Ofcom refers Sky's Pay TV movie practices to Competition Commission
After an investigation into Sky's Pay TV movie packages, Ofcom has decided to refer the company's practices to the Competition Commission.
Rival service providers Virgin Media, BT, Setanta and Top Up TV submitted complaints over 3 years ago over the way Sky operates its Pay TV business, which has recently culminated in the satellite giant having to offer both Sky Sports 1 and 2 at wholesale prices to its competitors.
However, another part of the complaint, and subsequent investigation, involved Sky's buying and selling of movie rights from major studios. The rival providers argue that the satellite TV giant buys the video-on-demand rights for films as part of their linear broadcast packages, even though Sky currently has no mainstream VOD TV service (Sky Player is IP based), thereby tying-up major releases and preventing its competition from offering them to their customers. Ofcom agrees enough to now refer this specific case to the CC.
In a statement, it says: "First-run Hollywood movies are particularly important to competition in the Pay TV sector. This is because they are highly attractive to a large number of consumers, who want subscription access to premium high quality movies as close to their box office release as possible. This content is a key factor for many consumers when signing up to a pay TV service.
"Ofcom is concerned in particular that the way in which these movies are sold and distributed creates a situation in which Sky has the incentive and ability to distort competition. The end result for consumers is less choice, less innovation and higher prices".
It's a move that will certainly please Virgin Media and the like: We've long argued that current arrangements for the supply and acquisition of premium movies do not serve consumers well", a spokesperson told Pocket-lint. "We're pleased that these issues are now going to be the subject of further detailed examination by the Competition Commission".
Of course, it may take a while to find out the outcome, as the CC has a maximum of 2 years to present its findings, but seeing as we've waited 3 already, what's another 2?