The European Streaming Industry: Clearing the Barriers to Growth

Less than a year ago, VisionConsult introduced the first edition of its "Opportunities in Streaming Media" report with this message: "Some analysts state that streaming technology is not yet ready for prime time, and is in an emerging, or 'nascent' state. But the baby is beginning to walk! The key to success will be judging when it will mature, or - at least - become a spending teenager".

Now, on the release of "Opportunities in Streaming Media 2000", the streaming industry has hit prime time, and become a key potential market for major companies. We have seen the rise and rise of the international content delivery networks, highlighted by the fact that last year, Akamai was so new that it made just a brief summary in the first edition of "Opportunities in Streaming Media"'; the introduction of all-in-one players and portals by Real and Microsoft; a definite improvement in the quality of low-bandwidth streaming; and an explosion in music downloading, a business Real was not even involved in 18 months ago.

What has this meant for the European streaming industry? VisionConsult's European broadband rollout forecasts are lower than in last year's report, showing major broadband proliferation delayed by around two years. But upcoming mobile broadband services and expanding audience awareness of streaming content promise to push Europe's streaming industry forward.

Europe goes mainstream

Partly due to reluctance on the part of national telcos such as British Telecom to open their networks to competition, the introduction of broadband services in Europe has been slower than hoped for.

However, several key movements point to strong market growth. One is the continuing expansion in Europe of the "free" Internet service, initiated by Freeserve UK with 2 million subscribers. At first, consumers still paid for the phone calls to access the Freeserve network. But now Freeserve is offering Internet access free if you spend $15 a month on its telephone network. AOL has just launched a $22.50 monthly service, including phone charges, in the UK. This means that people will be streaming more, as they don't have to keep watching the clock.

Another is the realization in Europe that mobile services will be a viable streaming delivery medium, especially if traditional broadband operators are slow to build out their networks. RealPlayer 8 will be incorporated into Nokia's next-generation smartphones in 2001. And 112kbps wireless services will be launched over some existing GSM mobile services in Scandinavia this year.

Meanwhile, the market for streaming content has grown substantially in Europe. For instance, the BBC, which reaches an audience of over 1 million a month, estimates that its streaming audience size is growing by 100 percent every four months. One of the leading French streaming sites, CanalWeb, boasts over 450,000 unique viewers per month, with video content watched for an average of 12 minutes. CanalWeb is now expanding into other European markets and languages.

The arrival of "reality TV" shows - such as Big Brother 2000 and Survivor -- has achieved for European streaming what the Victoria's Secret webcast did in the United States. In the UK, RealNetworks estimates that 500,000 users downloaded its player from the Big Brother Web site (www.bigbrother2000.com). Big Brother UK reports it was serving at least 6,000 simultaneous streams, and 1.5 million per day. Market research firm NetValue reports that the average viewing time for these streams was 25 minutes. And the new German edition is expected to be just as popular.

RealPlayer users are an increasingly international group, totaling over 48 million regular users, with approximately one-third of downloads/registrations now originating outside North America. VisionConsult estimates Real registered European users at over 26 million, with the United Kingdom at 4.5 million, Germany at 4 million, Scandinavia at 3 million, France at 2.5 million, and Italy at 1.75 million.

Broadband Reality and Forecasts

VisionConsult estimates that the number of European broadband connections is still under 1 million. But this is counterbalanced by strong latent consumer demand, and determined moves in countries such as Sweden, the Netherlands, and Germany to reach at least 25 percent of households by 2005.

Deutsche Telekom aims to connect 500,000 households by the end of 2000, and in Berlin, you can't miss the telco's consumer advertising campaign for T-DSL services. Most visitors to IBC in Amsterdam will have seen the Chello broadband cable modem campaign on the trams. And British Telecom has just launched ADSL services, and is aiming for 2 million connections in two years.

VisionConsult's new "Opportunities in Streaming Media" report estimates that the United States will have 35 million broadband homes by 2005, and Europe will have 30 million. With the rest of the world at 20 million broadband homes, this represents 85 million broadband homes worldwide. This will provide a rich potential for subscription-based services, especially when combined with movie and multimedia elements.

Vision also forecasts that broadband users, as they become more committed to their Internet service and require attractive services from it, will provide a market with higher subscription penetration and advertising value.

So despite a few remaining barriers, Vision still forecasts total world broadband streaming revenue to hit $17 billion by 2005.