Driven by catch-up services, such as the iPlayer, broadcasters in the UK and also France are taking a firm hold of the development of over the top (OTT) video services in Europe, according to new research by SNL Kagan.
The research found that Europe's emerging and competitive OTT deployments are driving the launch of not only free but also pay-TV business models. And despite the increasing volume of content available on an OTT basis it is indeed catch-up services that are significantly impacting how content is distributed and viewed online.
It says that fundamentally, nearly all major cable, satellite and IPTV players are exploring TV everywhere systems to bring OTT to the traditional services fold while satisfying consumer demands for multi-screen access to content on-demand.
Although SNL Kagan believes that the market is nascent today, TV applications ecosystems created by consumer electronics manufacturers and deployed via connected TV or smart TVs, are likely to reshape the market significantly in the medium term.
The analyst says that fragmented hybrid broadcast broadband initiatives across Europe are being brought under a number of national-level umbrellas, enabling broadcasters to compete on content rather than technology while opening significant opportunities for experimentation with interactivity Specially name checked are YouView in the UK, MHP in Italy and HbbTV in Germany and France.
SNL Kagan calculates that while broadband penetration in the UK, Germany and France is 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.
By contrast, the research shows that Italy and Spain have more limited mass-market penetration of VOD, catch-up and PC TV services. In Spain for example, broadband is far outpacing multichannel take-up, setting the stage for widespread online video adoption, yet high subscription prices are limiting pay-TV affordability, creating a gap which OTT is positioned to fill. Moreover, despite strong market fundamentals, widespread video piracy is likely to drag on legal OTT uptake near-term. In Italy, and despite key issues that are not conducive to new entrants building viable business models, incumbent players such as Mediaset are well positioned to leverage hybrid DTT/OTT systems to make a big impact long-term.
Commenting on the survey as a whole, Mohammed Hamza, Media and Communications Analyst at SNL Kagan, said: "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...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 UK, Germany, Denmark, Norway and Sweden."