On-demand video 'not competitive'

Kangaroo would offer shows such as Coronation Street and EastEnders

Plans by the BBC, ITV and Channel 4 to launch an on-demand video service could "hurt competition", a government watchdog has said.

The Competition Commission found Project Kangaroo would lead to a "substantial lessening" of competition in the UK video-on-demand market.

Project Kangaroo - a working title - would sell current programmes from ITV and C4 and archived shows from the BBC.

It would not replace the BBC's iPlayer, which offers current shows for free.

ITV already offers programmes via its ITV.com website, while Channel 4 does the same via its 4oD service.

'Loss of rivalry'

Competition Commission chairman Peter Freeman said: "Video on demand is a relatively new and rapidly-expanding medium and UKVOD [Project Kangaroo] clearly has much to offer.

"However, we are concerned that a loss of rivalry between BBC Worldwide, ITV and Channel 4, who are normally regarded as close competitors, could restrict existing and future competition for video on demand. Whatever benefits viewers would gain from this rivalry would clearly be lost."

The commission said changes could be made to the proposal to allay rival broadcasters' fears that Kangaroo would be too powerful for them to compete with.

"In the event that none of these are effective, prohibition would also be an option," the commission also said.

Mr Freeman said he wanted to hear further comments from the public and from broadcasters on how the changes could work.

BBC Worldwide, ITV and Channel 4 said in a joint statement: "Today's announcement represents the provisional findings from the Competition Commission, at the mid-point in this process.

"We welcome the commission's recognition that 'UKVOD clearly has much to offer'.

"We 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."