European Digital TV Will Show Solid Growth Despite Setbacks

Despite the high profile failures of ITV Digital in the UK and Quiero in Spain, Strategy Analytics says that digital terrestrial TV (DTT) will continued to play a ‘limited role’, aided by rising demand for free-to-air DTV converters. The optimistic outlook for DTT mirrors the findings of the European Broadcasting Union (EBU) (see Digital Terrestrial TV Prospects Are Brighter Than ITV Digital’s Closure Suggests).

The SA report forecasts that European DTV penetration will reach 73% by 2008, up from just 21% this year. This represents 122.2 million households, up from the current 33.0 million.

“After several months of turmoil and failed services, some observers have cast doubt on digital television’s future. However, Strategy Analytics concludes that the net impact of recent developments will be only a slight reduction in overall digital TV uptake during 2002,” says the report.

European Digital TV Ownership Forecasts*
	2000	2001	2002	2003	2004	2005	2006	2007	2008
Household Penetration (%)	12	16	21	27	34	43	53	63	73
No. of households (Millions)	18.9	25.8	33.0	42.8	54.9	70.0	87.0	104.8	122.2
*includes all digital platforms – terrestrial, satellite, cable, DSL and other
Source: Strategy Analytics, May 2002

Confidence in digital terrestrial TV is eroded The number of European homes acquiring digital TV this year will now reach 7.3 million, only 100,000 fewer than the previous Strategy Analytics forecast. Fifty-eight percent of new digital TV customers will choose a satellite service, while 36% will opt for cable, found the survey.

The biggest impact of recent developments, including the collapse of ITV Digital and Quiero TV, is that only 300,000 European households will acquire digital terrestrial television this year, compared to an earlier estimate of 600,000. “Consumer confidence in this technology is likely to have been severely eroded and there are continued doubts over a viable business model to support it,” according to the report

“The collapse of digital terrestrial TV services was always inevitable,” claims David Mercer, Strategy Analytics vice president for Broadband. “However their failure should be seen in the context of continued consumer demand for better television, a gap which satellite and cable platforms will fill.”

Cable will dominate Around 11% of European homes will have digital TV via terrestrial by 2008, compared to 32% via cable and 29% via satellite, says SA. Forecasts from Forrester Research say that satellite will be the dominant platform by 2007 (see European Interactive TV Penetration To Hit 44% By 2007).