The press ad for Sky Store stated that the service was "like having a huge movie store in your home - available instantly through your Sky+ box". It also promised consumers that they could "rent movies instantly" through the store.
However, BT challenged whether claims in the ad misleadingly exaggerated the speed with which consumers could actually use the service on a Sky+ box.
The ASA has today (August 29) upheld BT's complaint, after finding that Sky did not make it sufficiently clear that consumers may have to wait around a minute to watch selected movies due to their internet connection.
Launched earlier in the year, Sky Store offers rentals of new and classic films over an IP-connected Sky+ box via the Anytime video on-demand platform.
Sky attempted to argue that most customers would be aware that "rent movies instantly" meant that they could watch films via their box within seconds of renting them, rather than minutes.
Sky stated its belief that the "large majority" of those on its ADSL broadband package - delivered over copper wires rather than the faster fibre optics - would "be able to start watching a movie within a minute".
The firm also argued that most customers would understand that services provided over the internet would be affected by the speed of their broadband connection.
It said that this point was included in the small print, which told people that a "fast enough broadband connection" was required for optimum experience.
However, the ASA said that most customers would not view a delay of a minute or more before the movie starts playback as being an "instant" service, and so the ad was misleading.
"We noted that Sky estimated a significant majority of ADSL broadband users would be able to begin watching an average length movie within less than a minute after beginning the download, and we understood that customers with faster fibre optic and cable broadband connections were much more likely to be able to begin viewing within that time frame," said the watchdog.
"However, we considered that a delay of up to a minute for most customers (and longer for those with slower broadband connections) would not be in line with their reasonable expectations for an online movie service which was described as "instant". We therefore considered that the ad had exaggerated the capabilities of the service and we concluded that it was likely to mislead."
Sky was told that the ad must not appear again in its current form and also warned that future ads must "not exaggerate the speed with which consumers would be able to access movies using Sky Store".