Telecommunications will capture a larger proportion of interactive video markets than cable, according to Datamonitor’s report, Consumer Interactive Video Services In Europe. Germany, the UK and France will be the largest markets for interactive video via telecommunications. This doesn’t mean cable-based services don’t have a future, said analyst Daniel Toole, as cable and telecommunications providers will be competing for different markets due to the differing nature of their coverage. Taking the UK as an example, cable franchises have been granted to companies for specific regions, so competition will be local and centre around price and content provision. Toole said that this is a separate consumer issue from the development of the two interactive infrastructures. In fact, the report finds that Germany and the UK will be the largest markets for cable-based interactive video services. Cable-derived revenues are expected to grow steadily over time, eventually stealing market share from telecommunications operators. By this time, inherent growth in the market will slow the impact of this competitive effect. Datamonitor predicts the market will be saturated by 2005 which is likely to produce more intense competition, possibly leading to a proliferation of interactive services. Initial revenue growth will be highest via interactive video services offered over telecommunications networks because of the high installed base of subscribers and a projected fast roll-out of ADSL, Asymmetric Digital Subscriber Loop. If the telecommunications operators succeed in capturing a leading proportion of the market early on, they should incur competitive advantage thanks to earlier returns on investment. ADSL – which enables an asymmetric split signal to be sent across basic copper wire, with a large 2Mbps down stream and low 64Kbps back stream – will quickly enable existing telephone networks to be upraded cheaply along with the addition of some extra switching. The UK and Sweden are currently most advanced in using ADSL, while Spain lags behind. The report reckons 20m European homes will be accessing interactive video services via ADSL in 2000, but the number will decline as rival fibre to the home and fibre to the kerb become widespread.
