(21 June 2006 12:10 pm)

SINGAPORE: While some parts of the world are still trying to understand what interactive TV means, and some other markets are still in its infancy as in the Asia Pacific region; it looks like Europe will set the rules of the new game. With more than 380 interactive services on air in 2006, Europe clearly leads the way.

As of now there are more than 50 million digital households across Europe and experts predict the number will go up to 125 million by 2010. Also, with growing consumer spend the gross margins (not turnover) is expected to cross 700 million Euros by 2010 with growing consumer spend.

Quoting from a study conducted by AFDESI (The French professional organization for interactive television), delegate Jean Dacie said, "Europe is definitely leading the way on the ITV market with most of the technologies developed there since the first trials which started in the UK in 1994/95 and first commercial ITV services which began in France in 97.

Just a look the figures reveals that UK is the largest market with 17.8 million subscribers followed by Germany, 11.2 million and France with about 8.7 million. In recent times, France has recorded the fastest ever technology adoption by users, with about 2 million DTT households one year after its launch. While BSkyB is the most profitable platform in the world for interactive services (660 million Euros in 2005) and UK is the country that has generated the highest revenues from interactivity yet.

The study reveals that with the analog switch-off planned by national governments by around 2010, UK will perhaps emerge as the only country with the near objective with 69 per cent of digital homes, which means 125 million households in western Europe will have digital TV.

With the standalone and enhanced TV services offered by ITV, consumers are already benefiting with the use of interactive services via TV like messaging, video conferencing, on demand extension of linear advertising breaks, betting live on broadcast sports and participating in quiz shows live apart from using utilities like bank services and shopping. The study says that there are more than 150 interactive services available in the UK. While advertisers are benefiting through well-executed interactive advertisements that can deliver benefits for brands.

So, what are the business models that are driving the European digital market.

"Premium calls (calls via the return path line of the set top box are charged a premium rate)
" Subscription (users contract a monthly subscription to services)
" advertisement and sponsorship
" Indirect profitability (the service cost is entirely supported by the operator)

In the UK, with more than 8 million set top boxes at the beginning of 2006, BSkyB records an average annual revenue per user of 33 Euros for its interactive services with a long term objective of 70 euros. With the growing number of digital TV homes, this is bound to go up by leaps and bounds.