The UK's main terrestrial broadcasters have banded together to reshape the delivery of on-demand programming in a challenge to Sky, Virgin and Apple – but they have left Channel Five sidelined.

The initiative, Project Kangaroo, is an ambitious play by BBC Worldwide, ITV and Channel 4 to launch an on-demand platform initially on the web - although it will almost certainly have a TV berth too.

The core partners, while keen to make the platform as all-encompassing as possible with partner deals, have conspicuously not asked Five to become a founding partner.

Rod Henwood, Channel 4's new business director, said that Five had not been approached about the project in the run up to today's announcement - but he did not make it clear why.

However, he said all rights holders, including Five, would now be involved in discussions about having their content on the platform.

"One possible explanation for Channel Five not being involved is that it is a natural threat to Channel 4. While it competes with BBC and ITV, the others have much different brand identities," said Arash Amel, a senior analyst at Screen Digest.

This potentially has major ramifications for Five because it would not share in extra revenues as a platform founder.

However, Five appeared to contradict Henwood's argument that it had not been in discussion with the three project Kangaroo partners before today about the launch of the on-demand service.

"We have discussed this with the BBC, ITV and Channel 4 in the past and will be sitting down and talking to them again shortly about our involvement in this new venture," said a Five spokesman.

"It is strange, as you would have thought that any multi-broadcaster proposition looking to do what they are would involve all terrestrial broadcasters from the start," added Amel.

"If Channel Five is approached as a content partner, not a platform partner, it comes down to how many ways revenue is split and it could potentially have to pay the others to be on the platform."

The main partners are being understandably cagey about the financial details of the deal, and while all are "equal partners" in the joint venture there is no indication as to how the money will be divided.

The service will offer a mixture of free, rental and buy options, and has not ruled out a subscription model.

David Moody, director of strategy at BBC Worldwide, said that catch-up services offering recently shown TV were becoming associated with an ad-funded model, while archive material was more suited to a pay model.

In the longer term, the plan is to get Kangaroo beyond the web and on to TV, perhaps as a readily available platform within Freeview set-top boxes.

Such a move would make the project a potential competitor to integrated on-demand services such as Sky Anytime, which allows customers to download programming to their PC or Sky+ personal video recorder.

"Sky have the Anytime service but it is a pretty competitive market," said Henwood.

"Apple have their own service [to download shows], Virgin do too. We wouldn't see it as a binary competitive situation."

Amel argued that the broadcasters' competitors included everyone from Joost and Apple through to Sky.

"Potentially using the Freeview set-top box and embedding Kangaroo technology with the hardware manufacturers and saying 'we'll serve you content' to consumers with no subscriptions could be compelling," he said.

Tom Betts, ITV's commercial and acquisitions director, said he believed there would be some content exclusively available on Kangaroo to make the broadcasters' joint venture more attractive.

For Channel 4, the smallest partner in the deal and understood to have been the driving force behind Kangaroo, the ramifications for its own video-on-demand service are greatest.

Channel 4 will start running streamed programming through its high-traffic website, while the 4oD content and active user base will "migrate" to Kangaroo.

Integration will not be difficult because Channel 4 and the BBC both use the Kontiki and Ioko technology for their services. However, the continued existence of the 4oD brand is much less clear.

"In terms of brand it is important to say that the Kangaroo service will have broadcasters' brands in the environment," Henwood said. But he would not confirm that Channel 4 would use its 4oD name.

For ITV.com, a supporter of the ad-funded model, the deal is the first to offer long-form programming via a third party since the £20m revamp of ITV.com earlier this year.

"When we came together with the idea it was with the customer on our minds," said Moody. "We want one place for all content. It is what consumers want".

The joint venture partners hope that there will be no regulatory problems with their proposal.

They are compiling a formal submission for the Office of Fair Trading, arguing that Kangaroo will give additional choice in the online content market, and have held "informal conversations" with media regulator Ofcom.
It is not known at this stage if Ofcom would need to be involved officially.

· To contact the MediaGuardian newsdesk email editor@mediatheguardian.com or phone 020 7239 9857. For all other inquiries please call the main Guardian switchboard on 020 7278 2332.

· If you are writing a comment for publication, please mark clearly "for publication".