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187 million digital TV
households expected across Europe and the US by 2010
Other Topics:
3G Streaming Software,
IBC TV News
Datamonitor
August 23, 2006
London -- 2006 will be a watershed year for new services such as
high-definition TV, IPTV* and mobile TV, according to a report just
published by independent market analyst Datamonitor (DTM.L). The
report, “The Evolving Broadcast Sector,” expects the European
digital TV market to overtake that of the US in absolute terms by
the end of 2006, at which point Datamonitor estimates 65 million
households across the region will have made the transition to
digital TV services. Digital penetration will however remain higher
in the US until the end of 2009, when an estimated 63% of households
in both regions will be receiving digital TV services. |
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“Competition across
the digital TV sector is now greater than ever before, prompting
operators to develop their offerings in order to attract and retain
subscribers”, says Adrian Drozd, Senior Media & Broadcasting analyst
and author of the study. “The emergence of IPTV will act to boost
levels of competition and add new impetus to the plans of
established operators.”
Development will continue to vary considerably between country
markets
Datamonitor’s report provides an overview of current and future
developments across the European and US digital TV market, including
the potential of IPTV services, uptake of PVRs (personal video
recorders), high definition TV and mobile TV.
Thus far, more than 100 million households across Europe and the US
have made the transition from analog services, although penetration
between individual countries continues to vary significantly.
The UK remains the only country in Europe with over 50% of
households having digital television services. Datamonitor estimates
that by 2010, 95% will have made the transition to digital TV and
the UK will remain the most penetrated digital market in the region.
The continuing success of BSkyB’s satellite platform and expected
strong uptake of the Freeview DTT (Digital Terrestrial Television)
service will drive uptake – Datamonitor expects Freeview to become
the largest digital platform in the UK by 2008. The recent merger of
cable operators NTL and Telewest will also act to provide greater
impetus to digital cable development.
In contrast, Germany will continue to lag behind other major
European markets, with only around half of TV households digital by
the end of 2010.
IPTV set to make an impact, but unlikely to meet the hype this
decade
Despite strong support from European service providers, Datamonitor
believes IPTV will remain a relatively niche proposition across much
of Europe, with the platform facing stiff competition from existing
cable and satellite services and, increasingly, DTT. Datamonitor
expects there to be 9.5 million IPTV subscribers across the region
by the end of 2010, with fewer than 9% of digital households
connecting via this means.
France will retain a strong position with regard to IPTV deployment
in Europe, accounting for around 28% of households subscribing to
the services across the region by the end of 2010. The market
conditions in France make it an attractive market for IPTV
provision, with cable penetration relatively low and strict
conditions surrounding the installation of satellite dishes on
buildings.
In the US, the IPTV market is starting to gather momentum and is now
starting to develop beyond the rural telephone companies who have
been delivering TV content over DSL infrastructure for several
years. However, Datamonitor expects the US to be a more challenging
market than Europe for IPTV, with high levels of pay-TV penetration
and expected strong price competition from established cable and
satellite providers combining to limit uptake to around 6 million
households by the end of the decade.
“IPTV is primarily a defensive move by the major service providers
rolling out services. While they have the potential to generate
additional revenues for operators, the key driver of deployment – in
the short term at least – will be improving customer loyalty and
adding greater depth to the services provided to consumers over ADSL
networks”, says Drozd. “In some cases, IPTV may prove to be a
financial loss leader, albeit an essential one if telcos are to
retain a significant position with regard to provision of consumer
communication and entertainment services.”
PVR focus set to remain on the pay-TV sector
The rollout of PVR services is central to pay-TV operators’ strategy
of increasing ARPU (average revenue per user) and driving subscriber
loyalty. However, outside of the US (and to an extent, the UK),
uptake has been disappointing to date. Penetration has only reached
significant levels in the US, with 18% of households having a PVR by
the end of 2006.
In contrast, the European market has yet to gain any real momentum;
fewer than 2% of households will have a PVR by the end of the year,
with BSkyB accounting for a significant proportion of these. As
such, the true impact of PVRs may not be felt for some time,
although broadcasters and advertisers must begin to consider how to
evolve their strategies to meet the challenges created by a
mass-market move to time-shifted viewing.
High definition starting to make its mark
The 2006 football World Cup has acted as a catalyst for the first
meaningful stage of HD (high definition) development in Europe –
Datamonitor expects steady adoption over the next two years, with
only early adopters willing to invest in the devices and
subscriptions needed to receive HD content.
In the US, sales of HD TV sets are around three years ahead of the
European market, with almost 20% of US households owning an
HD-capable TV by the end of 2005 – 87% of US households are already
passed by at least one cable operator offering HD services. In
contrast, there were only around 2 million ‘HD ready’ (i.e. with an
HD-capable TV) households in Europe at the end of 2005, although the
vast majority of these sets are not connected to HD programming due
to very limited rollout of service.
This coupled with the fact that the difference in quality between
standard definition and HD programming is not as noticeable in
Europe as it is in the US due to differences between the standard
definition broadcast technologies used, is likely to result in a
continued gap between developments in the two regions. In addition,
the fact that average screen sizes are larger in the US means that
demand for HD services are likely to be greater, with picture
quality improvements more noticeable on bigger screens. |
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