BBC Worldwide, ITV and Channel 4, the UK’s major television networks, have banded together to use the Internet to deliver current and archived content from all three networks. Code named Kangaroo, the service is expected to launch in mid-2008 under a different name. The move is one of the most significant of the digital media era, rivaling, perhaps surpassing, the NBC Universal-News Corp joint venture Hulu. It shows how far the Internet has progressed toward becoming the main distribution vehicle for delivering entertainment to the home.
‘Project Kangaroo is a consumer-led on-demand proposition. The rules about linear broadcasting don’t necessarily make sense anymore,’ said Tom Betts, ITV’s commercial and acquisitions director.
The BBC and ITV were already far ahead of TV networks in the US and other countries with their catch-up services, which make all shows broadcast in the immediate past available on-demand online.
The three organizations already have separate online services that offer hundreds of TV shows:
– BBC’s free iPlayer with a seven-day catch-up service.
– ITV’s 30-day catch-up and simulcasts of ITV1, ITV2, ITV3 and ITV4 plus news, video clips, pictures and interactivity with ITV programming.
– Channel 4’s 30-day 4oD.
BBC and ITV will continue their existing online services, at least in the near term. Channel 4 said it would integrate its 4oD service into Kangaroo although it will still offer some limited content on its own site.
The new service provides UK residents a single point to access tens of thousands of entertainment videos. It will be a major competitor to the on-demand services that Virgin Media and BSkyB offer. Between them, the three networks have some incredible content, both in quality and popularity.
‘We believe this deal will lead to a major step change in the on-demand services offered by UK broadcasters,’ said Channel 4 CEO Andy Duncan. He said it’s good news for independent content producers, the creative community, advertisers and, ‘above all, for viewers.’
Each organization will contribute content and own one-third of the venture, which will operate as an independent entity. It will also serve as a content aggregator and encourage other professional content developers to join the service ‘to further enhance the viewer experience.’
General Electric’s NBC Universal, Disney’s ABC, News Corp’s Fox, CBS and Viacom’s various cable TV channels could be candidates to offer content. That is, unless they plan to operate their own UK online entertainment service – sort of a Kangaroo meets Hulu thing. Countries on the continent have TV networks that produce quality video entertainment, much of it in the local language, which can be translated on-screen or dubbed in. Germany, France, Italy, Spain and the Nordic countries are birthplaces of professionally done work – TV shows, movies and shorts.
Ovum senior analyst Annelise Berend told the Daily Telegraph, ‘This is a significant move in a number of ways. Firstly, this is the establishment fighting back. Secondly, and particularly important in terms of attracting large audiences, this venture will give consumers a one-stop shop for on-demand content with choice. Thirdly, this announcement is an acknowledgement that no single player can conquer the Internet.’
The Internet has no national boundaries – with the exception of China, of course. A major advantage that the Internet offers is the ability to offer content simultaneously worldwide.
TV networks in each country will eventually have to compete with every other major content producer. The UK especially, but also Australia, Canada, South Africa and New Zealand, are prime targets for content from the giant American media companies. That in itself could cause otherwise competing TV networks and content producers in a country to band together to maximize the quantity of their offering.
BBC currently makes its iPlayer content available only to IP addresses in the UK, but there are many ways around those restrictions, such as IP spoofing or recording a show in order to post it on a file-sharing site. The BBC does not show commercials, so its main revenue source is the $270 or so each UK household with one or more TV sets is required to pay annually. It also makes money by licensing its content to TV networks in other countries.
In the States, BBC has its own cable TV channel and also licenses content to such networks as the non-profit Public Broadcasting Service (PBS), which is funded by quasi-commercials, viewer contributions, grants from private foundations and government subsidies.
The venture’s goal is to create a seamless experience for viewers and to offer an attractive proposition for advertisers, content rights owners and other content producers.
– Initially the service will launch only on the Web, but will be capable of delivery by other means such as over mobile phone networks.
– Content will be available both streamed and downloaded.
– Viewers will be able to watch for free, rent or buy.
– A name and brand for the new service will be unveiled before the launch.
The deal is structured so each partner benefits from how much its content is viewed. BBC’s content will be paid for in part by some of its planned advertising. ITV and Channel 4 will generate income when a viewer clicks on the content they provided.
What makes Kangaroo unique is the breadth and depth of the content that UK residents can access in one place.
It also means the viewer will only need one media player, one means of accessing the content, not three. Seemingly every online media service that comes to market has its own player, which consumers have to download and install – Joost, TVTonic, Babelgum, iTunes, Windows Media Player, RealNetworks and on and on.
BBC programs released in the previous seven days will not be available on the Kangaroo site; they’ll only be available on the separate BBC iPlayer service. There will be links on the Kangaroo site to iPlayer content.
John Smith, CEO of BBC Worldwide, said that by combining resources, the three broadcasters were ‘really taking control of our destiny in a market that’s moving at a fast pace….This is a historic partnership between the UK’s largest broadcasters,’ he said. ‘For some time we have wanted to form an alliance with other rights holders in the UK and give viewers an on-demand service with real added value. The new service will contain some of the very best of the UK’s content for consumers to view in one place, which will be both easy to use and great fun.’
Michael Grade, ITV’s executive chairman, said the venture is a key strategic move that complements ITV’s investment in itv.com. He said the service could ‘become an important shop window for UK broadcaster content and a great destination for viewers.’ Grade expects the venture to help ITV reach the online revenue targets it announced in September.
‘TV on the Internet is a rapidly growing medium, as proven by the incredible success that Channel 4 has enjoyed with its 4oD service,’ said Channel 4’s Duncan. He said the company wants to give viewers ultimate control over what they watch and when they watch it, and that the partnering and sharing expertise of the venture is the best way of doing this.
Channel 4’s Web site will host a catch-up service including accompanying comprehensive program information and clips, but its 4oD online service will transition to the new service.
The joint venture has appointed Lesley MacKenzie as CEO and is said to be recruiting top executives to lead the joint venture team. MacKenzie was most recently in India launching TataSky. Prior to that, he was director of channels and operations at BSkyB.
BBC Worldwide Limited is the commercial arm and a wholly owned subsidiary of the British Broadcasting Corporation (BBC). Its purpose is to maximize the value of the BBC’s intellectual property and exploit content around the world on behalf of rights holders. In 2006-07, BBC Worldwide generated profits of £111 million ($229 million) on sales of £810 million ($1.7 billion).
ITV is the UK’s largest commercial broadcaster. More than 80% of the British population watches one or more ITV shows every week.
Channel 4 has been Britain’s most cutting-edge TV network – both controversial and creative – since it first broadcast in 1982. It gets all its content from third parties.
The BBC Trust and the other two broadcasters’ boards must approve the deal.
Unanswered Questions
There are some unanswered questions.
Will viewers be able to post their own videos? That seems unlikely based on the trio’s emphasis on quality and professionally done videos.
Will non-UK residents be able to access Kangaroo? That also seems unlikely because of the fact that UK residents fund the BBC and all three organizations have existing content contracts that limit their ability to distribute content outside the UK, even if one of the three owns the content. For example, the BBC may have given an exclusive deal to an Australian network to distribute a specific BBC show Down Under.
Will the venture aggressively seek content from non-UK producers? The Americans are the world’s dominant content producers, at least as measured by revenue if not by the number of viewers where China or India might have more. Does Kangaroo want American content – and do American content producers want to license their content to Kangaroo?
How will Kangaroo link its content to a social network it develops or to existing social networks such as MySpace and Facebook? Social networking seems to be an essential part of any media strategy these days – to the point that News Corp bought MySpace outright and Microsoft recently invested in Facebook.
Is there a strategy for delivering Kangaroo content over the mobile Internet? The answer to that would certainly seem to be at the very least, ‘Not now but we’re working on one.’
One last question: What’s wrong with using the Kangaroo name? It’s distinctive and easy to remember.