Free UK Video-on-Demand Service Opposed by US-Owned Rivals

15 September 2008

LONDON: The UK Competition Commission's extended probe into Project Kangaroo, a free online video-on-demand service, has triggered a review of the proposal by its three shareholders, the BBC's commercial arm BBC Worldwide, ITV and Channel 4

Kangaroo was referred to the competition watchdog following screeches of outrage from US-controlled pay-TV duopoly BSkyB and Virgin Media, both of which complain that the newcomer would dominate the UK's emerging market for online television.

The competition-loving pair are especially enraged that the three British broadcasters intend to retain exclusive rights to Kangaroo's content – meaning that Murdoch, Branson and their Wall Street entourages might be deprived of an opportunity to wring mucho million more dollars from the UK public.

However, it seems that Kangaroo's shareholders are now willing to compromise by allowing other online services to show 'catch-up TV' – the most popular segment of on-demand viewing.

The BBC, ITV and C4, however, will retain the rights to syndicate programmes for up to thirty days following transmission.

Kangaroo's key elements are …

  • It will offer 10,000 hours of online television. 
  • Three-quarters of the content will be free and contain advertising. 
  • The service expects to gain 10% of the online display advertising market, valued at around £120 million ($209.96m; €150.63m). 
  • It will account for an estimated 21% of on-demand broadcasting.
Speaking at last month's Edinburgh International Television Festival, Kangaroo ceo Ashley Highfield claimed that his stockholders' 70% share of the broadcast TV market would not translate into a similar figure online.

He told delegates: "British broadcasters face intense competition from powerful players in [the online] market. Many of them have gained real competitive advantage by linking their video-on-demand services to brilliant pieces of hardware."

The Competition Commission is now expected to announce its verdict in January which, if favourable, will see Kangaroo hopping in the early Spring.

Data sourced from Financial Times; additional content by WARC staff