Ofcom want a British Netflix, but Sky aren't keen

British public service broadcasters (PSBs) are being urged to work together to develop a video on demand (VOD) service to rival the likes of Netflix and Amazon.

The Ofcom chief said that such a collaboration would ensure the future of British broadcasting by 'harnessing the power of technology to capture the audiences who have moved online'.

However, Sky have warned that having the major PSBs club together in this way could attract competition questions, alluding to a similar project which failed the competition watchdog ten years ago.

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'Vital to the success of our industry'

CEO of Ofcom, Sharon White, raised the subject of a 'Brit Player' at the Outside the Box conference in London at the end of November. She claimed that what audiences really want are 'original, UK-produced shows that portray them and their communities in an authentic way'.

Her comments come at a time when traditional TV makers are struggling to keep pace with the likes of Netflix and Amazon. With Netflix added to Sky last month, the clout of these disruptive VOD providers has never been more powerful.

Tech companies, such as these, are investing large sums of money in original, on demand TV shows. According to White, Netflix alone invested $8bn (£6.3bn) in content development last year. That's more than twice the combined spending by public service broadcasters on UK shows.

She claimed that a unified platform from providers such as Channel 4, the BBC and ITV would boost the UK's presence on the world stage, allowing these companies to better compete in the market.

"I remain convinced that collaboration is vital to the success of our industry," said White.

Sky warns of a competitive breach

Commenting on the idea of a Brit-flix offering, customer favourite subscription TV service Sky has warned that such activity could fall foul of competitive restrictions.

The Chief Executive of UK and Ireland operations at Sky, Stephen van Rooyen, said that such a venture would undoubtedly be earmarked for investigation by the Competition and Markets Authority.

He commented that, because public service broadcasters still command around 74% of the viewing share, a competition question must be raised.

Would a Brit-flix be possible?

In an analysis by investment bank Exane/BNPP, the idea was largely supported. Their analysts said they could see a benefit in providing a one-stop place for VOD content from PSB operators.

However, the nature of that service was called into question.

Their analysts said that an advertising supported video on demand service would fit well with revenue models of ITV and Channel 4 at least. Having advertising support the development would help them compete with providers like YouTube and Facebook for views.

However, the warned against aiming for a subscription video on demand service. They said that the 'marketing firepower and content depth' of companies like Sky and Netflix was too great for PSB companies to compete with, even in a cooperative state.

If such a service was launched, it would likely be simply a compilation of existing services such as iPlayer, the ITV Hub and All 4 but in one unique location. The idea is good, but without any additional content, would the effort be worth it?

It's not a brand new idea either. In fact, more than 10 years ago, something very similar was attempted.

In 2007, the BBC, ITV and Channel 4 got together to build a VOD service they called Kangaroo, but the idea was ultimately blocked by the competition regulator.

Planned to be a streaming service, the platform would combine the best shows from all UK TV providers, allowing them to watch everything in one place.

At the time, it was deemed to be too much of a threat to competition in the UK's VOD market. The Competition Commission stated that the companies involved would have too much control over valuable UK-originated TV content.

Despite this chequered history, ITV, BBC and Channel 4 have been in discussion for some time over the future of British TV. Perhaps, if they were indeed to launch a competitor to Netflix, the competition watchdog would look more favourably on it this time, given the changed landscape of modern broadcasting.