European Video Content Market Experiences Growth

LONDON, September 11: A
new report issued by business consulting firm Bain & Company reveals that
the European video content market is currently worth 123 billion euros and is
growing at a rate of 4 to 6 percent per year, but only 20 percent of viewing
will be on demand by 2012.

The report, entitled The
Digital Video Consumer, Transforming the European Video Content Market, explains how the market is evolving as iPods,
mobile phones and computers are increasingly being used to download video
content. The study says that Europe is moving towards a mass market for new
digital video platforms and on- demand consumption. However, of the 123 billion
euros generated in revenues, companies are earning only 17 billion euros in
profits.

The study also indicates
the staying power of traditional television in Europe. There is still little
evidence that Internet usage is dominating television viewing habits, with
average television viewing still more than 3.4 hours per day and still growing
in most European markets. Bain & Company also notes 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
experience of watching traditional television. IPTV will likely offer a
superior experience to Internet-based VOD for most or all of the period, while
wide availability of PVRs and high-definition TV will raise the bar even
further. Youth behavior is also impacting the video content market in Europe,
with viewing habits shifting towards new Internet VOD models, but the impact
will be limited through 2012, with most changes not being felt for 10 to 15
years. Content creators are also unlikely to actively promote Internet-based
on-demand platforms at the expense of television-based platforms, but are likely
to experiment with all channels in delivering content to their consumers.

Content creators are also
faced with the challenge of staying focused on improving content and serving
their target audiences. They’ll need to explore a new sales model—selling
directly to consumers over the Internet—and develop an ability to put
their content on all media platforms while maintaining established, low-risk
moneymaking outlets. There are the opportunities for staggered releases of
content on different media platforms—such as making already-aired
television shows available on websites and mobile devices—but content
creators will want proof that there is substantial viewer interest in new
formats. Content aggregators must also learn how to compete in the VOD market,
where consumers will increasingly watch their favorite television shows when
they want—and not when broadcasters schedule them. A key to success will
be making it easy for viewers to find their programs amid hundreds of choices,
while at the same time offering quality programming to build and maintain
consumer loyalty. Meanwhile, content distributors will have to be both adept
content operators and innovators. They must continue operating existing
services efficiently, while creating new ones, especially VOD. Otherwise,
established distributors will find it hard to compete against emerging
distribution alternatives.

“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 Michele Luzi,
the head of Bain & Company’s European Telecommunications, Media and
Technology Practice, and the study’s author. “All aspects of the video content
value chain are being disrupted, with new risks forming at every juncture.”