BBC Worldwide Broadcasters Bounce Back with Kangaroo

On November 27th BBC Worldwide, ITV and Channel 4 announced that they will work together on a commercial on-demand content service under the working title of Kangaroo. The collection will bring together 10,000 hours of the UK broadcasters’ current and past programming. Initially, the service will launch as a Web-based proposition and be available for distribution on other platforms. Content will be available both streamed and downloaded, and viewers will be able to watch free, rent or buy. A name and brand for the new service will be unveiled before launch.

Recommended Competitive Responses

► BSkyB should follow suit. There is plenty of scope for Sky to meet and exceed the delivery that Kangaroo promises on a much shorter timescale. BSkyB’s satellite TV offering is reportedly edging towards saturation, and a move towards VoD offerings surely must follow.

► Independent production companies should take careful stock of what Kangaroo offers them and look for competing services. Hulu is likely to look outside the continental US soon, should it be a success, and plenty of other players are offering VoD or IPTV.

► Companies with an existing VoD or IPTV offering should concentrate on marketing what they have at the moment, emphasizing that Kangaroo is, at present, an unapproved joint venture. It is quite likely that Kangaroo will be beating a path to providers’ doors in future anyway.

► Other content providers should exploit the nature of Kangaroo, which, after all, is a joint venture. There is a distinct chance that Kangaroo will become a poorly equipped Jack-of-all-trades, stymied by the conflicting needs of three large companies. There is plenty of negative PR potential there.

► Companies should lobby against Kangaroo. In a certain light, Kangaroo could be portrayed as monopolistic, or taking advantage of the privileges the BBC and Channel 4 enjoy as broadcasters in the UK. It is entirely possible that creative lobbying could result in a stillborn organization.

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Nokia World 2007: ‘Nokia Comes With Music’ – Too Good to be True?

On December 4th Nokia announced its ‘Nokia Comes With Music’ program, which will enable customers to buy a Nokia device with a year of unlimited access to millions of tracks from a range of artists – past, present and future. After one year, customers will be able to keep all their music. The program will launch in mid-2008 with Universal Music Group International and Nokia is in discussion with the remaining major international labels.

Analytical Summary

► Current Perspective: Positive on Nokia’s ‘Nokia Comes With Music’, with reservations. Although a year’s free, unlimited and fully-owned music tracks from Universal Music bundled with a new device sale seems too good to be true, all the critical service details (device cost, side-loading limitations, DRM-limitations and the role of mobile advertising in this offer) are all unknown at this time.

► Vendor Importance: High to Nokia, as ‘Nokia Comes With Music’ will help the handset vendor launch itself into the consumer content services space with an original, eye-catching and potentially disruptive proposition that currently has no equal. Nokia’s Music Store initiative was a ‘me too’ proposition in a crowded digital download market, but ’Nokia Comes With Music’ will provide Nokia with compelling differentiation both in the device space (notably against SonyEricsson, Motorola and Apple) and content services space.

► Market Impact: High on the mobile music market, as ‘Nokia Comes With Music’ could be the catalyst for a change in the way mobile music is bought and sold in Europe. Providing new Nokia device owners with a year’s worth of unlimited music tracks is a highly original proposition that challenges traditional per-track pricing models, and even subscription models going forward.

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O2 UK Launches ‘O2 Wallet’ NFC Trial in London

On November 28th O2 UK launched its six-month O2 Wallet pilot, with 500 O2 UK user participants, with Transport for London, TranSys, Barclaycard, Visa Europe, Nokia and AEG. This trial is the first large-scale pilot of NFC (near-field communications) technology on mobile phones. Each trial list has been given a Nokia 6131 NFC handset installed with the O2 Wallet application for making purchases in selected retail outlets and travelling on London tubes and buses.

Recommended Competitive Responses

► The Vodafone Group and Orange should both approach O2 UK for a collaborative study into NFC user behaviour, arguing that joint learning and experience-sharing will accelerate services to market, for the benefit of all. Both Vodafone and Orange can argue that they have solid experience from other markets to share (Germany for Vodafone, France for Orange).

► The London Transport System has every incentive to open its Oyster payment card process to as many mobile operators as possible, and competitors should be building similar trials in London. The Oyster volumes are too impressive to ignore; competitors must not allow O2 UK a unique selling point.

► Competitors should note the way this trial ‘thinks big.’ In the past, NFC trials – and even commercial services – have tended to target specific sectors of users, such as football club members (e.g., Manchester City’s small-scale trial of November 2006 or Vodafone Germany’s service in Hanau [just 95,000 residents] launched earlier this year). By contrast, O2 UK is clearly partnering with big-brand retail partners with a considerable, nationwide presence; O2’s NFC goals are definitely ‘mass market.’

► All competitors should be keenly attuned to the implicit loyalty and mobile advertising business opportunities an NFC service such as O2 Wallet presents. A commercial launch of O2 Wallet is likely to be about so much more than allowing customers to pay for tickets and goods by mobile phone.

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