Competition Commission delays on-demand inquiry

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The dramatic rise of on-demand websites such as LoveFilm and NetFlix has forced the Competition Commission to delay its long-running investigation into premium pay-TV movies, the regulator said.

The competition watchdog's decision to consider what it calls a "a number of developments in the markets relevant to our investigation" is potentially good news for BSkyB.

Regulators previously claimed Sky had too much "market power" because it had exclusive deals with the big six Hollywood studios to screen films during the first pay-TV "window" after the cinema release.

Sky had faced the prospect that the regulator could impose limits on its movie deals and force down prices. However, the CC conceded that the market may have changed with the arrival of US website NetFlix, which launched in the UK in January and LoveFilm, the Amazon-owned DVD rental business that has embraced online.

The watchdog highlighted the fact that these sites have struck their own deals with some film studios to get subscription video on demand rights.

The CC also noted that prices are cheaper as NetFlix costs just £5.99 a month, while LoveFilm's online service sells for £4.99. A traditional Sky Movies TV package costs upwards of £16.

The cut-price services are attractive because subscribers can now view movies in high quality via broadband on not only laptops and tablets but also internet-connected TV sets. "Alternatives to traditional pay-TV retailers generally, or to Sky Movies in particular, may be expected to increase," added the CC, looking ahead to the launch of YouView, a joint venture from the BBC, ITV and BT later in the year. Sky has already announced plans for its own cheap on-demand service, which will launch later this year for an undisclosed price.

The CC began its investigation two years ago and is under pressure to complete it by an August deadline.