As part of its continuing investigation into movies in the pay-television market, the Competition Commission in the United Kingdom has suggested that third-party movie service providers might be able to access broadband-enabled set-top boxes in Sky homes. The Commission is consulting on the proposed remedy, after provisionally finding that the position of Sky in the market has an adverse effect on competition.
In its provisional findings published in August 2011, the Competition Commission found that the control exercised by Sky on the acquisition of movie rights in the first subscription pay-TV window adversely affects competition between pay-TV retailers.
The Commission therefore proposed a number of potential remedies: to restructure the number of major studies from which Sky may license exclusive rights, restrict the range of exclusive rights, or require Sky to market to its consumers movie services from other parties.
In response to suggestions from potential competitors, a further proposed remedy is to require Sky to provide, to any qualifying over-the-top movie service provider, access to its consumers who are currently able to receive its Anytime+ service, which is to say those with an Ethernet-enabled set-top box, although it does not stipulate that this actually need be connected.
The rationale for this appears to be that current regulations require Sky to make its satellite platform and electronic programme guide available to third parties, so something similar could be applied to subscription video on demand.
The remedy is proposed to reduce the switching barriers for Sky customers, such that new service providers can more effectively bid for movie rights and generate value from them.
The Competition Commission is consulting on the appropriateness, effectiveness and proportionality of such a remedy, and how it might actually be implemented.
Without particularly wishing to defend Sky, the involvement of the Competition Commission in such matters seems increasingly misguided.
From a technical perspective, it has never been easier for anyone to deliver an over-the-top movie service. One only has to look at how Netflix in the United States, despite its own mismanagement, has been able to establish a competitive service offering in an entrenched pay-television market.
Such services can be delivered to any number of devices and displays, from games consoles that consumers already own in their millions, to inexpensive media streamers, to the latest broadband network connected television screens.
None of these require access to the set-top box of a competing pay-television service provider.
The reality is that the major challenge for anyone seeking to provide such movie services is to acquire the relevant rights and to market the service effectively.
That option is open to third parties, but they will necessarily need deep pockets to compete effectively with existing pay-television providers, notably Sky.
It is also arguable just how important the exclusive provision of premium movies is to the success of such a service. In many ways, movies are only part of the mix for a pay-television service provider, and not necessarily the most important one at that.
Previous interventions by the Competition Commission, in the field of exclusive sports rights, have had little positive effect on the prospects for competing pay-television providers.
Premium sports and movies are traditionally held to be the backbone of pay-television operators, but in practice success is dependent upon a much more rounded service proposition. Compared to other programming, the actual volume of viewing of movies is marginal.
Unlike with exclusive sports, consumers generally have the option of accessing such movies by other means, for instance by purchasing or renting titles on disc, so the level of lock-in is much lower.
The real opportunities for new entrants lie in offering programming that is not currently available on traditional platforms, rather than competing directly for the latest releases. That generally means offering access to a vast catalogue of programming, including television titles.
Whether this would actually benefit from access to the rather primitive navigation afforded by a Sky set-top box is open to question. Any prospective service provider should probably be thinking very differently.