Today the Competition Commission (CC) has outlined its provisional findings as part of its investigation into movies on pay TV. In summary they have suggested that Sky’s relationship with the major Hollywood studios might stand in the way of innovation and consumer choice, and therefore may require some form of regulatory intervention.
As both the person in charge of Sky Movies, and, just as importantly, a major film fan myself, I see a very different picture to that outlined by the CC. And, not to put too fine a point on it, I struggle to understand how anyone can think the supply of movies today is anything other than vibrant and dynamic.
Just consider the succession of new and innovative services launched over recent years, from iTunes to Xbox, BT Vision to Playstation. And of course there’s more innovation on its way: we wait to see how Tesco supercharges Blinkbox, how Amazon will develop Lovefilm’s ambitions, and how Netflix tries to replicate the success it’s enjoyed in the US inthe UK. These are big consumer brands who believe that they can develop even more successful businesses through movies distribution.
What we've seen is innovation across the board, with myriad ways to access movies through a variety of platforms and devices. Consumers have never enjoyed so much choice as they do today. Cast your mind back a decade or so: back then, our main options for getting our movies fix were either the cinema, the video rental shop, Sky Movies or terrestrial TV.
Thankfully, not least due to advances in digital technology,the world has moved on, and so has Sky Movies. Increasing competition provides a further incentive for us to raise our game and I’m very proud of the contribution Sky has made in offering a great in-home movies experience.
Just look at our track record. We’ve led the way – and still do - in high-definition. We were the first broadcaster in Europe to offer the best of Hollywood in 3D. And with services like Sky Go we’re offering movies across new devices and platforms. In fact, we were the first UK broadcaster to offer a movie download service. And most recently we’ve innovated with our on demand service, Sky Anytime+. We’ve innovated precisely because we’ve had to, to stay competitive and to continue to offer our subscribers a service worth paying for. And to help our customers make the most of their subscription, we curate and showcase seasons and collections of movies as well as making many hours of dedicated editorial programmes each week.
Now the CC’s investigation has largely focused on the exclusive rights that Sky holds in the subscription pay TV window, which kicks in about a year after films have been in the cinema.
Of course, such exclusivity is a key enabler in allowing us to build a movies business which has been delivering customers choice and innovation. Exclusivity is the bedrock of the way TV rights are sold and licensed across the world. But, unlike with TV shows, we don’t benefit from the same ‘first run’ opportunity.Let’s remember that by the time movies arrive with Sky Movies, these titles have already been available in cinema, on DVD, through iTunes, games consoles, and pay-per-view TV. And even when the subscription pay TV window begins, many titles remain available on DVD.This means that our focus on innovating and offering a high quality service cannot relent. With high levels of competition, and consumers already accessing movies from multiple sources, our customers will simply go elsewhere if they find a service they feel better suits their needs.
And the same is true for the studios. We have been able to persuade rights owners to deal with us over a long period of time not because they have no alternative, but by convincing them that Sky will do the best job in delivering their movies to consumers during the subscription pay TV window. Sky is not gifted any rights and all of our output deals are secured through fair and open processes. Any of our competitors could outbid Sky for those rights, should they choose to – or make their case to the studios for selling their rights differently.
This competitive tension is good news for both consumers and studios. For the latter, it means they remain well placed to decide how best to exploit their rights, and how best to serve those who consume their movies. There’s no obligation to sell their rights exclusively, and if they believed that could seek better value and innovation from elsewhere, they are free to do so.
So from my perspective, these market forces are delivering opportunity and choice for consumers and film makers alike. While we continue to engage the CC on its ongoing investigation, it’s worth taking the time to consider whether regulatory intervention is really something that is required in this rapidly evolving marketplace.