Report: Multiplatform Distribution is Key for Broadcasters in 2008

LONDON, February 15: A new report from research firm
Datamonitor predicts that the global broadcast market will experience
significant revenue growth from $284.1 billion in 2007 to $326.2 billion by
2010, but says that traditional broadcasters must address issues such as
multiplatform distribution and value-added services in order to retain and
attract new audiences.

The report, 2008 Trends to Watch: Media and Broadcasting
Technology, found that growth in the global
broadcast market will only be secured through revenue diversification from
value-added and bundled services, including Internet service provision, HD
content, on-demand solutions, interactive applications and multiplatform distribution.

Datamonitor predicts that digital-TV adoption, particularly
IPTV and cable services, will grow in both the U.S. and Western Europe. There
were around 149.5 million households subscribing to a digital television
service in Western Europe and the U.S. in 2007. Of the total digital-TV
households, digital-cable services accounted for a 32-percent share, satellite
was 43 percent, digital terrestrial television (DTT) was 22 percent and IPTV
was around 3 percent. By 2010, Datamonitor estimates that 193.5 million
households in the U.S. and Western Europe will be connected to a
digital-television service. In terms of absolute growth, the two largest
gainers will be DTT and digital cable, growing by an estimated 13.3 million and
14.5 million households, respectively.

In terms of market share, Datamonitor expects IPTV and DTT
to show the strongest percentage growth, with a 2.7-percent and a 3.7-percent
increase, respectively. Considering this, digital-TV players will face a
challenging year as they look to attract new customers and reduce churn.

Datamonitor also says that diversified revenue streams are
essential to securing positive growth, as broadcasters face continued threats
of piracy, declining advertising effectiveness, the entrance of non-traditional
competitors and audience fragmentation. The U.K. provides a prime example of
diversification models, with broadcasters obtaining significant revenue from
non-traditional broadcast sources such as TV shopping, interactive services,
pay-per-view and program sales.

Furthermore, multi-service operators are using bundled
services (primarily telephony and Internet service provision) to bolster both
their product portfolios and secure additional revenue. In the long run,
broadcasters who employ diversified revenue models are able to hedge against
some of the risk inherent in securing funding from just one or two sources.

According to Datamonitor, digital program insertion is also
expected to become a particularly lucrative source of revenue for broadcasters
over the next 12 months. Ad insertion allows broadcasters to push relevant
advertising to specific demographics. Traditionally, ad-insertion technology
has been based on MPEG-2 codecs that is a tried-and-tested technology, widely
available in the market. As compression technologies mature, particularly with
the introduction of MPEG-4 (H.264) codecs, ad-insertion solutions can benefit
from the substantially lower bit-rates involved in transmission. Technology
vendors assisting in the transition towards enhanced advertising solutions,
such as analytics and on-demand server vendors, are expected be in a strong
position over the coming 12 months.

“From personal media players to TV sets to mobile phones,
people will access media content on a variety of different devices over a
multitude of communications networks,” said Chris Khouri, the media and
broadcasting analyst at Datamonitor and author of the report. “As such,
broadcasters are faced with strong pressure to adapt to multiplatform
entertainment provision. With only so many hours in a day, retaining and
attracting consumers requires a thorough understanding of evolving consumption
habits.”

Continued Khouri: “Advertising has been a steadfast revenue
generator for the broadcast sector. However, as consumption habits transform
and consumers utilize multiplatform channels as well as on-demand and
time-shifted viewing, traditional revenue-generation models are loosing their
effectiveness to bring returns. Broadcasters therefore will need to look to a
variety of diversified revenue streams to bolster income.”

—By Irene Lew