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Lovefilm, Netflix 'no competitive constraint' on Sky Movies

Ofcom: satellite broadcaster has more power

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Sky has too much money and subscribers to be threatened by the likes of Lovefilm and Netflix, the telecoms and media watchdog Ofcom has said.

"It does not appear to us that the current streaming VoD services offered by Lovefilm or Netflix are substitutes for Sky Movies," Ofcom said. "Rather than being substitutes for Sky Movies, these services appear to be designed to more closely resemble a general entertainment TV channel service."

Reporting once again to the Competition Commission's enquiry into the market for movies on pay TV, Ofcom said Sky has a far greater ability to buy first-broadcast rights to films and TV shows than the IPTV services do.

Amazon-owned Lovefilm and Netflix instead rely on gaining the rights to stream material when it has already been broadcast for the first time and content owners are selling rights to repeat transmissions, typically when their material is also made available on physical media.

"The [IPTV] services are not pure movies offerings and instead rely heavily on US and UK TV series content, a significant proportion of which is not recent," Ofcom told the Commission.

"We also do not consider that a meaningful analysis of the competitive impact of these new services can be based on a simple count of the number of movies to which they provide access."

All that, said Ofcom, is why Lovefilm and Netflix need only charge from a fiver a month, while Sky wants a £20-a-month basic subscription and £16 each month on top of that for its Movies offering.

"We have not seen any clear evidence presented to demonstrate that the streaming VoD services offered currently by Lovefilm and Netflix exert a sufficient competitive constraint on Sky Movies," Ofcom concluded. ®

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