Following disappointing levels of digital TV growth in Europe, subscriber growth has renewed with vigor. This viewer enthusiasm for all broadcast modes looks set to continue throughout the decade. Datamonitor forecasts that by 2008, 59% of European households will have made the transition to digital TV compared with 21% at the end of 2003. In contrast, the US will reach 52% 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% 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% penetration), followed by the UK with 20.6 million (82% penetration, remaining the highest in the world), France with 12 million (54% penetration) and Italy with 11.7 million (58% 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% receive analog or digital cable or satellite TV), DTT is unlikely to become a significant market.
Technology to lead the competition between operators
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.
