DIGITAL MEDIA

The launch of the keenly anticipated commercially funded British VOD service, Kangaroo, has been put on hold pending an inquiry by regulators.

The UK’s Office of Fair Trading has referred the initiative, backed by BBC Worldwide, the pubcaster’s commercial arm, ITV and Channel 4, to the Competition Commission.

The OFT expressed concerns about how Kangaroo, due to bow this fall, would impact on the rest of the market.

The regulator said: “Concerns arise because the concentration of these important and competing libraries of U.K. TV programming may give market power to the joint venture.”

Having the libraries of the BBC, ITV and Channel 4 might enable Kangaroo "to charge higher prices in syndicating content to wholesale customers, and potentially raise DTR (download-to-rent) and DTO (download-to-own) prices paid by VOD consumers, or limit the range of ways in which viewers can watch the parties' content on demand."

A fall launch is now impossible — and Kangaroo, led by the man who helped masterminded the BBC iPlayer, the BBC’s former new media topper, Ashley Highfield, is virtually certain to be delayed until 2009.

ITV executive chairman Michael Grade said: "This venture has been delayed by a reference to the Competition Commission, at the very same time that non-UK companies like Google and Apple are free to build market dominating positions on line in the UK without so much as a regulatory murmur.

"There must be a level playing field for those of us whose investment sustains UK production. Companies without that commitment, who financially contribute virtually nothing to the U.K. creative economy, are trying to use a narrow regulatory remit to exploit our investment at little cost or risk to themselves.

"If they succeed, the losers will be UK. viewers, UK. advertisers and U.K. producers. Today's ruling suggests that the regulatory framework does not seem to take that wider public interest sufficiently into account."

Following the enormous success in the UK of the BBC iPlayer, which enables viewers to catch up on shows they’ve missed by watching them online within a week of broadcast, there are high hopes for Kangaroo.

The upstart would use both pay and advertising-funded models and provide users with access to more than 10,000 hours of material, initially online, but the plan involves eventually supplying Kangaroo direct to TV sets

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