Competition Comission Rules Kangaroo Anti-Competitive

"Will restrict competition in the supply of VOD services in the UK."

It seems the Project Kangaroo March launch isn’t going to be taking place after all. After a review, published yesterday, the Competition Commission (CC) has (provisionally) 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.” Or, in plainer English, that Kangaroo, as currently envisioned, will not be allowed to operate.

The CC’s conclusion is that UKVOD, the joint venture between BBC Worldwide, ITV and Channel 4, which is pioneering Project Kangaroo, while having many points in its favour, would not be in the best interest of the viewing public.

The CC’s Chairman (also chairman of this particular enquiry group) commented:

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 BBCW, ITV and C4C, who 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.

Of course 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. We think that it would be difficult to obtain content from third parties to match UKVOD’s offer in scale or attractiveness.

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.

Which is a long quote, but worth reading in full; so go back and do so if you just skipped that text and shame on you. I’m in two minds as to whether I agree with the CC or not. On one hand, I concede that the monopoly on content that Kangaroo could exercise could be of detriment to third part rivals but conversely, I can’t help but think: so what? Protecting potential competition for competitions sake seems pointless. There are enough rival VOD providers out there to ensure pricing of Kangaroo content remains reasonable, even if it is only available in one place. The service UKVOD is proposing is too tempting to want to see Kangaroo fail to launch at all.

The CC is now accepting feedback on this preliminary report, before publishing its final decision on the 8th of February. Whether we’ll see a different Kangaroo to that originally envisioned, or no Kangaroo we’ll just have to wait and see now.

Competition Commission Project Kangaroo Provisional Findings (PDF).

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