U.K. and French Broadcasters Take the Lead in European OTT Video Market

Wednesday, May 25th, 2011
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SNL Kagan analysis indicates broadcaster-led catch-up services are attracting the most viewers and fueling an array of new OTT products

MONTEREY, CA — An analysis of Europe’s largest over-the-top (OTT) video markets by SNL Kagan, the global leader in video economics intelligence, finds the U.K. and France leading Europe’s emerging OTT deployments, invigorating both free and pay-TV competitive dynamics from which new business models are emerging.

The analysis – focused on France, Germany, Italy, the U.K. and Spain – notes an increase in OTT service launches in recent months, driven by broadcaster-led catch-up services that are significantly impacting how content is distributed and viewed online.

SNL Kagan’s key European OTT developments:

  • Broadcaster-led catch-up services: Today’s fragmented hybrid broadcast broadband initiatives across Europe are being brought under a number of national-level umbrellas, as Project Canvas (YouView) in the U.K., MHP in Italy and HbbTV (Hybrid Broadcast Broadband TV) in Germany and France enable broadcasters to compete on content rather than technology while opening significant opportunities for experimentation with interactivity.
  • Authenticated TV Everywhere: While broadband penetration in the U.K., Germany and France is high at around 70%, take-up of double and triple-play bundles is likewise strong and rates affordable, giving incumbent video providers a strong opportunity to influence the near-term shape of OTT in their markets.
  • Consumer Electronics brands: Although nascent today, TV applications ecosystems created by consumer electronics manufacturers and deployed via “connected” or “smart” televisions, are likely to reshape the market significantly in the medium term.
  • Significant market variations in OTT viability: Italy and Spain have more limited mass-market penetration of VOD, catch-up and PC TV services.
    • In Italy, SNL Kagan finds the competitive environment is not conducive to upstart entrants building viable business models, however, incumbent players including Mediaset are well positioned to leverage hybrid DTT/OTT systems to make a big impact long-term.
    • In Spain, broadband is far outpacing multichannel take-up, setting the stage for widespread online video adoption. At the same time, high subscription prices are limiting pay-TV affordability, creating a gap which OTT is positioned to fill. Shown in graphic. However, despite these strong market fundamentals, widespread video piracy is likely to drag on legal OTT uptake near-term.

Finally, the report concludes pay-TV incumbents are not standing idly by, with nearly all major cable, satellite and IPTV players exploring TV everywhere systems bring OTT to the traditional services fold while satisfying consumer demands for multi-screen access to content on-demand.

Mohammed Hamza, Media and Communications Analyst at SNL Kagan, commented, “Multi-platform video continues to gain momentum, as operators and broadcasters take the lead role with their own VOD, live and catch-up TV services, while also pursuing a TV Everywhere strategy.”

Hamza goes on to note, “However, sites of OTT gravity are also forming around new players in Europe, as entities including LoveFilm work to align content, distribution, brand and business model into sustaining businesses. Signs of traction are drawing the attention of global giants, with Amazon taking full ownership of LoveFilm in January, giving the retail behemoth a VOD presence in the U.K., Germany, Denmark, Norway and Sweden.”

Contact Christina Twomey, Press Relations, at 434-951-6914 or ctwomey@snl.com for more details and specific media requests for data, analysis and interviews.