008, the total number of pay TV packages supplied by TUTV to subscribers was approximately [ � ] Virgin Media - TV-VoD services (pull VoD) on PPV (including premium movies) and SVoD (shows and series). Films cost between £2.00 and £3.50 (HD movies up to £4.50). Customers must sign up to Virgin Phone to get TV services. In the last quarter of 2008 VoD usage increased to 52.9 million average monthly views. BT Vision – pay TV and VoD service. The BT Vision set-topbox incorporates PVR functionality, provides pull VoD and supports HD (only pre-recorded content). It also provides access to the Freeview DTT service. Content available on SVoD and PPV. Value Packs start from £13.70 a month. Premium movies are for £3.45 and the classics for £1.99. Customers must sign up to BT Phoneline and BT Broadband. By the end of March 2009, BT had over 400k customers. Top Up TV - Top Up TV Anytime. The company changed its business model into a VoD (push VoD). It offers services on SVoD basis. Viewing packs are available from £7 a month (movies content includes films from PictureBox). Boxes are from £49.99 to £99.99. The customer can use the box as a PVR. Over [ � ] customers subscribed to the packages in February 2009. Virgin Media – HD service – requires a HD set-top box. Mainly available for VoD content . The V+ Box is from £49 to £99. Setanta Sports (with FAPL) - is available on several platforms in the UK, including Sky and Virgin Media. Monthly subscriptions are available, and Virgin includes most of Setanta's channels at no separate charge in its more expensive packages. BT’s Value Packs include optional Setanta Sports 1. Individual Viewing Pack on Setanta Sports 1 is for £10.75 per month. Customers on Freeview can subscribe for £10.99 per month. 239
Pay TV phase three document – non-confidential version Note that the table shows the launch year for particular services. The description of the services, however, aims to reflect the current situation. VoD 7.87 VoD is a particular example of a delivery mechanism that does not favour satellite. As noted in our Second Pay TV Consultation, VoD services accounted for a smaller proportion of pay TV revenues in the UK than in other countries including Spain, the US and France. 7.88 As noted above, Sky told us that 498 that there had been strong innovation in VoD, among other services, in the UK (although much of this was for basic FTA content). Sky argued that Ofcom’s analysis of VoD services in the UK was seriously flawed. It argued that there were multiple sources of VoD services carrying a wide range of content. 7.89 VoD services were excluded from PwC’s innovation index. Sky provided a second report from PwC, to supplement the first. It said that the revised report incorporated VoD and near-VoD services into its innovation indicator and found that this did not significantly alter the ranking in its first report, with the UK remaining among the four leading countries. Sky said that this was hardly a surprise, as the number of VoD services available to UK consumers had increased substantially in the past few years. 7.90 Sky presented this as evidence that Ofcom’s analysis of innovation in VoD provision was flawed. We do not consider this to be an accurate description of the PwC report. PwC’s innovation indicators combine two sets of indicators – one based on the introduction of a service, the other based on its penetration in the country concerned 499 . PwC considered whether robust VoD and nVoD indicators could be developed. However owing to the lack of data, it did not develop such penetration indicators 500 . As a result, its final ranking takes account only of the date of introduction of VoD and nVoD services in each country, not the penetration rate 501 . 7.91 Sky also told us that VoD movies were available from Virgin Media, BT Vision, Tiscali TV, Top Up TV, Sky, 4oD, Apple TV, iTunes, Microsoft Xbox Live Marketplace and Lovefilm 502 . 7.92 Of the nine platforms which Sky mentions (other than Sky itself), we note that Lovefilm does not appear to supply VoD movies, while iTunes is not a TV platform but rather a means of downloading movies to Apple TV. Among the remaining platforms, none provides Core Premium movies on VoD, and none is an SVoD service. 7.93 Virgin Media argued that consumer demand for SVoD movies was strong and growing, but that it had been unable to negotiate SVoD rights to premium first-run 498 Sky response to Second Pay TV Consultation, Section 2, paragraph 2.2. 499 Second PwC report, page 76. 500 Ibid, page 68. 501 Ibid, page 77. 502 Sky response, Annex 2, paragraph 2.7. 240
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Pay TV phase three document Propose
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Section 1 1 Summary Pay TV phase th
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Pay TV phase three document - non-c
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(4) In this section— Pay TV phase
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Ofcom’s views Pay TV phase three
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� Annex 3: consultation response
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Content aggregation and market powe
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Section 4 4 Market definition Summa
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Respondents’ views 4.36 Sky comme
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Respondents’ views Pay TV phase t
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Our current view Pay TV phase three
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Retail markets for premium sports c
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Responses to our consultation Pay T
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Consumers’ observed responses to
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Section 5 5 Market power Summary Pa
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Event Total annual value of live ri
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� DTT. � IPTV. Pay TV phase thr
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Production differentiation Pay TV p
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Barriers to entry and expansion Pay
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Section 6 6 Competition issues Summ
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Background Pay TV phase three docum
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Figure 50 Distribution of Setanta p
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Figure 65 Retail cost stack £ per
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Figure 67 Cost-plus cost stack £ p
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Section 10 Pay TV phase three docum
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Effects on retail prices Pay TV pha
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Section 11 Pay TV phase three docum
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Consultation questions Pay TV phase
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Annex 1 1 Responding to this consul
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Annex 2 2 Ofcom’s consultation pr
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Cover sheet for response to an Ofco
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