Kangaroo: we won't stifle competition

Ashley Highfield

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Project Kangaroo has insisted it will not prove anti-competitive and that it would account for around 21% of the nascent VoD market for paid-for broadcast content.

The joint-venture between BBC Worldwide, ITV and Channel 4 was called in for review by the Competition Commission (CC) in June because the Office of Fair Trading said it could result in a "substantial lessening of competition" within the UK sector. The likes of Talkback Thames, Virgin Media and Joost have also raised concerns about Kangaroo.

But in a submission to the CC, Kangaroo said it would simply "add a differentiated competitor to a dynamic marketplace", and unlike its competitors, "will not enjoy the advantages of related hardware devices, existing internet distribution businesses, a strong subscriber base or the ability to enter into global deals".

The majority of content available to consumers via Kangaroo will be free and advertiser funded, but some content will be charged for. Consumers will still be able to access content via broadcaster's websites, existing services, third-party services and retail sites.

Kangaroo said it would face stiff competition from Apple, with its existing range of VoD content for iPod owners; Sky with its "strong subscriber base and rights to premium film content"; and other VoD providers including Amazon's LoveFilm, Microsoft, Tiscali, BT and Demand Five.

It also rejected claims that the indie sector was too fragmented to compete with Kangaroo, and that Sky, Apple and Amazon "have the ability to acquire content directly from independent producers".

"The large number of possible technological and viewing choices and combinations and the nascent nature of the sector means that a conventional approach to market definition is difficult to apply," Kangaroo said.

"While it is difficult to be certain about market share in a nascent market, it is estimated that, for transactional content, UKVOD's [Kangaroo's] market share will be about 11% if film and broadcast is included in the relative market (as parties believe they should be) and 21% if only broadcast VoD is included."

"The strength of alternative platforms and the different business models between such platforms will mean that competition will be vigorous," said the submission.

Kangaroo pointed out that VoD providers like Apple, Microsoft and Sony had added an incentive to price available content as low as possible to drive hardware sales.

Advertising on the site would also be competitive as parties would compete with each other to sell space in and around their content. The joint-venture will sell advertising on common areas.

The Competition Commission will publish its preliminary findings on Kangaroo in October.