The document discusses competition in content markets in light of technological changes. It notes that (1) consumer use of content is shifting from traditional broadcast services to on-demand options accessed on multiple devices anytime, anywhere. (2) However, demand for traditional TV remains strong even as new technologies emerge rapidly. (3) 'Must-have' content like sports continues to be critical for commercial success in this evolving landscape.

1. DCMS Communications Review Seminar Series
Competition in content markets
Yih-Choung Teh, Competition Policy Director, Ofcom
9 July 2012

2. Overview
• Consumer attitudes and use of content services
• Examples of market developments
• Implications for competition
1

3. Technological innovation and convergence is changing
the way we consume content
Broadcast On Demand
services services
2

4. The take-up of new technologies is increasingly rapid
Number of years taken to reach 50% penetration
Traditional AV adoption Faster AV adoption Web adoption
’86 ’88 ’75 ’23 ’86 ’67 ’00 ’97 ’09 ’98 ’04 ’07 ’99 ’05 ’06 (UK launch date)
Source: Oliver & Ohlbaum
3

5. For example, use of the internet to access content and
bundling of services has increased...
Proportion of web users accessing Proportion of homes buying bundled
video content every week (%) communications services (%)
30 60 57
26 50 53
9 Other
46 11
20 39 10
20 18 40 7
19
6 16 Fixed
14 17
20 2 voice, interne
12 2
2 t & pay-TV
10 20 3
2 Fixed voice
24 27
18 22 & pay-TV
16
0 0 Fixed voice
TV programmes/films Short clips 2008 2009 2010 2011 2012 & internet
2010 2011
Source: Ofcom research Source: Ofcom (note: data as at Q1 of each year)
4

6. ...and consumers now want to access content
anytime, anywhere
Mobile device take-up (%)
Accessing content has moved beyond the
39
40 traditional TV screen and home:
30 26 • In 2011, 25% of mobile web users
20
watched TV / video content or listened to
11
music online
10
2 • 2011 also saw the emergence and
0 increase in popularity of tablets, in addition
Tablet computer Smartphone to smartphones
Q1 2011 Q1 2012
Source: Ofcom research
5

7. However, demand for traditional services remains strong
Viewing per head, per day (hours) Average amount of media used per day
in all homes for the UK TV industry (minutes)
4.1 250
4.0
200
3.9
3.8 150
3.7
3.6 100
3.5
50
3.4
3.3 0
Text comms
Games
Voice comms
Print media
All video
Other offline media
All audio
Other internet
2005 2006 2007 2008 2009 2010
media
Source: BARB Source: Ofcom research
6

8. ‘Must-have’ content remains critical for success
Premier League live rights values per
Sports Movies and Other
season (£m)
US content
1200
1000
800
600
400
200
0
88/89 - 91/92
92/93 - 96/97
97/98 - 00/01
01/02 - 03/04
04/05 - 06/07
07/08 - 09/10
10/11 - 12/13
13/14 - 15/16
Source: Ofcom’s first Pay TV consultation; news sources
Ofcom Pay TV Competition
Review, 2010 Commission, Movies on
Pay TV, 2012
7

9. Innovation is supporting greater competition in content
distribution though network effects remain important
DTT Satellite
Cable
Broadband
8

10. Electronic Programme Guides are evolving into more
sophisticated User Interfaces raising new challenges
9

11. Greater integration across the value chain / convergence
may raise issues for the competition regime
OTT PLATFORMS
INTEGRATED PLATFORMS
CONTENT
RIGHTS
Data Transfer
Content Packaging
Supply and Delivery
Data Hosting
CONNECTIVITY PROVIDERS DEVICE MANUFACTURERS
10

12. Analysis of viewing data is an increasingly valuable
asset with implications for advertising markets
11

13. Implications for the broadcasting competition regime
Broadcasting markets have existed in the context of, and been shaped
by, regulatory frameworks, including in relation to competition
• Technological change. How can issues be addressed in a timely
fashion, given the rate of technological change?
• Service innovation. Should the scope of the regime go beyond broadcast
licensed services (eg standalone video on-demand)?
• Convergence. Should the regime take more explicit account of telecoms
markets to ensure effectiveness, given convergence?
• Globalisation. Does the regime need to recognise that broadcasters and
service providers may increasingly be based outside the UK?
12