BBC/ITV/C4 Kangaroo scheme 'anti-competitive'

The multi-channel video-on-demand scheme that is currently known as Project Kangaroo - think an iPlayer that includes not only the BBC but also ITV and Channel 4 - has a problem.

The Competition Commission (CC) has been looking into it, and their provisional findings, released early on Wednesday, suggest that Kangaroo remains too anti-competitive for their liking. A statement from the CC says Kangaroo is "likely to result in a substantial lessening of competition (SLC) in the supply of UK TV VOD [video on demand] content at the wholesale and retail levels".

"The CC does not, however, expect the joint venture to lead to an SLC in online advertising or content acquisition," the statement continues.

Over to Peter Freeman, chairman of the inquiry group:

Video on Demand is a relatively new and rapidly expanding medium and UKVOD clearly has much to offer. However, we are concerned that a loss of rivalry between [BBC Worldwide], ITV and [Channel 4]C, who are normally regarded as close competitors, could restrict existing and future competition for VOD. Whatever benefits viewers would gain from this rivalry would clearly be lost.

Of course there are already several other well-established providers of various types of VOD services. However, the evidence that we have seen tells us that domestic content is key to being able to offer strong competition to UKVOD’s proposed service. The parties control most of that content, putting them in a powerful position in relation to competitors and viewers. We think that it would be difficult to obtain content from third parties to match UKVOD’s offer in scale or attractiveness.

In this situation, UKVOD would have the ability and incentive to impose unfavourable terms when licensing domestic content to rival VOD providers. At the extreme, UKVOD might withhold content from its rivals altogether. Any reduction in access to content would be likely to impact unfavourably on viewers.

We now seek comments on how to address the loss of competition and its adverse effects for viewers.

So, remedies are apparently in order. These "might include, for example, adjusting the scope of the joint venture’s activities or the terms of exclusivity between the joint venture and its parents". Failing a successful remedy, euthanasia is on the cards, so to speak.

None of this is really much of a surprise - the premature departure of project chief Ashley Highfield was a dead giveaway - but it does serve as a serious hiccup in the progress of VOD in the UK. Not that the hiccup is without justification, but I rather like the idea of doing away with my TV set and taking all my viewing online.

Of course, I speak as someone who doesn't watch a great range of channels to start with, so maybe that's just me. I certainly imagine that ISPs are currently breathing a sigh of relief - particularly those who would rather the networks get congested with their own premium content.

Either way, the CC's final report is expected on 8 February 2009.