Media
Kangaroo, the proposed commercial video on demand service from BBC Worldwide, ITV and Channel 4, has been referred to the Competition Commission by the Office of Fair Trading.
In a statement, the OFT said it had concerns that "the concentration of these important and competing libraries of UK TV programming may give market power to the joint venture, enabling it to charge higher prices in syndicating content to wholesale customers, and potentially raise download-to-rent and download-to-own prices paid by VOD consumers, or limit the range of ways in which viewers can watch the parties' content on demand".
Kangaroo, which was expected to launch in August, now faces up to 24 weeks of Competition Commission scrutiny. The Commission must consider the issues and collect evidence by December 12.
"Video on demand is a new and fast-growing consumer sector, and we should judge the issues on evidence, rather than speculate about consumer behaviour," said Simon Pritchard, senior director of mergers at the OFT. "We were in a position to clear the recent LoveFilm/Amazon merger, but that outcome would have been unsafe in this case because we lacked the evidence to make the right judgment. The CC, however, can start with our roadmap of the issues and ultimately decide what remedies, if any, are in fact required."
In the LoveFilm/Amazon case cited by Pritchard, the OFT found that the two firms' combination of online DVD rentals would not result in raised prices or lower quality "because too many customers would desert LoveFilm if it did". In this case, the OFT is concerned that competition by iTunes, BT Vision, Joost, Sky, Tiscali and Virgin Media may be an insufficient balance against the potential market power of an organisation able to screen programmes from deep archives of popular British television.
The proposed Kangaroo service would offer content from the BBC that falls into a "commercial window" of between 7 and 30 days after broadcast transmission alongside content from ITV and Channel 4. Earlier reports had indicated that Channel 4 planned to totally subsume its existing 4OD service into the new project, but the OFT noted in today's statement that "Channel 4 and ITV will... retain their own websites that include VOD material".
In a statement, the OFT said it had concerns that "the concentration of these important and competing libraries of UK TV programming may give market power to the joint venture, enabling it to charge higher prices in syndicating content to wholesale customers, and potentially raise download-to-rent and download-to-own prices paid by VOD consumers, or limit the range of ways in which viewers can watch the parties' content on demand".
Kangaroo, which was expected to launch in August, now faces up to 24 weeks of Competition Commission scrutiny. The Commission must consider the issues and collect evidence by December 12.
"Video on demand is a new and fast-growing consumer sector, and we should judge the issues on evidence, rather than speculate about consumer behaviour," said Simon Pritchard, senior director of mergers at the OFT. "We were in a position to clear the recent LoveFilm/Amazon merger, but that outcome would have been unsafe in this case because we lacked the evidence to make the right judgment. The CC, however, can start with our roadmap of the issues and ultimately decide what remedies, if any, are in fact required."
In the LoveFilm/Amazon case cited by Pritchard, the OFT found that the two firms' combination of online DVD rentals would not result in raised prices or lower quality "because too many customers would desert LoveFilm if it did". In this case, the OFT is concerned that competition by iTunes, BT Vision, Joost, Sky, Tiscali and Virgin Media may be an insufficient balance against the potential market power of an organisation able to screen programmes from deep archives of popular British television.
The proposed Kangaroo service would offer content from the BBC that falls into a "commercial window" of between 7 and 30 days after broadcast transmission alongside content from ITV and Channel 4. Earlier reports had indicated that Channel 4 planned to totally subsume its existing 4OD service into the new project, but the OFT noted in today's statement that "Channel 4 and ITV will... retain their own websites that include VOD material".
More: Media, Broadcasting
More Media News
Satellite TV News
Sky marks Jubilee with Union Jack remoteSky and One For All create universal remote celebrating the landmark UK summer.
Cable News
Pirate Bay blockade begins with VirginBT, Sky, others to follow suit, but rights groups warn it won't tackle piracy.
Freeview News
Freeview+ made easier for blind peopleRNIB develops software to make it easier for blind people to use Freeview+.
Video on Demand
'World first' social VOD service launchesThe studio behind Plan B's iLL Manors offers VOD users rewards for sharing.
