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The UK’s Competition Commission has pulled a U-turn and declared the emergence of services like Netflix means satcaster BSkyB does not hold a dominant position in the pay-TV movies market.
This comes after a preliminary report last August rapped Sky for holding a market monopoly, as it has multimillion-dollar deals with all six US studios, and in the Commission’s view charged too much for its Sky Movies channels.
Then in March, the Commission reviewed its investigation in the wake of Neflix’s arrival in the UK, noting that it and other subscription VoD services such as Amazon’s LoveFilm would be included in the investigation.
Today, the Commission’s provisional findings confirmed it had changed its position and given Sky the all clear. ‘Principal remedies,’ such as limiting the number of the News Corp-back firm’s major studio deals, had previously been touted.
“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,” said Laura Carstensen, chairwoman of the Movies On Pay-TV Market investigation.
“LoveFilm and Netflix offer services that 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.”
The report also noted there was a “growing number” of retailers offering alternative subscription VoD (SVoD) and transactional VoD services, such as Tesco-owned BlinkBox, Apple and Dixons’ KnowHow.
Sky is also planning its own SVoD service, Now TV, and broadcaster-backed IPTV platform YouView is expected to finally launch in the third quarter of this year.
A spokesman for Sky’s rival pay-TV service Virgin said: “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, leading to higher prices, reduced choice and less innovation.
“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 did note competition in the pay-TV sector remained “ineffective” and that there were limited amounts of subscription pay-TV first-window rights content available to Sky’s rivals. On the flipside, “considerably more” second- and third-window content was being licensed.
Sky today said it would “continue to engage” with the Commission.
Virgin’s spokesman said today’s report stated “very clearly” competition in the wider pay-TV market wasn’t working. LoveFilm declined to comment. The US studios have previously thrown their full support behind Sky.
The full provisional report can be found here. The Competition Commission’s final report is due before August 3.
