Commission 'wrong' on Kangaroo's impact on ad market

LONDON - Analysts at Screen Digest have criticised the Competition Commission's thinking that proposed video-on-demand service Kangaroo will not pose a threat to competition in the online advertising market.

The commission said yesterday its preliminary decision on the joint venture between BBC Worldwide, ITV and Channel 4 was that it would substantially restrict competition in the supply of video on demand services in the UK, but it did not think it would distort the online advertising market.

This judgement is questioned today by Screen Digest, which claims that Kangaroo, in conjunction with its parents' own services, is "likely to mop up the vast majority of premium advertisers because it will dominate the monetisable online TV in the UK".

"This has the potential to stunt the online TV market at a key time in its development as third parties [for example Five, BSkyB and MTV] are likely to find it hard, if not impossible to find advertisers willing and able to buy high CPM in-stream advertising in sufficient volumes to cover the cost incurred by many services."

Screen Digest also believes that Kangaroo will not have much market power in the supply of paid-for online TV because it does not control a device consumers watch it on.

It argues that Apple, due to its iPod/iTunes ecosystem, is the leading digital content provider in the UK for music, movies and online TV, with Microsoft also powerful thanks to its Xbox 360.

"Were the Kangaroo partners to withhold content from any of these platforms it would be the UK online TV market that would suffer and not these companies' hardware sales," it said.