Summary:

UK regulators have changed their mind – new over-the-top internet movie services means BSkyB no longer has a restrictive position in pay-TV movie subscriptions.

Reed Hastings Happy

Here is an example of how technology can outstrip regulation.

Despite earlier provisionally concluding News Corp’s part-owned BSkyB’s exclusive subscription pay-TV deals with Hollywood studios restricts competition, the UK’s Competition Commission has now reversed its decision, saying:

“Whereas in the past consumers wanting to watch recent movies on a pay-TV movie service had to subscribe to Sky Movies through a traditional pay-TV platform, the launch of new and improved movie services in the pay-TV market by Netflix and Lovefilm means that they now have other alternatives.”

That development – the unleashing of new content options over internet TV – was evident to those who have been watching the sector. But it was a a development the Competition Commission had to find for itself, during an inquiry that began almost two years ago.

Sky, led by CEO Jeremy Darroch (pictured), had declared itself “perplexed” by the December 2011 provisional ruling. After provisionally ruling against Sky Movies, the Competition Commission at one point mooted that BSkyB be forced to carry competing services from the likes of Lovefilm and Blinkbox on its own pay-TV box – something BSkyB would have contested vigorously.

But there were especially two factors behind the commission’s change of mind:

“In particular, Netflix launched in the UK in January 2012 and, since the original provisional findings, LOVEFiLM has enhanced significantly its Internet-distributed movie offering.

“As rival services increase the number of their subscribers, the barriers to them acquiring further first subscription pay-TV window rights will continue to fall.”

Indeed, Netflix CEO Reed Hastings had left the door open for the Competition Commission’s reversal when, whilst launching Netflix in to the UK in January, he told paidContent:

“We could just bid against them (Sky). We are not dependent on whatever the Competition Commission does.”

Now Hastings will have to front up. BSkyB will this summer launch Now TV, its own suite of on-demand and live TV channels including movies, over internet TV devices without requiring a full annual satellite subscription as its core business does.

“The CC expects consumer choice to increase further when Sky launches its own Internet-based service in the summer (branded Now TV), which will offer Sky Movies without the need to take any other pay-TV content or subscribe to Sky’s satellite platform.

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