Watchdog kills Project Kangaroo's bounce

The future of Project Kangaroo, the proposed online TV-video joint venture between BBC Worldwide, ITV and Channel 4, is in doubt following comments from the Competition Commission.

The Commission today said the project could lead to a "substantial lessening of competition" in the UK video on-demand market.

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The comments are part of the provisional findings of an inquiry set up to investigate Project Kangaroo. A final decision on the fate of the scheme is due by 8 February.

Competition Commission chairman, Paul Freeman, said as the three broadcasters hold such a significant amount of domestic content, other video on-demand providers could be disadvantaged.

According to Freeman, the availability of so much content in one place could limit the appeal of other services while the broadcasters involved with Kangaroo could potentially license content to rival video on-demand providers on unfavourable terms.

In addition, Freeman said a loss of rivalry between the broadcasters could lead to a loss of the benefits viewers gain from their normally close competition.

In a joint statement, BBC Worldwide, ITV and Channel 4 said they will "continue to make the case for a service that will be both in vast majority free and non-exclusive, and of great benefit and value to British consumers".

The threesome will continue to work towards launching the service next year.

The Competition Commission is now inviting comments on how the potential loss of competition could be addressed.

It has suggested controls could be placed on the way in which content is offered to other providers or the terms of the joint venture regarding exclusivity of content could be altered.

The Commission has warned that if solutions are not found, "prohibition would also be an option".

The Office of Fair Trading referred the project to the Competition Commission back in June. During the process, those behind Kangaroo have continued to work on the project with a closed beta trial due in January next year.

Ex-BBC director of future media and technology, Ashley Highfield, briefly headed the project as chief executive but left to join Microsoft in November.