Kate Bulkley, Media Analyst.

Don’t let the market decide

By Kate Bulkley

Broadcast News

For Broadcast May 28, 2009

Control of on-demand is too important to give up to a US aggregator

The final blow to the technology we only ever knew as Project Kangaroo occurred last week, closing a tricky chapter in the story of on-demand in the UK. After lengthy due diligence, mobile and ISP operator Orange declined to buy Kangaroo’s assets, concluding it had nothing to gain.

How many millions went down that particular rabbit hole? But the story continues and now it looks like the American VoD success Hulu is going to open its digital doors in the UK, offering the UK a one-stop shop for its digital content.

Among US aggregators of professional content, Hulu reigns supreme. It has the backing of two of the biggest US studios, Fox and NBC Universal, and recently added Disney to its list of backers, giving it access to even more shows (and, hopefully, advertisers).

For its planned UK service, Hulu is talking to everyone and has already signed deals with some independents, including the Digital Rights Group and Endemol, to host their content in the US. But the big prize is the UK broadcasters and, although they are talking to Hulu, no deals have been announced yet.

The problem for the BBC, ITV and Channel 4 (the backers of the never-realised Kangaroo), is how to work with Hulu without giving everything away to an aggregator they don’t control. It reminds me of when the BBC realised that selling programming to US channels gave away too much in terms of brand building and advertising revenues, and chose to launch BBC-branded channels instead.

Getting a firm handle on the fast-developing online world is a priority for UK broadcasters, and another factor is the pressure emerging on Project Canvas, the IPTV joint initiative led by the BBC, BT Vision and ITV. Its selling point is getting VoD off computer screens and onto television, but critics (and most loudly Sky) say that the control of any standard should not rest with one group, particularly not one led by the BBC.

Letting the market decide sounds reasonable, but control of the on-demand and online world is too important just to yield to new players such as Hulu. As one senior industry executive told me last week: “Google, Facebook, Bebo, Yahoo, MSN – and now Hulu – all have one thing in common: they weren’t invented here. If we’re not careful we could end up as the miners of creative coal for other people’s engines.”

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