Project Kangaroo axed by regulators

Project Kangaroo, a proposed single platform for viewing BBC, ITV and Channel 4 programmes on a computer, has been blocked by the Competition Commission.

The commission suggested in December that it was unlikely to approve Kangaroo, and on Wednesday it officially blocked the joint venture. Commission chairman Peter Freeman said in a statement that the cross-channel, video-on-demand (VOD) project "would be too much of a threat to competition in this developing [video-on-demand] market and has to be stopped".

"The case is essentially about the control of UK-originated TV content," Freeman said, adding that the commission found UK viewers particularly value UK programming.

"BBC Worldwide, ITV and Channel 4 together control the vast majority of this material, which puts them in a very strong position as wholesalers of TV content to restrict competition from other current and future providers of VOD services to UK viewers," he said. "We thought the joint-venture parties would have an interest in doing so, in order to make Project Kangaroo a success."

Freeman said that "viewers would benefit from better VOD services if the parties — possibly in conjunction with other new and/or already established providers of VOD — competed with each other".

Kangaroo would likely have been similar to the BBC's iPlayer platform, only with more channels available to watch live or catch up with on-demand. The man largely responsible for the iPlayer's success, Ashley Highfield, left the BBC to head up Kangaroo in April, but left in November to become Microsoft UK's consumer and online managing director.

The iPlayer has caused some controversy in the ISP industry, with many blaming the peer-to-peer platform for congesting networks. On Wednesday, however, Ovum analyst Jonathan Doran told ZDNet UK that such complaints were probably overstated. He also said the Competition Commission's blocking of Kangaroo was unlikely to alleviate any network congestion from people watching UK TV online.

"Without Kangaroo, people will still want the same content," Doran said. "Now they'll just have to go to different sites and download multiple players to their PC."

The commission's decision represented "a missed opportunity in the further development of British broadcasting", BBC Worldwide, ITV and Channel 4 said in a joint statement reacting to the news.

Channel 4's new media director, Jon Gisby, said in a separate statement that Kangaroo would have offered clear benefits to viewers as well as a valuable opportunity for Channel 4. "Video-on-demand currently makes a small contribution to our revenues, and the short-term effect on our business will be limited," Gisby said. "Longer term, VOD still represents an opportunity for growth."

ITV chairman Michael Grade said in a statement that he was surprised by the commission's decision, but claimed "the success of ITV.com has proved that [ITV's] UK content is attractive enough to stand on its own".

The next step for the VOD ambitions of the broadcasters involved is not yet clear. However, once it became clear in December that the Competition Commission was cool on Kangaroo, the BBC hinted that it might share its iPlayer technology with ITV and Channel 4.