Saturday 6 December 2008

Kangaroo is expensive exercise in reducing TV choice

Surprise, surprise, the Competition Commission has ruled against Project Kangaroo in its current conception.
...the [Competition Commission ("CC")] has concluded that the joint venture is likely to result in a substantial lessening of competition (SLC) in the supply of UK TV VOD 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.
Analysts at Screen Digest are apparently confused by the decision. Their argument is that the device, not the content, is king. People buy a device then they buy content. What they fail to see is that the device is purchased for the content that is available on it. They have also ignored the fact that the majority of the content on Kangaroo is proposed to be free.

Fundamentally, Kangaroo ("UKVOD") would control the vast majority of content produced over the last decades for viewing in the UK and could become the only point of access for that content.

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.

The CC is now looking at possible remedies, which include, at the extreme, blocking Kangaroo outright. Other possibilities include allowing other VOD retailers access to the content on a "fair, reasonable and non-discriminatory basis."

Although the CC's investigation into Kangaroo is quite separate from the Public Service Broadcasting review by Ofcom, it does raise the question of the role of the BBC. Part of its mandate is to lead technological change in broadcasting. However, this duty has been taken to mean that it should maintain control and ownership of new distribution mechanisms.

Both the iPlayer and Project Kangaroo display such tendencies. The implications for the licence fee payer, who funds the BBC, is that the cost to him is much greater than if the development and ownership of new platforms were left to other, commercial entities. The fact is, that a number of commercial entities pre-exist the hundreds of millions of pounds that have been spent on new media development by the BBC.

A change of mindset would reduce the costs of the BBC - as well as those of ITV and Channel4. The irony is that the development of online TV, far from being a threat to the PSBs, is an opportunity to increase viewership while simultaneously reducing costs.