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European Video on Demand Market Growth

New research by Screen Digest reveals how the European TV-based video-on-demand (VoD) and pay-per-view (PPV) markets will develop over the next five years and what the industry is worth today.

From a low penetration of just under eight percent today, Screen Digest predicts that by 2011 over 20 percent of Western European households will have true VoD, a 30 percent growth on current levels.

This growth will generate increased revenues, giving the VoD and PPV markets a value of 3 billion Euros by the end of 2011. Key markets include Belgium, the Netherlands and France, where cable operators have launched their own video-on-demand services.

While the big-five European markets 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 (ARPUs).

The expansion of the rest of Europe's revenues is also a consequence of the wider availability of the so-called long-tail of content. 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.

It is this which is one of the major factors in allowing Europe's smaller states to close the gap between the big five countries of the UK, Germany, Italy, Spain and France.

In the early days of paid for services, it was blockbuster movies that encouraged people to buy. In 2001, 60 percent of revenues were generated by blockbuster films. By 2006 this had halved to 30 percent, as sports content came to dominance.

The next five years will see the supremacy of sports and major movie content challenged, as other content such as archive and library films and a-la-carte TV programmes grow their share of total on-demand revenues from nine to 18 percent.

In fact true video-on-demand services present a win-win situation for content owners, allowing them to finally earn income from large back catalogues of material that had been consigned to the rubbish heap.

On top of this, as subscriber numbers and overall on-demand buy rates increase, blockbuster films will benefit from the market growth and will be earning 700 million Euros per year by 2009, despite their loss of market share. The adult industry will also reap rewards, doubling its VoD revenues from its current level of over 250 million Euros to over half a billion Euros by the end of 2011.

According to the analysis, 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 explains, "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 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.

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