In a December 2008 report, Arash Amel of the media research firm Screen Digest said Kangaroo’s biggest threat was not the loss of VOD retail competition, but the concentration of advertising. His latest forecast is on Hulu. Writing for paidContent:UK, Amel says today’s Competition Commission ruling shows Kangaroo was “a waste of time and effort on the part of both ITV (LSE: ITV) and Channel 4”...

“To any casual observer, it is abundantly clear that Project Kangaroo has never known what it was. Some would (and should) feel sympathy that the CC was forced to rule on a joint venture never able to properly distinguish itself. Was it a subscription archive service? Was it an ad-supported archive service? Was it a catch-up service? Was it both but in different windows? Was it free or paid? Would it feature US hit shows or not? 

At some point during the 20 months of its short life, Project Kangaroo was one or all of these things. In many respects, it was the brainchild of a confused pre-“iPlayer 2.0” era (for those wondering, that’s pre-Summer 2007), when the BBC had yet to pursue its current enlightened iPlayer strategy, when UK broadcasters were still obsessing with clunky P2P services and application-based downloads, and the concept that TV schedules drive online consumption was still an unknown.

This was taking place at a time when the US networks were developing popular browser-based streaming platforms such as the ABC Full Episode Player, or the poster-child for online TV, Hulu, which have effectively shaped today’s online video landscape, and all with tech teams considerably smaller than those working at many UK broadcasters.

What happens now for UK online TV and what are the longer term prospects for VoD? Looking into Screen Digest’s crystal ball, the fallout is pretty clear…

—Won’t result in competition: In the paid downloads segment, the market will ironically remain as bereft of competition as ever. Apple’s iTunes, driven by the iPod and iPhone (which in turn drives sale of TV downloads), will dominate digital retail, building on the company’s current 84 percent market share of all TV DTO in the UK. Other platforms, such as Xbox 360, PlayStation 3, Virgin Media (NSDQ: VMED), BT (NYSE: BT) and in time Sky, will also feature, though unlikely to really take as much of a long-term grip on the paid segment as Apple (NSDQ: AAPL) has. 

—iPlayer has already taken potential ad spend: But, that’s not what should interest us. The vast consumption of VoD viewing of TV content is free - and by definition capable of being ad-supported. However, the UK is home to a dubious trend. When compared to the US, France and Germany online video markets, UK online TV advertising makes up a disproportionately smaller percentage of all UK online TV revenues. In other words, while online TV advertising in the US, France and Germany make up 64 percent, 65 percent and 57 percent of total online TV revenue, in the UK, it only constitutes 47 percent of a total £102 million online TV market expected in 2009. Much of this underperformance is down to the runaway success of the iPlayer.

Much of it rests at the door of ITV and Channel 4 whose abject failure to ramp up their respective online TV catchup services has gone fist in glove with their attempt to mitigate shallow pockets not through innovation but through concerted practice. This compared to plucky Five, whose Demand Five platform was revamped this week and has been plugging away quietly on what is rapidly becoming an impressive and user-friendly platform. 

—Smaller rivals: In the free sector, the market will fragment and abating consumer confusion will fall squarely on the BBC iPlayer’s shoulders, but the landscape will also become more competitive – not from just ad sales and revenue opportunity, but also more innovative exercise of rights by both US and independent producers alike. Of course the BBC iPlayer stands head and shoulders above the other platforms, but there are also companies other than the usual suspects – such as start-ups blinkBox and Joost - who will have the opportunity to succeed or fail on their own merits.

—Waste of time: Then there is that elephant in the room, major US platforms with UK ambitions such as YouTube, Hulu (arguably before the economic downturn forced NBCUs current retrenchment) and others who have been waiting silently in the wings for today’s decision. With 20/20 hindsight, Kangaroo was a waste of time and effort on the part of both ITV and Channel 4. As the dust settles, the focus will rightly shift towards ITV Player and 4oD which, if the BBC iPlayer and Demand Five are anything to be measured by, will have to make up for lost time if they don’t want to get lost in the noise. ”

• Kangaroo Blocked, It ‘Has To Be Stopped’; Trio Laments ‘Missed Opportunity’
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