Why Did SeeSaw, Britain’s Hulu, Really Fail?

It took years of negotiations and technical work to make it to launch, but in the end SeeSaw, the U.K.’s answer to Hulu, lasted just 16 months before its owners pulled the plug. The site, which streams TV shows over the Internet, has announced that it plans to shut down next month, as Ryan reported last week.
The news came in an unceremonious blog post that seemed both apologetic and confused: “We’re sad to announce that next month will be the end of the road for SeeSaw,” it said. “SeeSaw has become a great place to watch TV for millions of U.K. viewers. However, as part of an ongoing strategic review of its business activities, Arqiva, our parent company, is no longer able to support the service.”
Users reacted strongly, with many pleading for it to be saved. SeeSaw’s closure, though, is a sad and desperate end to a story that has been troubled every step of the way, with the site fighting for survival almost from the moment it was conceived back in 2007.
When the project originally kicked off, the U.K. already has a massively successful online TV service in the shape of the BBC’s iPlayer. But due to the way the BBC is funded —- by an annual license fee that every household pays towards public service broadcasting, rather than by advertising —- it seemed impossible for the iPlayer to be turned into a commercial venture. Instead, the BBC joined forces with other TV companies in a consortium that planned to build a broad, multichannel online TV catchup service along the same lines as Hulu.
But once it was up and running that scheme, known as Project Kangaroo, hit all sorts of snags. The main broadcasters behind the service differed on how they wanted to implement it: Some said they would continue to run their own video-on-demand systems, others said they wanted Kangaroo to replace their existing offerings. Ashley Highfield, the BBC’s top technology executive, was brought in to run the project —- but ended up leaving to head Microsoft’s U.K. division instead.
That was awkward enough, but then came the coup de grace: Rupert Murdoch’s Sky TV, which wasn’t part of the consortium, led a full court press on government regulators to block Kangaroo’s progress. The grounds? That it was anti-competitive, and would allow a cabal of broadcasters to use their existing power to dominate the Internet video market. In the end, the regulators agreed, and ruled the BBC, ITV and Channel 4 were creating a platform that was too powerful —- and too exclusionary —- for the rest of the market to cope with.
Of course, Murdoch knew that on-demand Internet TV could be a public success. His own News Corporation (s NWS) was one of the key investors behind Hulu. But the idea that somebody else might launch a similar service was too much to bear. Kangaroo, cut adrift from its investors, went on the block.
In the end, things looked like they might work out when the service was bought by Arqiva, a British telecom and broadcast technology group, for £8m ($13 million USD). Early last year, they launched the service as SeeSaw, to some acclaim -— and immediately started looking for ways to make good on their money. They signed deals with American networks like NBC (s CMCSA) and MTV, (s VIA) and started negotiations with foreign broadcasters in an attempt to license the technology to other countries.
But none of it, apparently, was enough. Earlier this year, Arqiva said it was looking for investment partners and was open to offers. With no viable offers forthcoming, it’s decided that it is easier to shut things down completely.
SeeSaw has been troubled all the way, but it would be a mistake to assume that it was always doomed to failure. Yes, it had to deal with the complex and confusing world of British broadcasting, and it was forced to cope with being torpedoed by Rupert Murdoch, who seemed motivated as much by a spiteful relish as he was by competitive concerns.
But SeeSaw did nothing to help itself. Despite the huge amount of time and energy and money sunk into the project, it was barely known outside its core user base. It had to compete with the on-demand services that its founders worked on, and hardly registered in the public mind -— advertising for the service was so thin on the ground, I can’t remember seeing any promotion for SeeSaw in the last six months.
There is no denying, however, that the site’s demise paints anything other than a damning picture of the state of British innovation. Hampered by a complex and antagonistic relationship between the public broadcasters and private companies, perhaps the real miracle is that it ever launched at all. The irony is, of course, that SeeSaw’s failure leaves the door open to expansion from the likes of Netflix (s NFLX) or Hulu itself —- companies who can now move in from across the Atlantic and shake things up. Murdoch wanted to shut down Kangaroo from the beginning, but even he couldn’t have imagined his plan would work out so well.