Published: 12.45 Europe/London, May 25, 2011

UK and France broadcasters are leading Europe’s emerging OTT deployments, invigorating both free and pay-TV competitive dynamics from which new business models are emerging, according to SNL Kagan research.

The analysis – focused on France, Germany, Italy, the UK 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.

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 UK, MHP in Italy and HbbTV 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 UK, 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 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. However, despite these strong market fundamentals, widespread video piracy is likely to drag on legal OTT uptake near-term.

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.

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.