BSkyB's battle to retain its stranglehold on Hollywood films on pay-TV has been given a potential boost, after the Competition Commission announced it will broaden its investigation to measure the impact of Netflix and LoveFilm.
Last summer the competition regulator published a provisional decision that BSkyB's contracts with the six major Hollywood studios – Disney, Warner Bros, Paramount, 20th Century Fox, Sony Pictures and Universal Studios – were anti-competitive and needed to be weakened to allow rivals to flourish.
On Wednesday the long-running investigation, which published a revised deadline of July for delivering its final report, said that it needed to extend the consultation to take into account changes in the movie market.
The Competition Commission admitted it needed to assess "potentially relevant" developments, in particular the arrival of US giant Netflix which launched in the UK and Ireland in January.
The commission also pointed to the need to assess LoveFilm, which is owned by internet retailer Amazon and has extended its rental-by-post model to offer streaming movies to customers.
BSkyB recently announced that it intends to launch its own internet service, which will include Sky Movies, that will stand alone from its TV channel subscription offering.
"We recognised in our provisional findings that, were developments in the market to occur, it would be necessary to take them into account before reaching our final views," said the commission.
"We are considering their implications, alongside other evidence received since the provisional findings, both with regard to our assessment of whether there is an adverse effect on competition (AEC) and for any potential remedies."
The commission has published a working paper calling for submissions on how these new services might have opened the competition in the market, a development which BSkyB will welcome.
The commission said that it is seeking views on a range of questions including to what extent services such as Netflix "substitute for traditional bundled pay-TV services and Sky Movies"; and whether the new entrants mean that Sky Movies and the first pay-TV window rights "are likely to remain as significant to consumers in choosing their pay-TV retailer".
The working paper published on Wednesday offers five questions in total, calling for submissions by 28 March.
BSkyB, which has sewn up the rights to show films on TV and via video-on-demand services in the lucrative first pay-TV window, has long argued that since the investigation was launched the market has become much more competitive, mitigating the need to break Sky's exclusive deals with studios.
BSkyB's control over film output from the major studios has been criticised by competitors including BT and Virgin Media as well as Reed Hastings, the chief executive of Netflix.
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