August 19, 2011

Competition Commission recommends pay-TV movie changes

Could the price of Sky Movies be coming down? There are two stings in the tail of the following report from MediaGuardian: the final report from the Competitions Commission isn't due for another year, and when we last had this kind of breakup on Sky's market dominance (with Premiership football) the consumer ended up worse off, having to be pay for ESPN without Sky's prices dropping. We'll have to see.
BSkyB will be ordered to weaken its stranglehold on Hollywood films on pay-TV after an investigation by the Competition Commission.
In a provisional decision published on Friday morning, the commission said BSkyB's contracts with the six major Hollywood studios present a significant barrier to entry to potential competitors, including BT and Virgin Media. The industry watchdog ruled that the prices charged by Sky to Virgin are too high, meaning Virgin cannot make a business selling films to its customers.
Among a number of recommendations from the commission, the regulator said Sky should be restricted from signing exclusivity deals with all of the major Hollywood film studios for movie rights in the so-called "first subscription pay television window".
The Competition Commission recommended that exclusivity deals with the film giants should be weakened so rival operators can buy the rights to other distribution methods, including video on demand.
Under recommendations put forward by the Competition Commission, BT and Virgin Media would be able to rival Sky Movies by offering their own selection of new releases.
The Virgin Media chief executive, Neil Berkett, said: "Virgin Media has long argued that there are deep rooted problems in the pay-TV movies market which have been severely hampering competition. We're pleased that the Competition Commission has provisionally recognised that consumers have suffered significant harm from Sky's stranglehold and are paying far too much to watch films at home.
"We hope today's findings will lead to a dramatic transformation of the market and allow new compelling services to flourish that give consumers much greater choice of innovative film services. We look forward to working with the commission to ensure that movie fans reap the benefits of a more competitive and dynamic market."
The Competition Commission will invite views on its recommendation before publishing a final decision in August 2012.


campbellg said...

I really couldn't care less about this - I watch movies at the cinema and on DVD, I decided against getting movies on VM long ago.

Can they not look into the problem of Sky buying up the rights to TV studios' output, ie all HBO New programming on Sky Atlantic??

Jon said...

More significant I think is whether this allows Virgin to offer a movie-on-demand subscription service, similar to those currently offered by post.

Currently these are largely blocked (for current blockbuster titles) by Sky first subscription contracts.

sibod said...

Love Film have always said that they can't get much in the way of VOD thanks to Sky locking down pretty much anything that is first run, thus limiting their service.
Same for NetFLix - can't launch here without any content!

And since Sky won't offer anything on a pay per view or other basis online, it's effectively locked out unless you take out a full Sky sub and get their Sky Player as part of the deal.

Sky of course, will argue it will in fact harm competition as they 'wont heavily invest' etc etc.

I always thought it was perverse that it costs £19 a month for films on a rolling basis, when it costs £15 for unlimited DVDs that are bang up to date, and all that…

Same goes for Sky locking down all the HBO stuff - not only for Sky Atlantic, but nobody can view them on a VOD basis wether they want to pay for it or not, as Sky have made it a condition that you have to take out a full subscription to all channels before you have any access to it…

Jon said...

I think they've missed a trick. I believe they should ban all exclusive contracts for all suppliers, except for a very limited "promotional" window of say 4-6 weeks. I would also say that such promotional deals should be "per movie", not block deal "per studio".

The reason for this is consumers are tied in the medium term to their current TV supplier (Sky/Virgin/BT Vision). Unlike an exclusive deal on the high street, consumers cannot just switch to Sky for an afternoon to see a specific new movie they want - it becomes, essentially, unavailable to them until the exclusivity period passes. Forcing some split of exclusivity across the TV platforms just means no one will be able to watch all the movies they want on any UK subscription service.

The Competition Commission say they have discounted limiting the term of any exclusivity contract because theyhad "significant concerns as to the practicality" and also unspecified concerns of "unintended consequences", but they only seem to have considered reducing it to, say, 12 months, rather than eliminating it altogether, save for a brief launch window.

Can anyone see what the practicality issues or unintended consequences might be of such an approach?

Moroboshi said...

Anything which weakens Sky is a good thing, but things are still clearly massively skewed in Murdoch's favour. There should be a blanket ban on any network provider from holding exclusive rights to any content they did not make themselves. That would encourage home grown content while freeing up the big high end US stuff such as Mad Men and Game of Thrones.

I would hope that post hacking even the wretched gutter trash tories might develop some sort of miniature backbone and finally say no to Murdoch.

Anonymous said...

wish people would stop harping on about Sky Atlantic, this has nothing to do with that, it`s all about movies. If you want Sky Atlantic that much, then I suggest you do one to Sky and leave the rest of us in peace.....!!!!!

campbellg said...

Sorry, manu76, can't get Sky.