BBC, ITV and C4 team up for on-demand TV service

The UK's largest broadcasters have teamed up to take advantage of the burgeoning market for on-demand television content to better face the challenge posed by online aggregators like Google, Apple and Joost as well as traditional rivals such as Sky.

The joint venture – dubbed "Project Kangaroo" – represents a giant leap for the traditionally combative broadcasters as they come to terms with changing customer behaviour and the growing importance of on-demand content. The broadcasters – Channel 4, ITV and BBC – have previously worked together to stimulate digital TV take-up by launching the Freeview platform and recently agreed to collaborate over the launch of high-definition TV services on the free-to-air digital platform.

The three equal partners – Channel 4, ITV and BBC Worldwide, the commercial arm of the state-owned broadcaster – have all already launched separate on-demand players online but Project Kangaroo has been designed to provide UK consumers with a single platform to access more than 10,000 hours of content. The service will initially be launched online but is poised to also grace other distribution platforms such as Freeview and possibly BT Vision and Virgin Media's platforms.

David Moody, director of strategy at BBC Worldwide, said: "The consumer is at the heart of this proposition. They want one place to access all the content from the UK's largest broadcasters in a simple and fun way. It's a natural next step for us."

Tom Betts, ITV's commercial and acquisitions director, said: "Project Kangaroo is a consumer-led on-demand proposition. The rules about linear broadcasting don't necessarily make sense any more."

The service, which will be rebranded when it is launched in 2008, will offer a range of different ways to access content. The "catch-up" content, where consumers can watch shows that have already been broadcast, will be free but supported by advertising, while consumers will probably have to pay to download material to rent or keep. The broadcasters declined to say how they would share revenue generated by the site. Leslie MacKenzie, a former Sky executive, has been appointed to head the project.

It is notable that Channel 5 has not been invited to participate in Project Kangaroo. Mr Moody said the company is talking to content owners such as film studios and that there would be third-party content available on the site when it is launched. However, he said that the broadcasters are not seeking new equity partners in the venture which could leave Channel 5 out on a limb.

The broadcasters are each investing a modest sum – somewhere in the tens of millions – in the project over the coming years despite already spending millions of pounds launching standalone players. Rod Henwood, Channel 4's new business director, said there would be some overlap between existing services and the new site but that the collaboration would produce efficiencies and allow the companies to learn from each other's technological investment. "You can't just dip your toe into any market and expect to prosper," he said. "You have to embrace it."

Since launching in December, Channel 4 has already had 60 million items of content viewed on-demand including 10 million downloaded on to computers.