Sky Movies no longer provides Sky with a material advantage over its rivals in the pay-TV retail market, according to the Competition Commission's provisional findings published today as part of the Movies on Pay TV investigation.
In August 2011, the Commission provisionally found that Sky's control over first subscription pay-TV window (FSPTW) movie rights in the UK was restricting competition between pay-TV retailers, but stressed that it would monitor developments in the market.
The Commission said that today's revised findings take into account developments in the market since August 2011—including the launch of Netflix and LoveFilm's enhanced internet-distributed movie offering, and representations received in response to its August 2011 provisional findings.
Although Sky currently holds the rights to the movies of all six major Hollywood studios in the UK Lovefilm and Netflix have already acquired the FSPTW rights of several other studios and rights to movies of many of the major studios in subsequent pay-TV windows. The Commission has found that, as rival services increase the number of their subscribers, the barriers to them acquiring further FSPTW rights will continue to fall.
Laura Carstensen, Chairman of the Movies on Pay TV market investigation, said: "Competition between providers of movie services on pay TV has changed materially and, as a result of these changes, consumers now have much greater choice. Lovefilm and Netflix offer services which are attractive to many consumers and they appear sufficiently well resourced to be in a position to improve the range and quality of their content further. Moreover, Sky is about to offer Sky Movies on Now TV, which will make Sky Movies available unbundled from other pay-TV content and not requiring a subscription to a traditional pay-TV platform.
"Despite these developments, which are good for competition and good for consumers, we still believe that competition in the pay-TV retail market overall is ineffective. However, the scope of our investigation is limited by the terms of the reference to us to the impact of FSPTW movies and, in our view, Sky's position with respect to FSPTW movies does not provide Sky with a material advantage over its rivals in the pay-TV retail market."
The Commission is inviting comments on its revised provisional findings before 13 June and will take any feedback into consideration before reaching its final views.
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