BSkyB Could Be Forced To Host On-Demand Movie Rivals

BSkyB’s set-top boxes may have to offer services like Netflix (NSDQ: NFLX), Lovefilm and Blinkbox alongside its own Sky Movies, under new proposals from the Competition Commission.

That is one of two new remedies proposed by the commission, which this summer provisionally ruled that Sky’s exclusive deals with six Hollywood studios is anti-competitive.

In an additional new consultation, the commission is asking…

  • “whether access to Sky’s Ethernet-enabled STBs would enable qualifying OTT movie service providers to compete more effectively with Sky’s movies services”
  • or “whether, in the foreseeable future, this remedy will be rendered superfluous through technical and market developments, in particular the adoption by consumers of Internet-enabled TVs and STBs, including YouView”.

Sky has only recently enabled its own on-board on-demand service, Anytime+, which includes movies, on its boxes. It is also increasingly making its own content available on other devices and platforms including YouView, for which it is a content partner, when it launches next year.

A compulsion to host rival services on its own box would be a massive boon to rival services like Netflix, Lovefilm and Blinkbox because Sky is in around 10.5 million UK homes.

But the notion is likely be contested vigorously by Sky. In any case, the technical challenge could be considerable since Sky’s current Sky+ box was not built to host over-the-top services.

Research carried out by Screen Digest for the commission has found the most common scenario across leading markets is for pay-TV rights with the six Hollywood majors to be split between different operators.

Previous remedies proposed by the commission had been…

  • Restricting the number of major studios from which Sky may license exclusive FSPTW (first subscription pay-TV window) rights
  • Restricting the range of exclusive rights which Sky may license from the major studios
  • ‘Must retail’ measures requiring Sky to acquire on a wholesale basis and market to its retail customers products incorporating FSPTW movie content created by other parties

The commission has ruled out these remedies…

  • Wholesale must-offer
  • Divesting Sky of its rights acquisition, content aggregation and wholesaling functions
  • Divesting a proportion of Sky’s retail customers
  • Changing the duration of the FSPT
  • A price control
  • Coterminous studio contract

It has also proposed “requiring Sky to publish the expiry dates of its contracts relating to FSPTW rights with the six major studios, so as to increase the ability
for rival bidders to engage in timely negotiations”.