Video On Demand Dawn
Frost and Sullivan says the VOD dream is now reality
23 August 2001, 10 am GMT
Video on demand (VOD) will soon become reality
as the lure of a vast new marketplace leads an increasing number of players to take the plunge,
say analysts at Frost & Sullivan.
The convenience of VOD delivery to customers' TVs via digital set-top boxes, along with the pause, rewind and fast-forward functionality, will redefine the consumer experience.
"VOD will be available only to those with access to high levels of bandwidth, and is expected to attract more than 8.5 million subscribers across Europe by the year 2006, realising a revenue potential of $2.5 billion." says Niamh Spillane, Research Analyst at Frost & Sullivan.
Since the technology's inception, report the analysts, European rollout of VOD has been substantially lagging the US.
During the last quarter of 2000, Video Networks launched VOD commercially in the UK, yet audiences remain limited, but moves are being made to propel the market
As the price of set-top boxes and the cost of bandwidth technology decrease, network operators are able to launch viable business models for VOD which will result in the service becoming affordable to the average consumer in the mass market.
"Interest in the technology will initially expand at a sluggish pace, on a par with the development of subscription levels," she adds, "but rapid
growth will ensue as a result of the expected escalation in the overall subscriber base and average revenue per subscriber. We believe that the number of VOD subscribers will rise in tandem with home broadband access." continues the analyst
VOD market take-off in Europe will benefit companies providing digital subscriber line and cable modem services, and the the demand for extra bandwidth will further stimulate the sector.
xDSL technology, supplying broadband over the exiting
copper lines used for telephony, and its imminent rollout in most European countries, could bring broadband to the masses, suggest optimistically the analysts.
But Lack of standardisation, control over the last mile, revenue sharing between content providers and network operators, as well as abounding technological glitches are still obstacles.
Global spin
VOD services are forecast to be launched in Spain, the Netherlands and Portugal throughout 2002. Germany and Scandinavia will follow in 2003, with France and Belgium deploying the technology in 2004.
The major incumbents who have announced concrete plans include Telefonica, KPN, Deutsche Telekom, Telia and Telenor. Key players in the cable space include NTL, UPC, Callahan and Telewest.
The increasingly competitive nature of the television market will force TV broadcasters to seek out attractive programming options that will supply them with more kudos.
The emergence of VOD presents yet another option for
consumers in their choice among terrestrial, cable and satellite TV, as well as allowing broadcasters to build up subscribers by providing a complete home entertainment service.
The development of ancillary revenues achieved through television commerce (t-commerce), targeted advertising and targeted sales directly to individual subscribers will boost the popularity of interactive digital
television and advanced cable services.
Spillane adds: "The breadth of content availability will enable advertisers to target certain content at individual consumers based on their respective requirements and usage patterns. The spectrum of content across Europe, for example, will differ greatly from that in the US due to inclusion of multiple languages and locally produced material in domestic languages."
"The competitive landscape of service providers in this market is changing dramatically owing to the consolidation of the cable market and the continued deregulation and liberalisation of the telecommunications market. This is bound to have a major impact on the initial rollout of on-demand services as well as their subsequent success rate" she concludes.
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