(2 February 2007 6:00 pm)

MUMBAI: Revenues from online content will reach €8.3 billion by 2010 in Europe, a growth of over 400 per cent in five years, says a new study by media analyst Screen Digest for the European Commission’s Directorate General Information Society and Media.

The study entitled Interactive Content and Convergence: Implications for the information Society had two major objectives.

Firstly, to assess the potential growth of digital content including TV, movies, games, radio, music and publishing content across new distribution platforms and technologies, such as interactive TV, broadband and mobile. Secondly, and most importantly, to identify the current and potential economic, technical and legal obstacles that might hinder the exploitation of digital content in Europe.

The research found that the spread of broadband, the roll-out of advanced mobile networks, and the massive adoption of digital devices mean that online content is on the verge of becoming mass market, especially in the sector of music and games, where the proportion of revenues made online already represent a significant percentage of overall income. Although the European market is growing steadily, technological, economic and legal challenges were identified that need to be addressed to ensure European creative industries can maximise the potential economic and social benefits.

The research will be a contribution to the communication on ’Content Online in Europe’s Single Market’ which should be presented later this year by Viviane Reding, European Commissioner for Information Society and Media.

The report highlights some of the key obstacles to developing online content and assesses their market impact up to 2010. These include:

Technology: Although broadband access is spreading in Europe there are still wide ranging differences between countries. The average broadband penetration per capita was 17 per cent at the end of 2006, with 30 per cent in Denmark, 21 per cent in the UK and only 2.5 per cent in Greece. For mobile services, the relatively slow uptake of 3G in Europe (11 per cent at end-2005), and the sometimes confusing pricing and structure of data tariffs are obstacles still to be overcome.

Copyright. Issues here include difficulties in accessing content due to the definitions of new media, exploitation rights, terms of trade and collective management of rights at international level all have the capacity to negatively impact access to content. However Screen Digest’s view is that many of the difficulties could be solved through business and legal practice in the medium to long term.

Digital piracy still significantly limits potential online revenue and dissuades rights-holders from making content available online. An answer to this is efficient Digital Rights Management systems (DRM) to manage and protect digital content.

As the market matures, evolving business practises will tackle many obstacles but some others may require national or EU legislation to provide legal certainty for consumers, content providers, service providers and technology providers.

Screen Digest senior analyst Vincent Letang says, “This was a fascinating consultancy brief for Screen Digest to be part of. The scope of the project was huge: over the nine months we interviewed 180 entities in Europe, including content and technology providers, network operators and regulators. In addition we carried out significant research and analysis across 25 European countries and many media sectors. We are very proud that the research we have done will contribute to the European Commission’s policy on digital content and help companies in the EU understanding the potential for revenue and jobs creation in the region.”