Report Summary
This report covers developments in Europe's digital media market, including an assessment of EU and national strategies for maximising the potential of the digital dividend to 2012. Europe's media market is on the cusp of massive changes driven by new technological developments in broadband, with IP-delivered content provided via upgraded DSL and cable networks, and increasingly widespread fibre networks. Faster Internet access has also enabled content providers to move into the telecom arena. IPTV has become a successful proposition in markets such as France, providing fresh opportunities for emerging digital media companies such as Yahoo! and Google.
The market for digital home services in Europe is promising in coming years, shaped by technological developments and cross-platform competition. TV broadcasters, the traditional distributors of media content, are competing with and at the same time turning to Internet delivery platforms. While new players have entered traditional media markets, most notably in the burgeoning satellite pay TV market, new markets based on digital media products are growing on the back of rising broadband penetration, most notably in Central Eastern Europe, the Baltic region and Russia.
Cable TV remains popular across the region, with household cable penetration in some Eastern European countries among the highest in the EU. Competition has led to consolidation among operators, particularly in Germany, and an expanding product portfolio to encompass broadband access and fixed-line telephony. Nevertheless, for cable TV operators video will remain the principal revenue driver in coming years. The traditional terrestrial TV broadcasting sector is rapidly evolving, with all countries progressing with digital terrestrial broadcasting initiatives to meet milestone analogue switch-off dates. A number of countries, including Sweden, have already switched off analogue signals and are utilising spectrum for a myriad of uses, including wireless broadband.
The countries covered in this report include: Albania, Austria, Belarus, Belgium, Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Macedonia (FYROM), Malta, Moldova, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Ukraine and United Kingdom.
Key highlights:
Sweden
Digital switchover in Sweden, undertaken region by region, was completed nationwide by October 2007. Four digital TV multiplexes cover approximately 98% of the population and a fifth multiplex 50%. A sixth multiplex went live in mid-2007, with capacity reserved for HDTV and mobile TV, while an eight was to be licensed later in 2009. IPTV is dominated by TeliaSonera, while the cablecos Com Hem and Tele2Vision.
Germany
The number of triple play subscribers reached about 1.3 million by early 2009, and continued dynamic growth is expected over the next few years. Bundled services have become very popular among consumers, stimulating further network upgrades among providers. The triple play platforms of cable and DSL have considerable footprints in Germany, while mobile wireless is likely to be deployed from 2010 in conjunction with other broadcasting networks. Deutsche Telekom's VDSL networks have been extended to some 50 cities, while the consolidated cable sector has largely been upgraded to 840MHz in order to deliver high-bandwidth content. DSL providers trying to expand into the broadband TV sector have been hampered by Germany's television market which includes numerous free channels.
United Kingdom
The UK has one of the more competitive markets in Europe for triple play services, with competition at the infrastructure level between the main cable provider Virgin Media and the numerous DSL providers. In addition, the main satellite broadcaster BSkyB has entered the broadband arena, exploiting the fast-growing sector's revenue potential, while mobile network operators are undergoing network upgrades to develop 4G services from 2010, which will enable them to compete for targeted TV audiences and potential revenue streams. Virgin Media's launch of 50Mb/s services in early 2009, together with a planned 200Mb/s service expected to be operational by 2012, will open up further possibilities for the HDTV market. BT's FttC network, to be deployed to some ten million homes by 2012 and given the economic go-ahead by the regulator's guarantee of appreciable returns on investments and unregulated wholesale access pricing, will similarly be a fillip for converged IP services in coming years.
Spain
Although Spain's broadband infrastructure is being upgraded to provide triple play services to a wider proportion of the population, much investment remains to be undertaken in regional areas. Telefonica remains the largest broadband provider, though strong competition exists from alternative operators based on LLU and from the main cableco ONO. Growth in triple play and IPTV will require far greater investment in network infrastructure in coming years. Fibre has only a small presence in the Spanish market, so ADSL2+ will be the preferred vehicle for emerging triple play offerings until fibre networks from Telefónica (launched in October 2008) and Orange (trialled in Barcelona and Madrid) are extended. As of January 2009 the Spanish regulator's encouragement of facilities based competition on fibre networks extended wholesale access to the full range of Telefónica's VDSL and fibre platforms, thus encouraging competition and broadening the scope for regional triple play services.
France
The French government has supported DTTV by requiring the platform to carry both FTA and pay TV services. It also opened up the TV advertising market for new entrants and has part-funded the public broadcaster France Televisions to develop its DTTV services. By 2011 about 95% of the population should be served by DTTV. Digital dividend spectrum also has considerable potential to drive wireless broadband use. The regulator is also developing mobile broadband using the UHF band to provide nationwide broadband coverage of at least 10Mb/s. The regulator planned to allocate 790-862MHz sub-band spectrum to mobile services as soon as the analogue switch-off takes place.
The following notes provide some background to our scenario forecasting methodology:
* This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.
* The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.
* All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.
