Plans by the BBC, ITV and Channel 4 to collaborate on a single video on-demand (VOD) service for their TV programmes has been dealt a blow after the Competition Commission provisionally declared the plan anti-competitive.
The service, codenamed Kangaroo, would have aggregated content from the BBC's iPlayer service, Channel 4's 4oD and ITV's Catch-up service into a single platform, accessible via the web and other platforms such as cable TV.
"The Competition Commission has concluded that the UKVOD joint venture is likely to result in a substantial lessening of competition in the supply of UK TV VOD content at the wholesale and retail levels," it said in a statement.
"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 the BBC, ITV and Channel 4, which 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," added Peter Freeman, Competition Commission chairman and chairman of the inquiry group.
The Competition Commission, which has the power to block the deal, said it did not, however, expect the joint venture to lead to a substantial restriction of competition in online advertising or content acquisition.
The Commission will now seek comments on how to address the loss of competition and its adverse effects for viewers. Its final decision will be made by 8 February 2009. Possible solutions include requiring the platform to be opened up to other broadcasters such as Virgin Media, Sky and Setanta.
"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," Freeman said.
Under the original plan for Kangaroo, a mixture of free and paid-for content would be offered, combining a free-to-air catch-up service with archive content offered at a premium price.
Last month, the Kangaroo project lost its chief executive after he quit to join Microsoft.
