The establishment strikes back

Analysts have expressed little surprise at the combined video-on-demand service announced yesterday by the BBC, ITV and Channel 4.

Aleksandra Bosnjak, lead analyst for digital media at StrategyEye, described the move as a "step forward for broadcasters".

"Many other traditional media players will be looking for a 'get together' approach as a potential tool to outgrow the scheduled broadcasting business," she said.

"It is no surprise to see traditional media repositioning and taking a more consolidated broadband video strategy in light of emerging web TV entrants such as Joost and Babelgum. "

Bosnjak believes that the ultimate aim of the joint service, dubbed 'Kangaroo', is to embrace broadband delivery and push content direct to TVs and, in the long-term, across different platforms.

Annelise Berendt, senior analyst at Ovum, agreed with Bosnjak on this point. "This is a significant move in a number of ways," she said.

"Firstly, this is the establishment fighting back. The past 12 months have seen a raft of new players all aiming to become leading aggregators of TV and video content on the internet."

While the competition is still in its infancy, the rapid adoption of new platforms has forced broadcasters to sit up and take notice, according to Berendt.

By pooling their resources, the BBC, ITV and Channel 4 can instantly create a huge user base with a formidable amount of available content.

This will give the broadcasters a major advantage over the competition, making it easier to attract advertisers and do business with content owners.

However, Bosnjak warned that pressures on UK internet bandwidth will impose a natural limit on Kangaroo's offerings.

"There are many challenges ahead with the UK broadband market. For example, UK ISPs will continue to cap download speeds at those peak times when consumers can sit down and watch or download on-demand TV programming," she said.

"And that is before other broadband content services are taken into account such as games, music and personal content uploading.

"Kangaroo is a good move, but it will be interesting to see the ISPs' reactions, and the revenue-sharing structures between all the parties involved. "

Berendt questioned the future development of the service, noting that it will be available initially as a web-based proposition and for distribution on other platforms at a later date.

"Clearly the venture is being positioned to extend to other broadband platforms including IPTV and cable, and potentially to mobile platforms as well, " she said.

"Also worth noting is the background and experience of launch chief executive Lesley MacKenzie, who previously launched India's TataSky and was director of channels and operations at BSkyB. This is a serious and well considered venture."

Both analysts agreed that a combined approach will be compelling for customers with so much varied content available right from the start.