Category: Research

UK Households Buying Second Digital TV, Ofcom

In Ofcom’s morning release of its third quarter figures for digital TV (dTV) penetration in the UK, they’re reporting an estimated 55.9% of UK households now have dTV in some form.

The dominant provider of dTV in the UK is still Sky, with over 7m subscribers, although they have only added 53,000 more in the quarter.

With just short of 4m households is Freeview (the UK Free-To-Air Digital Terrestrial Television service), which exceeds the combined analogue and digital services of UK cable TV providers NTL & Telewest. Pure digital cable is running at 2.5m subscribers.

One of the big concerns with digital switch off has been going beyond the first dTV set in the house. It was fine to say that over 50% of UK households had digital TV, _but_ given that the UK average is 2.5 sets per household, what was going to happen to the analogue sets that were left? There might be a lot of unhappy people not able to watch TV the day after analogue switch off.

The latest figures bring good news to those worried about this. Around a quarter of new sales of Freeview went to homes that already have one digital TV. With the pricing of the Freeview Set Top Boxes (STB) starting from as little as £49 (~$95, ~€71), households must be finding the content on Freeview compelling enough to want also have it in the kitchen, bedroom or child’s room.

What isn’t clear from the figures, is if the original dTV set was Freeview, Sky or cable. We contacted Ofcom to dig a little deeper, only to find that they “don’t dig that deep” into the figures. One thing that did become clear during the chat, was that Sky household’s that purchase a second box are not broken out at all, but are just added to their overall subscriber base numbers.

Full Ofcom Digital Television Update – Q3 2004

Jo

In his keynote presentation at the Net-atHome conference in Nice, France, João Da Silva gave an overview of where Europe is with digital media within the home, what the trends are and where Europe would like to be in the digital landscape.

Da Silva is Director of (deep breath) Communications Networks, Security and Software applications, at the European Commission. His opening slide stressed the European Commission’s desire to create equilibrium between three parties, the consumer; technical suppliers; and content owners. They want to create a balance where the rights of the content owner and the consumer are protected, to try and level the current imbalance, as “there has been a tendency to protect the rights of rights holder over the consumer.”

Moving on to bandwidth, he declared that since July 2002 broadband in Europe has grown over 248%. Despite this he feels there is a danger of a digital divide over Europe – not between no access and some access, but a split of where there is broadband of decent speeds and where there is insufficient for the next generation of entertainment.

He highlighted the huge variation in pricing of broadband services over Europe, giving the example of the contrast between Belgium and France; the first giving a 3Mbps connection and the latter 150Kbps – for the same charge. While some felt this example wasn’t quite as simple as the headline sounds, as it ignored the population density of the two countries, it does point to disparity. He illustrated this further, with examples of companies moving their offices to get bandwidth. The message was clear, member states, get your broadband up to scratch or you’ll start falling behind.

The inevitable comparison with Asian markets was covered. Japan now offers 100Mbps over Fibre To The Home (FTTH) for €22/month (~$29, ~£15) and Korea offers 50Mbps over VDSL.

When discussing the explosion in content, Da Silva pointed to blogs as a major source of new entertainment – content created by the consumer, for the consumer. He quoted the growth of blogs running at rates of 20% per month and generating traffic of 8Gbit of traffic daily. The EC are generally excited about the growth in user-generated content, seeing it as a real option to, what is currently seen as entertainment.

Concluding his presentation, he reminded the audience that the European Commission’s Information Society Technologies (IST) programme has a four year research budget with a net worth of €4Bn (~$5.34Bn, ~£2.76Bn), equating to €1Bn year. He encouraged all with innovative ideas to apply.

European Information Society Technologies (IST) Net-atHome conference

European Broadband Pricing Drops 23% in 2004

A new report, the European Broadband Pricing Report, researched by Quantum Web and distributed by BroadGroup, shows European broadband pricing (of speeds between 0.5Mbps and 2Mbps) dropping since January 2004 by around 23%. The numbers of supplier and packages available have increased considerably over this period with 0.5Mbps tariffs availability increasing 75%.

455 tariffs offered by 109 operators over 36 European countries were examined over the first three quarters of this year (2004).

At the higher speeds, 4Mbps and 8Mbps the price reductions have been less dramatic. Clearly at this premium-end of the market there is little competition and in their words “[leaves] more room for price elasticity for content providers.”

It’s interesting to note that non-DSL products make up 20% of the European market.
BroadGroup European Broadband Pricing Q3 2004 Graph
We find it surprising that, given the intense competition at the 0.5Mbps level, pricing hasn’t come down more than at 1 and 2Mbps levels. We wonder if this is due to the majority of connections being provided by wholesalers to markets, such as BT Wholesale in the UK. Without competition at this level, these wholesalers (normally the incumbent telco) don’t have much impetus to lower their prices dramatically, just gradually, to keep their telecoms regulator from getting angry.

When we asked the BroadGroup about pricing across the surveyed countries they said there was a considerable difference. Generally, the previous Eastern European counties have lower pricing, as do many of the Scandinavian countries. To us this points towards major fibre optic network runs equalling lower prices, as most of the former Eastern Europe frog leapt mainland Europe by replacing their antiquated phone system with fibre. Scandinavia is well known for their wisdom in laying copious amount of fibre. We suggest that those trying to make their countries competitive both in terms of the obvious – IT, and the less obvious – digital entertainment networks, pay attention.

BroadGroup – Broadband Pricing in Europe Q3 2004

Europeans Devote 20% of Media Activity to the Internet

There has been a rise in the amount of time people spend online, with the Internet now accounting for 20% of Europeans’ media consumption, according to research commissioned by the European Interactive Advertising Association (EIAA).

The Internet now represents 20% of European’s media consumption, above magazines (8%) and newspapers (11%) but below radio (30%) and TV (35%), according to the research.

The study was undertaken via phone interviews with 7,000 respondents in the UK, Germany, France, Spain, Italy and the Nordic countries between September and October 2004. Five hundred were interviewed in both Belgium and the Netherlands. The study was designed to quantify how people allocate their time across media in Europe and to gauge consumer perceptions of the Internet and the role it plays within their media selection.

The EIAA is a pan-European trade organisation for sellers of interactive media. Members are currently AdLINK Internet Media AG, AOL Europe, LYCOS Europe, MSN International, Tiscali, T-Online International and Yahoo! Europe.

Issues:

According to the survey, the Internet now accounts for 20% of European’s media consumption, up from 10% in December 2003. Almost half of all Europeans are now using the Internet with penetration rates ranging from 74% (Sweden) to 34% (Spain).

At 35%, TV continues to represent the lion’s share of the average European’s media consumption, followed by radio (30%), the Internet (20%), newspapers (11%) and magazines (8%).

Respondents generally perceived the Internet as a more pro-active media. Sixty-one per cent viewed it as a medium to “keep you ahead of the game” and half cited the Internet as their favourite source of information. Seventy per cent rated the Internet as “the best place to get what you want when you want it” and 80% described it as the “best time-efficient medium”.

These results compare with a separate study by the Online Publishers Association (OPA) in New York which showed that, for the first time in the US, content such as information services or entertainment became “the leading online activity as measured by share of time spent online”. Content surpassed other online activities such as communications, commerce and search.

Positions:

“We are witnessing a shift in how consumers are using the Web as broadband households continue to grow. Clearly, it is much more than a tool; it is a primary source of information, entertainment and fun,” said Michael Zimbalist, President of the Online Publishers Association.

“The Internet is now a rival to other media and with ‘always on’ and mobile technologies emerging, we can only expect this trend to continue,” said Michael Kleindl, Chairman of the EIAA.

The number of Dutch broadband connections (cable and ADSL) increased from 2.53 million on 30 June 2004 to 2.85 million on 30 September 2004. The penetration of broadband connections in Dutch households reached 40.4 percent on 30 September 2004 compared to 22.9 percent on 30 September 2003. ADSL increased market share to 54.7 percent and penetration per household to 22.1 percent. Cable continues monthly additions over 100,000, thanks to @home with 49,000 new customers. @home boosted its customer base to 409,000 and passed chello, while Wanadoo saw a seasonal dip in quarterly growth, continuing to stay the largest broadband ISP with 429,000. Het Net doubled net additions to 66,000, passing the 200,000 milestone in Q3 and becoming the fifth largest broadband ISP with 204,000 subscribers, behind chello with 379,600 and Planet Internet with 376,000.

European Interactive Advertising Association

Jupiter Find Media Becoming More Digital at Home

mirra personal serverBy 2009, consumers will require at least a 57Mbit/s Internet connection speed – up from today’s 3Mbit/s – to meet the demands of an ever-growing collection of always-on home media devices, according to research carried out by Jupiter Research. For tech-savvy consumers, the bandwidth requirement will likely be even higher, as much as 84Mbit/s.

Fuelled by the uptake of home wireless networks, the report, “A Portrait of the Wireless Home in 2009,” tackles a number of key issues; what the average and tech-savvy digital home will look like in 2009; comparing wireless bandwidth requirement of the average home today with 2009. It also poses questions such as with the implementation of compression standards such as H.264, will consumers need 100Mbit/s or 802.11n at home?

The report comes following the four complete and 30 partial proposals that were submitted to the IEEE for consideration for the 802.11n standard in August 2004, which will increase wireless throughput to 100Mbit/s. The 802.11n standard should be ratified in 2006, although pre-standard products are already out on the market.

The study finds a growing reliance on digital media. Home media servers, such as Mirra’s Personal Server (from $399), are growing in popularity because they allow you to access files stored on their hard disk from any Web browser, allowing you to playback video and audio files to a laptop or Wi-Fi enabled TV in your living room, or access family photos at your desk at work.

With the increasing uptake of both on-demand video and audio playback, it’s looking more likely that consumers will access media files stored on a central server in their backroom from multiple-connected devices – especially as the number of consumer electronics devices using a wireless network in the home will explode over the next five years, as people move away from traditionally separate devices, such as PCs and stereos.

802.11g has a theoretical maximum speed of 54Mbit/s, you only tend to get on average about half of that. Although this is still over twice as fast as 802.11b, the original WiFi, home media networks which transmit TV shows and music as well as Internet connectivity to multiple devices will require far more speed and bandwidth than standard Wi-Fi can provide. Standards like 802.11n and Ultra Wide Band (UWB) move closer in the right direction.

Jupiter Research Mirra’s Personal Server

Paid Music Downloads up 150%

New findings from TEMPO reveal that in July of 2004, more than one-third (35 per cent) of American downloaders aged 12 and older had paid a fee to download music or MP3 files off of the Internet, roughly a 150 per cent increase over levels witnessed in late 2003 (compared to 22 per cent in December 2003). This translates into roughly 20 million people within the current US population (according to 2000 US Census figures). The report highlights the evolving role the PC has in music exploration, listening, and purchasing behaviours.

“In the past year, we’ve witnessed the high-profile launches of many new online music services and download stores. Combined with the RIAA’s ongoing campaign to curb file-sharing, this has prompted many increasingly digitally-dependent consumers to experiment with the legitimate online methods of music acquisition currently available,” said Matt Kleinschmit, Vice President for Ipsos-Insight, and author of the TEMPO research.

Thus far, adult downloaders aged 25 to 54 are most likely to have paid to download digital music (40 per cent among 25 to 34 year olds; 46 per cent among 35 to 54 year olds). Interestingly, downloaders aged 12 to 17 were the least likely of all American downloader age groups to say they have paid for digital music (16 per cent), perhaps reflecting the lack of non-credit card based payment methods available on current fee-based services.

Apple Computer, a driving force in online music, has announced that users have downloaded more than 150 million songs from its iTunes Music Store, marking another major milestone for the online music business. iTunes users are now downloading more than 4 million songs per week, a rate of over 200 million songs per year. Apple also sells iTunes gift cards in the US at Best Buy retail stores. “Crossing 150 million downloads marks another major milestone for the online music business,” said Eddy Cue, Apple’s vice president of Applications.

In another move to push online sales, Napster UK, a subsidiary of Roxio, was the first to launch the UK’s first ever digital music pre-paid cards. Available through the Dixons Group, the pre-paid cards are available as gifts or for those without a credit card, giving music fans a unique code that they can redeem against subscriptions or purchases of tracks from Napster’s catalogue.

Napster and Virgin Radio also launched the nation’s very first online music chart on national radio. The Napster Online Music Chart on Virgin Radio counts down the Top 20 tracks taken each week from Napster’s catalogue of over 1 million songs. The chart is not just based on permanent downloads, but also registers full-length streams and subscription downloads, helping to make it a relatively comprehensive assessment of online music tastes (albeit from a single source).

Ipsos-Insight

VoIP Threatens Traditional Telcos Revenue

It comes as little surprise that a new report from Analysys, global advisers on telecoms, IT and media, reports that over 50 million broadband users in Western Europe could potentially be using private Voice over Internet Protocol Applications (PVAs) by 2008. As a result, the impact on traditional telephony providers’ revenues could reach 6.4 billion euros (~$8.23Bn, ~£4.47Bn) in 2008, representing 13 per cent of the residential fixed-line voice market.

VoIP technology – used in excellent applications such as Skype – works by digitising voice in data packets, sending them over the Internet using TCP/IP networks, and then reconverting them into voice at the destination. As well as offering a ‘free’ alternative for voice conversations compared to traditional fixed lines, you can also compress voice packets, route them, convert them to a new better format, and so on – bypassing the existing PSTN network.

Digital signals are also more noise tolerant than analogue ones – a feature appreciated by users communicating overseas. With VoIP, you can also talk all the time with every person you want (as long as the other person is also connected to Internet at the same time) for no call charges. And, in addition, you can talk with multiple people (conference call) at the same time.

Analysys advises that incumbent public switched telephone network (PSTN) operators are highly vulnerable and should assess the weaker segments of their market and create targeted packages to retain valuable customers. They also advise that service providers should also make subscriptions the core of their service packages.

“The recent rapid take-up of Private Voice Applications (PVAs) using free downloadable software from providers such as Skype raises the possibility of the appearance of a critical mass of PVA users that could unleash a significant structural change in the voice market by the removal of a large proportion of PSTN revenues,” says report co-author Stephen Sale. “In the residential market, PVAs are typically used to make longer calls to friends and family, the core telephony business of fixed-line incumbents. In combination with increased mobile usage, this could render the PSTN subscription worthless for many broadband users. Fixed-line voice would face not only mobile substitution, but PVA substitution as well.”

The report, Voice Communications: From Public Service to Private Application, examines the potential impact of these applications on the residential voice market. It uses new market models to show that, given favourable future regulatory and other conditions, the rapid adoption of PVAs could generate direct revenues of over 3.5 billion euros (~$4.5Bn, ~£2.44Bn), the bulk (about 85 per cent) stemming from subscriptions, not call charges.

This emphasises the huge importance that the subscription element will have in a future multiservice mix and in establishing PVAs in the mass market. Further research from consultancy firm Mercer has suggested that Internet-based phone services could be in use by up to 30 per cent of homes in the UK and the US in the next three years.

The report is available to purchase online at http://research.analysys.com/stor, priced at £1,700 (approximately 2,500 euros).

Europeans don’t Get Portable Video Players Yet

A new survey has found that Europeans are not enamoured by the all singing, all dancing devices that play songs and films, play video games and have a video-playback feature. Only 5% are interested in buying a device that plays both music and video, while a mere 7% would like their device to play games and video. But almost a third are interested in listening to music on a portable player such as an iPod.

5,000 consumers from Britain, Germany, France, Sweden, Spain and Italy were recently surveyed by Jupiter Research and the results were published yesterday.

Things might change, of course, if the multi-purpose gadgets could stay small, neat and inexpensive, and indeed Apple has managed to add photo display capabilities to the iPod without increasing its size.

It makes sense that 27% of European consumers would prefer to have music-only while on the move, since unlike movies, you really can listen and enjoy it whilst running or walking. As for the 13% who want to watch video while out and about, maybe they are the ones who have to wait the longest for buses and trains.

So, gadget makers sit up and take notice. Consumers want music, just music – 39% of French and 31% of British consumers were most interested in music players – and they want the sound quality to be top notch. That’s why lots of them have dedicated, digital music players. This is probably not really what Bill Gates wants to hear, with his Portable Media Center waiting in the wings.

Last months Jupiter Research report, ‘European Digital Music: Identifying Opportunity’, predicts that digital music revenue will reach €836 million(~$1,062m), or 8% of the total market, by 2009. While the growth of digital music players like Apple’s iPOD or the Creative Nomad Jukebox feature a lot in the news, CD’s still rule. So, it is sobering to remember that these statistics and reports are only referring to a tiny proportion of the music-listening public.

Content becomes More Popular than Communications

The Online Publishers Association (OPA) has announced that for the first time ever, this September, Content surpassed Communications to become the leading online activity as measured by share of time spent online.

Content was also the only category to register an increase in share of time spent online over August 2004, while Commerce, Communications and Search registered month-over-month declines of 5.8%, 4.0% and 3.1%, respectively. It was tight, but Content (41%) only just pipped Communications (39.8%) to the post rather than outrun it by lengths.

For OPA purposes, Content means Web sites and Internet applications that are designed primarily to provide news, information and entertainment like CNN.com, ESPN.com, Windows Media Player and MapQuest. Communications covers Web sites and Internet applications that are designed to facilitate the exchange of thoughts, messages, or information directly between individuals or groups of individuals like Yahoo! Mail, AOL Instant Messenger and MSN Groups.

The Internet Activity Index is based on the proprietary clickstream database that underlies Nielsen//NetRatings’ NetView service, and calculations are made for each segment – Communications, Commerce, Content, and Search.

As mentioned, Content’s share of time grew substantially from 34.6% in September 2003 to 41.0% in September 2004. While Commerce and Search remained relatively flat over that same time period, Communications registered a sharp decline, from a 46.0% share to a 39.8% share.

Michael Zimbalist, president of the Online Publishers Association explained the increase in share of time spent on Web Content – the string of hurricanes, the start of the pro football season and the baseball playoffs, the presidential debates, and the new Autumn line-ups of the television networks.

If these are the reasons for the historic first, well then the figures are just temporarily skewed and will, one presumes, return to second place in October. But what about September 2003? All the sporting and television line-ups were there a year ago.

What really pushed Content ahead of Communications? Was it the hurricanes, the presidential election debates or both? Or, as Michael Zimbalist says, “a shift in how consumers are using the Web as broadband households continue to grow. Clearly, it is much more than a tool; it is a primary source of information, entertainment and fun.” Online Publishers Organisation/iai

Report: Euro Music Download Market $5.7 Billion by 2009

A new report by research and analysis firm Generator, predicts that the digital song download market in Europe will reach $5.7 billion (€4.5 billion) by 2009. If this figure pans out, it will mean that the download market will account for about 40% of the total recorded music market.

The report also predicts that the mobile channel will figure largely in this market growth, up to $777 million (€610 million), 13.5% of the total by 2009 – and that’s not including huge ringtone market. But Europe first needs to change its usage-based mobile data tariffs and adopt flat-rate 3G tariffs like DoCoMo in Japan to encourage the successful use of the mobile channel, says the report’s author, Andrew Sheehy.

Operators will also need to develop their WAP portal strategies, so consumers can directly access existing Internet music resources, such as artist Web sites and digital music stores.

The Generator report, ‘Digital Music Meets Mobile Music’, differs considerably from last months Jupiter Research report, ‘European Digital Music: Identifying Opportunity’, which predicts that digital music revenue will reach €836 million, or 8% of the total market, by 2009. With a difference of 32% between Generator and Jupiter, one perhaps slightly conservative and one perhaps slightly ambitious, it might be safest to pitch the predicted figure somewhere between the two.

Only one year into the legal digital music industry, but in real terms more than a few years in, it has permeated the world of commercial music consumption far quicker than happened with the CD.

While both Generator and Jupiter agree that sales of downloaded digital music in Europe will continue to grow steadily for the forseeable future, Jupiter says the trend but will not replace the CD anytime soon, while Generator says it will be largely replaced within ten years.

Don’t throw anything away yet!