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Pay-as-You-Go European Pay-TV Innovation

With analog broadcast television services about to shut-down forever, a growing number of Western Europeans are opting for Digital Terrestrial Television (DTT) as a replacement.

Most DTT services are free-to-air (FTA) services, with no subscription and minimal hardware requirements -- in the UK, for example, DTT set-top boxes are available for as little as 10 pounds, or just under $20.

However, pay-DTT in particular is carving out a niche in competition with other pay-TV offerings from cable and telco service providers in some markets. A new market study by ABI Research finds that DTT's market potential varies widely from country to country.

"Some pay-DTT providers are positioning their service as a kind of halfway house between free-to-air services and other forms of pay-TV," says senior analyst Cesar Bachelet. "They offer all the regular FTA programs, plus some premium content at an attractive price."

Italy is expected to show the strongest growth in DTT over the next five years, and pay-DTT is a leading component of that growth. It is attractive for several reasons including plenty of sports programming, but the main driver is the prevalence of pay-as-you-go (PAYG) or a-la-carte services that don't require a commitment to lengthy subscriptions.

"The pay-as-you-go model has a strong history in Italy in broadband and mobile telephone services, so the transition to pay-DTT is an easy one," notes Bachelet. "ABI believes PAYG DTT will prove popular in other European markets as well."

Another important determinant of DTT's success in a given market is the availability (or lack) of digital alternatives, and the level to which the population depends on analog terrestrial FTA television.

In Belgium, for example, where most of the population gets its TV via cable pay-TV, the migration to digital TV will primarily occur within the cable environment. So DTT is unlikely to gain much traction.

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