Summary:

Sky Movies’ stranglehold on UK subscription on-demand rights for movies may not be broken by competition authorities until 2014, according t…

Hollywood
photo: Justin Jibbs

Sky Movies’ stranglehold on UK subscription on-demand rights for movies may not be broken by competition authorities until 2014, according to Enders Analysis.

Movies available online through both Lovefilm and Netflix (NSDQ: NFLX) are fewer and less A-list than on their DVD catalogues. One reason is that competitors already own the much-needed rights.

In the UK, that means Sky Movies, which enjoys exclusivity on offering many Hollywood blockbusters through subscription for 15 months after release. Last week, the Competition Commission provisionally ruled this constitutes a lack of competition and so should be remedied.

That could mean an opening for Lovefilm, which had lobbied the commission’s inquiry, as well as for BT (NYSE: BT) Vision, Virgin Media (NSDQ: VMED), Google (NSDQ: GOOG) and others. Netflix is also planning on opening a UK service.

But Enders’ note says that, once the commission’s final report in February is likely to be appealed by Sky and that, alongside Ofcom’s own inquiry in to the UK pay-TV sector generally, any opportunity for the competitors is unlikely to come before 2014.

It’s also not yet clear whether the process will lead to the opportunity online upstarts want, even on that timeline. The Competition Commission is proposing either Sky’s major-studio deals be limited, that it be allowed to control only linear or subscription VOD but not both, or that Sky be compelled to wholesale Sky Movies to competitors at fairer prices – or a mixture of all three.

It would seem that only the first option would significantly reduce Sky’s lock-up on subscription VOD to the extent that new online businesses could truly be enabled.

Until then, consumers who want to watch A-list Hollywood movies online soon after theatrical release are better off going to PPV, transactional-VOD services like Tesco’s Blinkbox, which eschew the subscription route altogether and which benefit from better rights availability.

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