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Digital TV Platform and On-Demand Content

Digital distribution of content is growing rapidly across the globe, driven by continued technological enhancements and content industry support. However, key to its long term success will be the development of strong consumer propositions and business models that secure sustainable revenue streams, according to the latest research by Understanding & Solutions.

"Looking at the marketplace, broadcast Pay TV currently accounts for close to 50 percent of annual consumer expenditure on entertainment," says Jim Bottoms, co-Managing Director at Understanding & Solutions, "with packaged video, music and games content close behind. However, into the next decade, online will become a major means of distribution, and recent industry activities and consumer take-up are starting to lay the foundations for these revenue streams."

Up until recently, most consumers in Europe accessed video content either on DVD or watched traditional linear TV. Yet things have changed, with a raft of digital platforms and the rise of on-demand content. But a drawback of online VoD services is that most people want to watch movies on their TV and not their PCs -- to date there has been no straightforward, mass market method of achieving this.

Competition to paid-for VoD increasingly comes from the broadcasters, who are offering free catch up TV services, particularly in the U.S. and the UK. Historically the broadcast community has generated a significant portion of its revenues from advertising, and this model is now being tested on new media platforms.

Indeed, online TV advertising could achieve revenues of at least $10 billion worldwide by 2011, which equates to 18 percent of the Internet advertising market for that year.

Additionally, user-generated content sites, particularly YouTube, and social networking websites such as MySpace and Facebook, are well-placed to develop an alternative TV distribution model, potentially bringing audiences of millions back to the entertainment industry. Leading file-sharing networks like BitTorrent and LimeWire are moving into the market with video content distribution.

Online video is growing at around 100 percent each year and, going forward, television content will be a primary driver. Major U.S. broadcast networks are already reporting tens of millions of streams monthly from their websites, but to build sustainable revenues the industry needs to effectively engage with a wider consumer base.

Online TV will challenge the traditional broadcast industry by vying for content rights, the ability to offer on-demand linear broadcast and the generation of advertising revenues. The competitive structure of the market will be under threat as new Webcasters compete with conventional broadcast channels for audiences and advertiser money.

The national boundaries which govern broadcasting today will also be challenged by the global nature of the Internet, as has been the case with e-Commerce.

Consumers are increasingly demanding entertainment and information on their terms. In entertainment content distribution there still tends to be a one-size-fits-all mentality where we seem to expect all consumers to behave in the same way. However, there are major changes taking place in the way users access and consume their entertainment.

According to Understanding & Solutions, for the next ten years at least, we need to get used to a world of multiple delivery options and multiple viewing and listening experiences, which will vary according to a user lifestyle, age and income level, and the type and length of content being enjoyed.

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