Project Kangaroo has been deemed to be too restrictive of competition by the UK Competition Commission. Today it became official, as Britain’s antitrust agency said it “would be too much of a threat to competition in this developing market and has to be stopped”.
Kangaroo is a video-on-demand joint venture between the BBC, ITV, and Channel 4. It’s mission statement was to be an online one-stop shop for the three public service broadcasters’ extensive library of programming, including both archived and current. In the past several months the initiative has undergone several set-backs and developmental blocks. From uproar by competitors, to the resulting investigation by the Commission, to the resignation of Ashley Highfield the project has been riddled with obstacles. Today it has officially been shut down.
The commission feared that the three powerhouse would have too much control, since they already hold market share and majority of public service TV foothold. In addition, Kangaroo threatened to restrict competition in existing and future on-demand services including Virgin Media, BSkyB, Joost and BT Vision. These companies claimed that Kangaroo would have the power to spike wholesale prices for proprietary shows, thus making it virtually impossible for smaller platforms to carry their content.
This ruling has angered many, as Kangaroo was expected to represent the “Hulu of the UK”, a leader of online tv catch-up services in UK, and across Europe. In fact, now that Kangaroo has been killed, many say Hulu is poised to take ownership over the market, obtaining licenses to UK shows. Has the commission just thrown away a massive opportunity for the UK market to become leaders in this field?
A Kangaroo spokesman said in a statement that, “The real losers from this decision are British consumers. This is a disproportionate remedy and a missed opportunity in the further development of British broadcasting.”
Notwithstanding this ruling, the BBC, ITV and Channel 4 intend to keep (and grow) their own VOD players independently, as planned, but suffer continuous competition from the likes of Google’s YouTube or Apple’s iTunes (among others).
ITV chairman Michael Grade was shocked by the commission’s decision, “because we believe that the Kangaroo joint venture, competing in a crowded online world against dominant global brands, was an attractive U.K. consumer proposition, free at the point of use.” He added a positive, encouraging note, saying: “However, in the two years since the idea for Kangaroo was born, the success of ITV.com has proved that our UK content is attractive enough to stand on its own and we remain focused on our online growth.”
Perhaps we should have known this was coming, or listened to the signs that people internally at Kangaroo knew the future was bleak. A string of high profile moves were announced since August (Ashley Highfield quit as Kangaroo CEO in November and Patrick Ugeux’s departure as the Director of the Project in September) and now it seems over 50 people have lost their jobs due to today’s ruling.
What does the future hold? We hope to see great things emerge from Project Canvas. In addition, the BBC may share its iPlayer technology with multiple broadcasters, a venture called “Marquis” (stay tuned we will blog about Marquis soon). But one thing’s for sure, now the competition comission has perked its ears and will be keeping track of any movement they deem fishy. Lets just hope the commission lets loose and big broadcasters play nice - encouraging TV innovation and development in the UK, so that media companies across the board can reap the benefits in the future.
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February 5th, 2009 at 2:07 pm
[...] Why the Competition Commission Killed Kangaroo [...]
February 5th, 2009 at 2:11 pm
This is typical of British leadership and very complacent. If the UK do not keep up with technologies in any area then the rest of the world will fly past us and leave us ‘dead in the water’.
The arrogance of this ruling is ignorant and the UK will suffer in the long term. The WWW brings opportunities to us all and as an organic system if the BBC, ITV etc didn’t manage this idea correctly i.e. allow people to upload ideas, interact, add video in sub sections then it will not work anyway.
This idea isn’t ‘dead in the water’, it may be for Britain but for other countries it’s ‘Hello World’.
February 5th, 2009 at 2:12 pm
In the long term such an entity will need to exist anyway. We’re talking about a global market here. The regulators are stuck in a timewarp of 60s/70s independent television policy.
February 5th, 2009 at 2:13 pm
Good day for Hulu and iTunes, who are now handed pole position (Hulu for ad funded streaming, iTunes for downloads). Maybe YouTube if it dramatically remodels itself away from user uploaded content (v. probable). Note none of them are British owned - superb marshalling of the British economy there…
The only reason I’m not more upset about this as a disaster is that Kangaroo was already dead - six weeks ago it said in response to the competition commission that it felt it was only profitable if it was allowed to keep some content exclusively to itself and not make it available to third party services for reasonable tarriffs. That really IS anti-competative, and was never going to be allowed (quite correctly) - it would have meant Channel 4 not selling the likes of The IT Crowd to iTunes to make people go to Kangaroo instead.
I am amazed that Kangaroo wasn’t viable anyway even without that, but taking Kangaroo themselves at their word that meant it was already dead. This just kills it entirely for the wrong reasons.
There’s a few misconceptions here though. This is nothing to do with Canvas’ set top box, so that can still go ahead, just without a Kangaroo store for archive content on it (say, ITV can still have their own store somewhere). Nor is it a given at all that Kangaroo would have changed 4OD’s technology platform, which was picked for a reason. I have to say, I still don’t think typing in a different web address for each shop is that big a deal, but hey well.
February 5th, 2009 at 2:14 pm
Considering that BSkyB have just spent £1bn on Premiership football rights (how the hell is anyone else supposed to compete with that?), as well as Sky having three times as many subscribers as all of its pay-TV competition combined, there must now be a new monopoly case to answer for this dominant commercial entity on the back of this Kangaroo decision.
February 5th, 2009 at 2:14 pm
I can only echo what others have said - crazy, out-of-touch and absolutely anti-consumer. The next time Branson tries to come across as a friend of the consumer, remember it was Virgin Media and Sky who led the opposition to Kangaroo.
February 5th, 2009 at 2:17 pm
great thorough article. i like your style!
February 6th, 2009 at 9:40 am
[...] Kangaroo gets Killed [...]
February 23rd, 2009 at 3:33 am
Well written articles on this site. Excellent resource.
February 23rd, 2009 at 3:35 am
Shutting down kangaroo is shocking indeed. Typical UK beaurocracy - at the ruin of local IPTV industry. All hail the Hulu king.