Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
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International examples
3.30 We continue to believe that the international case studies from around Europe that
we set out in our Second Pay TV Consultation illustrate the importance of sports
rights in particular 37 . Amounts paid for rights were high in Germany, Spain, Italy and
France, as in the UK.
3.31 Changes in rights ownership in France and Germany also illustrated the importance
of top-flight football rights to pay TV operators. Premiere’s subscriber numbers
dropped in 2006 for the first time since 1997 on the back of Premiere losing rights to
broadcast live Bundesliga matches. Similarly, seven years of consistent growth
turned to a decrease in subscriber numbers for TPS in France upon it losing its rights
to Ligue 1 matches.
Premium subscribers
3.32 We noted the substantial numbers of UK consumers that are prepared to pay a
premium specifically to acquire premium sports and movies services over and above
a basic service. There is little change in this picture since our Second Pay TV
Consultation: over six million UK consumers are willing to take up premium channels,
most of them paying a price of over £40 a month for a range of sports and movies
content, compared to less than £20 for some basic services.
Likely future developments
3.33 We also considered whether these types of content are likely to continue to be as
important in the longer term as we believe them to be now.
� Our view was and remains that live top-flight sports programming is likely to
have an enduring appeal, regardless of technical change. Broadcast media are
intrinsically well suited to content which is based on mass participation in major
live events, and this is unlikely to change in the foreseeable future.
� The same may not however be true of movie programming, since although
blockbuster movies are likely to retain their appeal, the simultaneous broadcast
of a small number of movies to a large number of viewers is unlikely to remain
the most effective means of distribution in the longer term. It is not difficult to
imagine a world in which they are generally accessed more directly, for example
via various forms of internet download. Movie download services are already
available, though they have yet to be taken up by large numbers of consumers
3.34 Having established that some content can drive take-up of pay TV services, we need
to establish which specific channels contain content of sufficient importance to drive
take-up, and whether those channels are sufficiently concentrated in the hands of
particular companies to raise possible competition concerns. This is the purpose of
our market definition and market power analysis, which follows in subsequent
sections.
37 See section 3 of our Second Pay TV Consultation for full details –
http://www.ofcom.org.uk/consult/condocs/second_paytv/condoc.pdf.