Move to future TV services slower than you think

13 Sep 2007

Only 20pc of European viewers will be consuming their content “on demand” by 2012, according to research by global business consultancy Bain & Company.

It says that while Europe is inexorably moving towards a mass market for new digital video platforms and on-demand consumption, the transformation will be slower than many would like to believe.

Bain says that the European video content market is currently worth €123m and is growing at a rate of between 4pc and 6pc a year.

Of the €123bn revenues generated, companies are earning €17bn in profits.

Bain cites six main reasons for the staying power of traditional television in Europe in what it calls its “evolving” scenario.

Watching television it says is different than surfing the internet — a “lean back” rather than a “lean forward” experience — and there is little evidence that internet usage is cannibalising television viewing today.

Average TV viewing is over 3.4 hours per day and growing in most European markets.

Bain says that though alternative technology will continue to offer the consumer improved video content viewing options over the next five years, it will take time to catch up with the “lean back” experience of traditional TV.

In particular, video on demand (VOD) based on television or IPTV will likely offer a superior experience to internet-based VOD, while wide availability of personal video recorders (PVRs) and high-definition TV will raise the bar even further.

Youth behaviour, Bain says, is changing with viewing habits shifting towards new internet VOD models. However, the impact will be limited up to 2012, with most changes not being felt for 10 to 15 years as Bain says only some youth behaviour carries forward into later life.

Content creators are unlikely to actively promote internet-based on-demand platforms at the expense of TV platforms, but they are likely to experiment with all the channels in getting content to their consumers.

Industry players, including creators, distributors and aggregators, will demonstrate success in rethinking and adapting their business models.

Regulatory frameworks that will emerge over the next seven years will likely follow market trends rather than aggressively steering toward a desired outcome.

“While the migration toward the digital video age in Europe may face some headwinds, this is no time for industry players to put their strategies into low gear,” said Michel Luzi, head of Bain & Company’s European Telecoms, Media and Technology Practice.

“All aspects of the video content value chain are being disrupted, with new risks forming at every juncture,” Luzi added.

In related news the move to services capable of carrying high quality future generation TV services is proceeding at a pace in Europe. In Amsterdam, cable operator UPC and Cisco demonstrated the first European field trial of new cable standard EuroDocsis 3.0 and broke a new record broadband speed of over 120Mbps in consumer homes.

“The field trial is the initial phase of a plan to deploy full EuroDocsis 3.0 technology which will enable speeds of up to 200Mbps and above,” said UPC’s chief technology officer Eric Lennon.

By John Kennedy