May 23, 2012

Competition Commission takes no action shock!

The Guardian is reporting that the Competition Commission are bottling it when it comes to reviewing BskyB’s monopoly on pay TV film rights:
BSkyB is to face no action from regulators over its monopoly of UK pay-TV film rights, after the Competition Commission decided that video on demand rivals such as LoveFilm and Netflix provide a vibrant market for consumers.
The decision marks a U-turn by the competition regulator, which provisionally determined last August that BSkyB's contracts with the six major Hollywood studios – were anti-competitive and needed to be weakened to allow rivals to flourish.
"Virgin Media strongly disagrees with today's provisional findings by the Competition Commission and continues to support its earlier findings of 2011 – that Sky's control of movie rights is restricting competition in the UK," said a spokeswoman for Virgin Media.
"The recent emergence of providers such as LoveFilm and Netflix has done nothing to impact Sky's advantage and we're currently working to better understand the reasons for the commission's decision as we consider next steps.
"The commission states very clearly in these provisional findings that competition in the wider pay-TV retail market remains ineffective."
Now normally I would be on VM’s side here, but, as we’ve seen when Sky was forced to share Premiership football with another broadcaster (Setanta/ESPN) these things don’t always benefit the paying customer even if it does eliminate a monopoly. Where once you could get all your Premiership games from Sky for a single price you now have to subscribe to ESPN too (on Sky at least). If that happened with the movie channels we could find ourselves in a situation similar to the States where you have to take multiple premium priced services to have access to the five big Hollywood studios movies, costing the customer considerably more than we pay here. The current arrangement works well – if you are just an occasional movie watcher you probably just need the films broadcast on the Freeview channels, if you want first run you go to either FilmFlex on a pay per movie or subscribe to Sky Movies. If we had to pay for, say, Sky Movies for Warner Bros movies but VM Movies for Universal and Sony films, that would be a mess.
I can't believe VM is going to suddenly decide to invest in their own content again, so all I can suppose is that their complaining is more to do with reducing carriage fees for Sky Movies than any genuine demand to address a monopoly situation.


Kevin Lloyd said...

I've always thought that the test is access not competition per se for precisely the reasons that you give.

The most heinous example is the Atlantic model which deliberately puts programmes beyond the reach of anyone but Sky platform subscribers. At least the film channels are available on other platforms.

But the other aspect of access is the way that rights for different viewing periods are being tied up. In practice this means that some films are not available for rent on blu-ray or dvd or on any other platforms for a very lengthy period. That does seem to me to be where the CC should have been sticking to its guns. So Sky (or indeed others) might be allowed an initial monopoly but access on other platforms is opened up much sooner than is currently the case.

That would allow Netflix and Love Film to provide a better service for the consumer (and Netflix badly needs some better content even though its service if fantastic in terms of quality and ease of use) and gives the consumer the choice about whether to wait or whether to buy up front in much the same way that I make decisions about the films that I will see at the cinema and those that I will wait to see in other ways.

I have to say that the best model emerging at the moment is Curzon which offers some on demand access to films that are being shown in its cinemas and those that have recently been in cinemas as well as an interesing back catalogue at very competitive prices and with superb quality. Alright, Curzon have a particular niche client group and I spend more of my time in their cinemas than any others by some very considerable margin. But this is a great approach and would actually start to make serious inroads in terms of access if extended more widely. But it does requires the studios to be prepared to do the necessary deals.

Phil Baxter said...

The LoveFilm and Netflix argument, far from proving that Sky don't have a monopoly, in fact proves the opposite. People complain that LoveFilm and Netflix have limited selections and generally only offer old content, that's because Sky have everything locked up.

You would have thought that with all the totally justified anti Murdoch sentiment around right now the competition commission would have had the balls to do the right thing and break up Sky's monopoly.

Kevin Lloyd said...

As a coda, there was a discussion about this on The Media Show (R4)yesterday which I caught on iplayer. The discussion there emphasised that the entry into the market of Netflix (and Netflix' own testimony that launch had been better than expected) showed that there was an effective market (the argument being that Netflix and others could in future start to compete with Sky more effectively and Netflix in particular had the financial clout to do so).

They also very much agreed with the argument that splitting access to different studios via different providers would not be in the interests of consumers.

But they did then get onto the distinctions between the pay per view films, the subscription arrangements, and then the dvd and free to air arrangements. They thought that this differentiation was important and that access varied as a result.

Ultimately though you can't get away from the issue of the price that Sky charge for their subscription channels. The CC didn't address that but it is the consequence of the deals that they have in place at the moment.

Nialli said...

Interesting. I would guess that the OTT Now TV service from Sky will also realign the market to some degree, depending on how it's priced and the quality of service delivered over an average broadband connection.
For me there is a question about quality and content of these OTT services. I've got a Sony Blu Ray player that has LoveFilm on it and the PQ is Freeview SD at best. Netflix is supposed to be better but has a limited catalogue in the UK, whereas presumably Now TV will turn up with the full Sky Movie catalogue (much like the Sky Anytime service we have).
I'm not convinced that we'll see an immediate shift to what the US refer to as "cable cutting", dropping subscription services in favour of pay as you view. And of course the elephant in the room remains DVD ripped downloads.

Oliver James Spicer said...

Dear friends,

Please do yourselves a favour and go to your network settings and change your DNS to,

Your UK Netflix will become US and you can enjoy a much better catalogue of shows.