US and Europe embrace the digital home
I want my HDTV
The US is the largest and most competitive digital TV market in the world today, with more than 45 million digital households at the end of 2003. However, Datamonitor analyst James Healey says that by 2006 Europe will represent a larger digital TV market than the US, with some 63 million digital households.
Following disappointing levels of digital TV growth in Europe, subscriber growth has renewed with vigour. This viewer enthusiasm for all broadcast modes looks set to continue throughout the decade. Datamonitor forecasts that by 2008, 59 per cent of European households will have made the transition to digital TV compared with 21 per cent at the end of 2003. In contrast, the US will reach 52 per cent by the end of 2008, almost 60 million households.
The UK is the most highly penetrated digital TV market in the world. At the end of 2003, over 50 per cent of UK households were receiving digital services. The UK will continue to represent the largest digital terrestrial TV (DTT) market due to the continuing success of Freeview. Satellite broadcaster BskyB also announced it is to launch a new service offering up to 200 digital TV and radio channels without subscription later this year.
The faster uptake of digital TV in Europe will be driven primarily by the demand for DTT. In terms of total digital TV households in 2008, Germany will lead with just over 21 million (56 per cent penetration), followed by the UK with 20.6 million (82 per cent penetration, remaining the highest in the world), France with 12 million (54 per cent penetration) and Italy with 11.7 million (58 per cent penetration).
The American market, by size, had the most digital TV households, with more than 43 million at the end of 2003 compared to 31 million in Europe. The intense competition for subscribers between the cable and satellite operators will continue to be the driver for the US market. Due to the already high penetration of multi-channel homes in the US (some 80 per cent receive analogue or digital cable or satellite TV), DTT is unlikely to become a significant market.
On both sides of the Atlantic, cable, satellite and terrestrial TV operators will seek to differentiate their services through technology. In the US, high definition TV (HDTV), video-on-demand (VOD) and personal video recorders (PVRs) are expected to be the weapons of choice. The cable operators will try to offer a superior service by offering all three technologies, while the satellite operators will focus on HDTV and PVRs. In Europe, VOD is not likely to be a driving force due to the poor cable infrastructure and lack of investment in new equipment, nor is HDTV due to the high price points of the necessary consumer equipment. Instead, PVRs will become more prevalent.
Internet Protocol TV (IPTV), which has recently experienced a spate of launches in Europe such as MaLigne tv in France and Imagenio in Spain, could yet rise to become a measurable competitor to the three traditional broadcast mediums. To date, these IPTV services are typically offering VOD and some content from the local pay-TV operator over a DSL line. Although an interesting alternative, pricing and content will limit demand in the near-term.
Related research: Datamonitor, MarketWatch: Technology Annual Subscription