Introduction: (graphics not included) In October 1990, two new contestants suffered a combined investment of £1.25 billion and a weekly loss of £10 million and are desperately waiting the Christmas period to better fit hands. Rather than behave rationally and focus on profit maximization and a long-term concern for the entire industry, the two companies engaged in a bloody war, which caused the industry one of its largest losses ever and caused led to the merger of the two companies. This case outlines one of satellite TV's fiercest competitions, and heralds a series of battles under other skies in the same industry. The situation described in the case is very close to a “War Game” which ends with a takeover of one from the other. Today's view on that situation may be distorted due to the outcome of that game, but we will try to be as honest as possible with the BSB management to justify their intentions at that time. The task would not be easy due to the drastic changes that occurred in that sector during the 1990s. The two companies gambled all their funds and based all their future wealth on two different alternatives. However, these two alternatives were analogue-based technologies that were quickly replaced in 1996 by cheaper and higher quality digital satellite broadcasting with its own standard known as DVB. This latest technology allows encoding of signals, stereo sounds and wide screen support. During this period, many scrambling systems appeared. The most secure remains the Videoguard NDS system developed by an Israeli company for BSkyB. Description of the situation: We are faced with an extremely competitive market with two players. The situation could be summarized in the following points: - High entry costs - High operational costs - Existence of substitutes (BBC, ITV and terrestrial TV Channel 4 and VCR for film channels) - High antagonism between actors - Government intervention to regulate the sector (the applicant –BSB- was “forced” to use risky and high-cost broadcasting standards) - Uncertainty over the technology used - The two companies market the same product (package of TV channels, including a movie channel) - Two behaviors based on "monopolists" who are faced with fierce competition. - The price was established from the beginning in the initial application to the IBA (it could be assimilated to a regulation) - Each subscription is considered an asset (power to create loyalty its customers) due to the high costs of switching from one supplier to another .