Pay TV phase three document - Stakeholders - Ofcom

Pay TV phase three document – non-confidential version
Evidence on indirect constraints
Consideration of product characteristics and consumer preferences
Our position in the Second Pay TV consultation
4.78 In the Second Pay TV Consultation we set out the results of our analysis of
consumer preferences and product characteristics to assess whether other sport on
TV is likely to be a substitute for sport in the Sky Sports Mix. We found that
subscribers have overlapping preferences for multiple sports but they have
particularly strong preferences for FAPL and other top flight football 93 much of which
is found on Sky Sports 1 and 2. The specific characteristics of FAPL content meant
that other substitutes on FTA TV were likely to be a poor substitute for Sky Sports.
We found that preferences for football of marginal consumers were similar to the
preferences of infra marginal consumers 94 .
4.79 We recognised the importance of other sports on Sky Sports channels. We found
that a significant minority highly valued other content on Sky Sports for which there
were few substitutes on FTA, for example Cricket, rugby union and rugby league.
However, we focused primarily on football as the most important characteristic of
premium sports channels.
4.80 We argued that our survey data and analysis of product characteristics indicated that
matches featuring FAPL teams are very important to subscribers. For example our
survey on subscriber preferences found that 75% of consumers think FAPL football is
very important and that these consumers are unlikely to find close alternatives on
FTA TV 95 . While there are a number of competitions that subscribers consider
important, including four that feature FAPL teams, FAPL itself is the most important
competition, since it features FAPL teams playing matches regularly through the
season. However, we recognised that other football competitions featuring FAPL
teams where matches are scheduled regularly through the season may be
considered a substitute for FAPL for some consumers. For example, consumers
place a high value on the UEFA Champions League, which includes matches shown
on premium sports channels as well as FTA.
4.81 A critical question for us, however, was whether the football matches featuring FAPL
teams on FTA TV are a sufficiently strong substitute for premium sports channels. On
balance we considered the relatively low number of matches featuring FAPL teams
on FTA TV meant that FTA was likely to be regarded as a weak substitute for live
football featuring FAPL teams on premium sports channels.
4.82 We therefore concluded that live FAPL games played regularly throughout the
season represented a distinctive characteristic of premium sports channels.
However, we recognised that the market could be somewhat broader, including all
competitive games featuring FAPL teams (including matches on FTA TV from either
UEFA Champions League UEFA Cup, or the FA Cup).
93
By top flight football we mean matches from FAPL, FA Cup, Carling Cup, UEFA Cup and England
internationals.
94 Ofcom’s Second Pay TV Consultation Annex 6 paragraphs 5.35 – 5.38.
95
A further 10% of subscribers highly value either cricket, rugby union or rugby league for which there
are limited alternatives on FTA TV.
70