Media Forum: Are Kangaroo plans sound?

Should advertisers be reassured by Kangaroo's model, Alasdair Reid asks.

In all the kerfuffle about the analogue TV switch-off and the migration to digital TV in the UK by 2012, it's often forgotten that digital television is itself a transition technology and that its heyday as a dominant distribution platform is likely to be very brief indeed.

In fact, by 2012, a significant chunk of viewing will be transacted on its successor, web TV. Non-linear, fully interactive, supposedly anarchic, web TV. If figures for the BBC iPlayer are anything to go by, web TV's growth is already astonishing. And, yes, in a couple of years' time, its share of viewing will probably be small - well under 10 per cent, say - but still hugely significant for all that.

Not as significant, however, as the fact that we'll be watching, by and large, not just on the BBC iPlayer and its commercial equivalents, but on Kangaroo, a joint venture bringing together ITV, Channel 4 and the BBC - but dominated by the latter.

This is effectively a recognition by ITV and Channel 4 that they must accept another generation of life as (at best) second-class citizens. For other commercial broadcasters, they face a future ensconced back there in the third class compartment.

This issue is currently being explored, of course, by the Competition Commission - and last week Kangaroo attempted to forestall worries that it was setting up a commercial cartel by insisting that each of the participants would be responsible for their own ad inventory in and around their own content - though there will also be a tier of more generic inventory sold on a centralised basis.

There were also other revelations - for instance, that Kangaroo will aspire to a mixed funding model, with viewers able to watch on a pay-per-view basis or purchase them, as in the iTunes model.

So, from what we've seen so far, is Kangaroo likely to be a force for good in the advertising market? Ian Twinn, the director of public affairs at ISBA, would like to think so. He points out that, in general, ISBA has always taken a strong line on issues such as cartels and the abuse of monopoly powers.

He says: "An over-powerful BBC is a danger to the commercial media sector, but, from what we've seen so far, I'd say Kangaroo's funding mechanism is welcome. The BBC is a platform that's respected on a worldwide basis and it's one that advertisers want to be associated with. We wouldn't expect a new platform like Kangaroo to abuse its position from the outset because that might kill it at birth."

However, Jim Marshall, the chairman of the IPA Media Futures Group, fears for the broadcasters that aren't included in the Kangaroo project. He agrees that it might help drive the development of web TV in this country and he concedes that having access to content from the BBC is an attractive prospect for advertisers. But he adds: "There is a question mark hanging over what works in broadcasting - at the one end you've got the pay-TV providers, such as Sky, and at the other, the BBC with the licence fee. In the middle, you've got those funded by advertising alone, but this is the bit that's being squeezed."

Perhaps, Jean-Paul Edwards, the executive director, futures, at Manning Gottlieb OMD, says. But that's a relatively small worry, he argues, when set against the potential gains. He says: "I think we can all see the potential for Kangaroo based on what we've see so far from Hulu in the US, which has been going great guns. Kangaroo should be a huge opportunity for advertisers. Potentially, it's actually one of the best things that could happen to TV - and will help to define it in the modern era. It will empower a new kind of model embracing better metrics, tighter targeting and greater interactivity."

Neil Jones, the managing director of Carat, agrees. He says: "Advertisers are already asking about this and I'm sure this sort of service will be popular in audience terms. It's going to be an important environment and Kangaroo is absolutely right to focus on advertising."

YES - IAN TWINN, DIRECTOR OF PUBLIC AFFAIRS, ISBA

"ISBA is always concerned with the issues of BBC power and the ways in which it spends its money. But we believe it's a good idea for advertisers to gain access to a space that wasn't there before."

MAYBE - JIM MARSHALL, CHAIRMAN, IPA MEDIA FUTURES GROUP

"As Kangaroo's BBC content is likely to be the most valuable, when the revenue distribution goes back to the content providers, you could end up with the BBC taking 60 per cent of it."

YES - JEAN-PAUL EDWARDS, EXECUTIVE DIRECTOR, FUTURES, MG OMD

"For the BBC to become the arbiter of pricing would be a bad idea, but I'm not all that worried about BBC power. It's not a cartel and I'm positive about the opportunities Kangaroo will bring."

YES - NEIL JONES, MANAGING DIRECTOR, CARAT

"Kangaroo's decision to focus on advertising is the correct one. There's plenty of interest out there. And I believe, in terms of the state of the market's development, it's too early to worry about what this will or won't do for the BBC's status (in the commercial marketplace)".

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