Digital TV is about to rejuvenate the television industry in Europe, where operators are rolling out digital offerings for satellite, cable, and terrestrial broadcasts - that's what a new Report from Forrester Research, Inc., predicts anyway. IT goes on to say that more than 80% of TV viewers in the European Union will be watching digital TV by 2010, although the pace of consumer adoption will vary by country.

"Consumers, not technology, will determine the future of digital TV in Europe," said Dr. Therese Torris, director of New Media Analysis with Forrester's European New Media Strategies service.

"To attract consumers, operators must emphasize the improved choices and content digital TV offers, rather than the digital and interactive features that are still abstract notions to most consumers."  Digital TV's strongest selling point in many countries will be the additional channels and programs it offers. In southern Europe, where analog cable and satellite penetration is limited to less than 20% of households and terrestrial broadcasts offer few options, consumers will be attracted by the multichannel offerings of digital TV. But in heavily cabled countries like Germany and the Netherlands, consumers will not be as easily converted.

Next to improvements in choice, two factors will influence consumer adoption of digital television: customer perception of the cost and government intervention. Digital TV will grow faster in countries like France and the United Kingdom, where a pay-TV culture already exists. In Sweden and Spain, government support for free digital terrestrial broadcasts will stimulate competition and help bring down the cost of receivers and the pay-TV subscription fees that would otherwise limit adoption among lower-income households. Government-mandated switch-off dates for analog broadcasts, as happened in Sweden and Germany, will also speed adoption and increase customer confidence.

Of the seven largest European markets, France, the United Kingdom, and Sweden will lead in digital TV adoption through steady growth, reaching 50% penetration by 2005. After a slow start, digital TV will ramp up quickly in Germany and Holland, while Spain and Italy will grow at a slower pace once the wealthier segments of the population are fully penetrated with digital satellite TV.

The quick adoption of digital TV in Europe will create enormous opportunities for content providers as well as for hardware manufacturers. Broadcasters will collect new revenues from pay-per-view programming, direct marketing, and interactive services, while manufacturers will see strong demand for new hardware to receive digital signals.

But digital TV will also create a more competitive market.  "Operators and broadcasters will fight hard for content to fill the multiple new channels and for consumers to view them," added Torris. "Following the adoption of the European standard, the hardware market will be a level playing field where Sony and Pioneer will compete with European manufacturers like Philips, Thomson, and Grundig to supply the millions of integrated TV sets and set-top boxes needed."  Forrester believes that the competition for content will be won by a handful of vertically integrated platform operators  &√Ǭ£45;- Canal Plus, BSkyB, OnDigital, and Kirch Gruppe &√Ǭ£45;- that both own broadcast content and control viewer subscriptions.

These companies will use their control over content rights and corporate brand to attract and retain subscribers while squeezing out the competition. These companies will also be best positioned to use interactive services to retain viewers and guide their choices.

http://www.forrester.com/