REPORT PROVIDES ANALYSIS OF EUROPEAN VOD MARKET

A NEW study by Frost & Sullivan, the international marketing consulting company, shows that ‘video on demand’ (VOD) will soon become reality as the lure of a vast new marketplace leads an increasing number of network operators, software companies, as well as solution, equipment and content providers to take the plunge.
While the current crop of pay-per-view services have set starting times for movies, consumers will be able to watch any movie they want, whenever they want. 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.
Since the technology's inception, European rollout of VOD has been substantially lagging behind the US. During the last quarter of 2000, Video Networks launched VOD commercially in the UK, yet audiences remain limited.
However, tentative moves are being made to propel this fledgling market into the growth stage of its product life cycle.
As the price of set-top boxes and the cost of bandwidth technology plummet, 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.
Niamh Spillane, Research Analyst at Frost & Sullivan, says: "VOD, which will be available only to those with access to high levels of bandwidth, is expected to attract more than 8.5 million subscribers across Europe by the year 2006.
VOD market take-off in Europe will be a boon for companies providing digital subscriber line and cable modem services. The quest for extra bandwidth and an increasing interest in using bandwidth-hungry applications is another core factor stimulating demand for VOD.
The development of xDSL technology, supplying broadband over the copper lines used for telephony, and its imminent rollout in most European countries, could bring broadband to the masses.
The sudden flurry of activity comes at a time when a number of stumbling blocks, such as the current lack of standardisation, still need to be cleared. Prevailing technological glitches represent hurdles of the same order of prominence as the local loop unbundling delay and ongoing negotiations over issues such as revenue sharing schemes between content providers and network operators.
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.
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