The high costs of technology and ongoing content issues will ensure that video-on-demand (VOD) does not take off in Europe until 2005. That is the conclusion of a new report from Forrester Research as reported on Europemedia.
VOD is seen as the next logical progression of the television experience but there has been a bitter debate over the pace of change. Forrester forecasts that VOD advertising revenues will generate £5 billion for the US iTV industry by 2007 but this estimate was derided as being ‘almost perversely bullish’ by media forecaster Jack Myers (see
Myers Attacks ‘Incomprehensible’ Forrester iTV Forecasts).
VOD is seen as a potential saviour for Europe’s indebted telecoms and televison operators as it reduces churn and increases the average revenue per user. However, subscribers can be counted in their tens of thousands and Forrester admits that the low level of consumer demand, content problems and technology costs are currently hampering growth.
In the past year, DVD player sales have increased by 155% across the continent and their popularity has ruffled VOD operators who do not at present have access to blockbuster movies and must-see content. There is little prospect of a change in the status quo until 2005 by which time 2 million European consumers are expected to have access to VOD. It is hoped that the the availability of faster and cheaper technology, including video file-sharing, will encourage movie studios to switch their allegiance from DVDs and serve this growing audience.
