After Asia-Pacific, Europe Is The World’s Second Largest Broadband Market With More and More Video Programming Being Streamed

Philip Stone August 4, 2005

Europe is witnessing the death of dial-up Internet with some countries probably eliminating it completely within five years, according to a new study by Strategic Analytics. And as broadband grows, so, too, are the video streaming programs on offer, whether from new start-ups or major players like the BBC and BSkyB.

Strategic Analytics estimates that by the year 2010, 93% of online homes in Europe will use broadband to access the Internet. But one major country, Germany, is bucking that trend.

The survey estimates that by the end of 2005 only 24% of German homes will have broadband, placing it beneath the 33% average and last among the 14 countries of Western Europe.

“Germany’s fragmented and highly regulated cable industry is a key factor in the constrained growth of broadband, according to Martin Olausson, senior analyst at Strategy Analytics. “With limited competition, Deutsche Telekom has no real incentive to implement an aggressive growth strategy for broadband.”

The Netherlands is projected by the end of the year to have Europe’s highest household broadband penetration at 56% followed by Switzerland (51%) and Denmark (49%), Norway (48%) and Sweden (44%), according to the survey.

The UK places ninth at 38% but in the past 18 months alone, because of aggressive pricing reductions by the major communications vendors, it doubled its broadband connections to 8.1 million households, compared to the 7.5 million homes still on dial-up,

The Office of Communications (Ofcom) says new connections are running at the rate of 60,000 a week and it believes that by the year 2010 more people will be watching television over the Internet than via analogue sets.

Many countries have experienced that when broadband costs come down to around $30 a month  ($1 a day) then broadband installations take off. Ofcom notes that in the UK at the end of 2002 a 512kb connection cost about $50 monthly, but this year a 1mb connection costs around $35 monthly, and the prices are continuing to tumble.

And as broadband penetration expands so does video programming.

The International Amateur Athletics Federation (IAAF) has signed a deal to stream the nine-day athletics world championships from Helsinki to the US. While most European countries will have blanket television coverage of the games, in the US there are just some taped highlights since US broadcasters pay scant attention to amateur sports outside of Olympic years. So the IAAF hit on a proactive strategy to show US audiences everything going on in Helsinki in real-time via the web, broadcasting some 58 hours of Internet coverage at a cost per user of about $5.

Other athletic bodies will be watching to see its success. Perhaps the Internet  could be THE vehicle to show those “minor” sports that fail to get their fair share of television time.

Meanwhile, The BBC in the UK streamed a comedy program on the Internet one week before its terrestrial debut. It has now introduced a range of its current affairs programs, including its newscasts, as part of its video news player that will have about 190 hours of programming available. The service previously had just shown clips and video packages.

The BBC said its research showed people prefer entire programs to clips, and it expects to add more programming in the future. The news video player can be accessed outside of the UK, but only at narrowcast 56kbps

BskyB satellite television broadcaster has announced a new movie broadband service that will offer hundreds of movies for downloading. And it will offer a sports broadband service containing more than 1,000 video clips. 

At the other end of the scale is a new start-up, the British Internet Broadcasting Company (BIBC) that has launched a video download service where users can buy comedy and music programming.

But research indicates what people really want to download are movies, and although Sky has apparently worked a deal, small start-ups seemingly cannot.

And since everyone knows it is the young who flock the most to the Internet it should come as no surprise that MTV in the US has firmly planted its feet on the Internet with its ad-supported Overdrive web channel. The network has discovered that clips bring in crowds but what really works is original programming.

So on Aug.3 it debuted an hour-long special on the Internet featuring hip-hop artists Eminem and 50 Cent six days before the program appears on television.

MTV president Christina Norman said it was all about expanding the brand.

All of this will have great ramifications on the future of television as we know it today. But where MTV, BBC and Sky are treading today, will others be far behind tomorrow?

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