Broadcasters “should pull out of Project Kangaroo”

ITV and Channel 4 should pull out of Project Kangaroo, according to a new report from Enders Analysis.

The report says that taking part in the video-on-demand project will cost the broadcasters up to £15 million each.

It argues that instead of taking on new projects, they should concentrate on riding out the recession.

Enders estimates that Kangaroo has so far cost its partners BBC Worldwide, ITV and Channel 4 over £25 million in staff costs, development and online programme rights.

The report said: “The market for internet video advertising, on which the commercial revenues from Kangaroo would chiefly depend, is tiny and developing slowly.

“Revenues may not exceed the cost of Kangaroo for some time. In summary, the potential advertising rewards from online video are far lower than Kangaroo’s backers imagine. Therefore it can certainly wait for a year or two whilst the commercial PSBs focus on their survival.”

Enders added that Channel 4 and ITV should take up the BBC’s offer of free and open use of its iPlayer service.

“Their interests may be better served by collaborating with the BBC over the iPlayer, although the Competition Commission’s findings [into Project Kangaroo] indicate strongly that and video on demand venture from the UK’s leading content providers will be subject to intense scrutiny,” the report said.

Just before Christmas, the partners submitted new proposals to the Competition Commission, offering to scrap plans to jointly sell catch-up and archive programmes to rival broadcasters (see Kangaroo makes changes to win CC approval).

BBC: 020 8743 8000 www.bbc.co.uk ITV: 020 7843 8000 www.itv.com Channel Four: 020 7396 4444 www.channel4.com