VOD, Pay-Per-View European Markets to Hit 3 Billion Euros By 2011

LONDON, November 21: A new
Screen Digest study predicts
that growth in true video-on-demand services among Western European households
will generate increased revenues, boosting the value of video-on-demand and
pay-per-view (PPV) markets in the region to 3 billion euros by the end of 2011.

According to the report,
by 2011, more than 20 percent of Western European households will have true
video on demand, a 30 percent increase from penetration of just under 8 percent
today. Key markets include Belgium, the Netherlands and France, where cable
operators have launched their own VOD services.

In the early days of
paid-for services, blockbuster movies encouraged people to buy, with 60 percent
of revenues generated by blockbuster films in 2001. By 2006, this had been
halved to 30 percent, as sports content became more popular. Screen Digest predicts that over the next five years, the
dominance of sports and blockbuster movie content will be challenged as other
content such as archive and library films and à la carte TV programs grow their
share of total on-demand revenues from 9 percent to 18 percent. On top of this,
the report also notes that as subscriber numbers and overall on-demand buy
rates increase, blockbuster films will be earning 700 million euros per year by
2009, despite their loss of market share. The adult industry will also double
its VOD revenues from its current level of more than 250 million euros to more
than half a billion euros by the end of 2011.

While the “big five”
European markets— the U.K., Germany, Italy, Spain and France—will
continue to take the lion's share of on-demand revenues, other countries are
beginning to catch up. As more Nordic companies deploy VOD services, the
Scandinavian countries are beginning to show increasing on-demand average
revenue per unit (ARPU’s). True video-on-demand services typically have a much
greater range of local and international programming than their near-
video-on-demand counterparts, driving increased spending. This is one of the
major factors that allows Europe's smaller states to close the gap between the
“big five” countries.

The European market will
remain a pay-for proposition until at least 2011. In comparison, the more
mature U.S. market already offers viewers free or low cost on-demand services.

Richard Broughton, analyst
at Screen Digest, explained:
“The growing number of subscription services in Europe suggests that we could
be heading in the same direction as the U.S. Companies such as Virgin Media and
Italy’s Fastweb are already emulating the big U.S. cable operators, providing
free TV-on-demand with their standard packages. However, as we’ve shown in this
research, VOD has to yet to become a commodity in Europe, and until it does,
European viewers will continue to have to pay to view.”

—By Irene Lew