Massive online content revenues on the horizon - EC

 

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Posted on 25 Jan 2007 at 17:42

Revenues from online content will jump fourfold over the next four years according to research from a study for the European Commission.

Online content will bring in some €8.3 billion - £5.46 billion - in revenues by the year 2010, it claims. Some 20 per cent of revenues from music will come from online and mobile services, but the real advances in terms of market growth will be from TV and video on demand services. Revenues from these sectors are expected to be close to €2bn by that date.

Even so, Europe looks set to remain dragging on the coat tails of the US for video content and of Asia when it comes to mobile. And there are many obstacles in Europe's path if it is to take a leadership position in the sector - according to the study 36, to be precise.

One of these is broadband penetration. Although the study predicts some 25 per cent of Europeans will enjoy broadband access by 2010, the extent of this penetration will vary widely among the member states. Similarly, Internet use via 3G networks is also hobbled by geographic inconsistencies, such as being relatively well established in Italy, while being almost non-existent in Belgium.

This creates uncertainty for EU citizens, where they might be paying wildly different rates for wildly different levels of service to access the same online content depending on where they are.

This is also reflected in industry standards, where the concerns are that these become fragmented and the costs of pan-European online services escalate because they need to be ported to different platforms and for varying devices. This could put a dent in the profitability of projects such as games that have a relatively short shelf life.

Another issue is the management of content rights. The study concluded that many rights owners were reluctant to exploit the online possibilities for fear of cannibalising existing established revenue models.

Owners of content that does make it online are therefore keen to protect it with strong DRM controls, and issues over interoperability and standards are likely to persist for some time to come.

Another persistent issue is piracy. The issue is unlikely to disappear and will always represent so much lost revenue to the copyright holders of that material.

European content owners and broadcasters are also concerned that the massive power of US media empires will threaten our shores via direct online distribution, cutting them out of the picture and curbing revenues.

'The long-awaited digital convergence is becoming an economic reality, creating great opportunities for Europe's consumers, content providers and technology industries,' said Viviane Reding, Commissioner for Information Society and Media. 'To capitalise may require casting a fresh eye at the technical and legal issues where a modernised and internal market-oriented approach would add value to European content. As I am preparing my "Content Online in Europe's Single Market" package for the second half of 2007, today's study will prove very useful.'

The full report can be downloaded in PDF format.

Author: Matt Whipp