DTH to reach 100M subs by 2007...................
multi-international.com
Industry Experts Assess Global Rise of DTH
By CRAIG KUHL June 7, 1999
Denver -- The global market share of direct-to-home platforms is expected to grow at a brisk pace for the remainder of 1999, and to continue its steady rise into the new millennium, with France, Spain and the United Kingdom projected to lead the continued international migration to DTH.
That's according to some industry leaders involved in DTH, or direct broadcast-satellite, as it is also known.
At the sixth annual Denver DBS Summit here last month, statistics were released projecting that DTH's reach will grow from about 12 million households worldwide today to 100 million digital-DTH subscribers by 2007.
Top industry leaders gathered at the summit to discuss DTH's growing presence in the U.S. and world markets -- particularly Europe, which is at the forefront of DTH's international growth.
"Europe has the highest number of digital platforms, with 166 million television households and a 3.2 percent-penetration rate for digital-satellite service, while cable television is at 28 percent-penetration," said Mariangela Bisi, senior analyst for The Carmel Group, a Carmel, Calif.-based media-research and consulting group.
Of the five largest European markets, France is expected to lead the region's DTH growth with a 32 percent market share of the satellite business, Bisi said.
And the projection for the remainder of 1999 looks promising for Spain, the United Kingdom and particularly those countries with relatively small numbers of cable subscribers.
"DBS should grow faster in lower cable-penetrated countries. Those countries will do better, since cable is not a reality there," Bisi said.
DTH's growth is greatest in the U.S. market, which is projected to reach 25 million DTH households by 2007. However, Europe and Japan should continue as the "hot markets," according to Steve Blum, president of Tellus Venture Associates, an education, science and technology center in Monterrey, Calif.
"Japan and Europe should come close to the United States" in market penetration, Blum added.
Mixed with the talk of DTH's global growth, however, is the reality of transitioning from analog to digital technology and other critical issues the DTH industry expects to face well into the next century.
"In Europe, there are lots of analog subscribers. How do you move them from analog to [digital] satellite? And lots of digital that's being rolled out is on new satellites, and transponders are expensive," said George Monaster, managing director of World Link Network. His comments came during the "DBS/DTH Growth: The View from Europe" session.
Sharing content is another issue that Monaster suggested would be important to Europe's DTH advancement. "Europe provides its own content, and it is reluctant to sell to other providers. There needs to be more coproduction of content," he suggested.
However, the biggest issue for the satellite industry -- according to Vincent Dureau, chief technical officer for OpenTV Inc., a joint venture between Sun Microsystems Inc. and South African multimedia company MIH Ltd. -- is satellites' lack of capacity. Diminishing DTH bandwidth makes it difficult to offer Internet services and to compete with cable. As the number of subscribers increases, a satellite still has the same amount of bandwidth, which narrows the bandwidth per user.
"They can't use a lot of what's available, so it's hard to compete," Dureau said. "In Europe, there's lots of competition between horizontal and vertical markets."
Among the European platforms, France's Television Par Satellite and British Sky Broadcasting Group plc's OpenTV service are projected to lead the way to a developing interactive business for the satellite industry, Dureau said.
"[A total of] 80 percent of the set-top boxes in Europe are interactive, and [BSkyB] plans to migrate all of its subscribers to digital," he added. "It will be the largest interactive infrastructure in Europe."
BSkyB, Dureau said, is planning to spend $800 million during the next three years on Internet infrastructure. "Its strategy is to have one bill for interactive, programming and phone service. If subscribers want Internet access to their PCs [personal computers], they get it for free. [BSkyB subscribers get free Internet access as a way to keep them loyal. The company intends to make it up with interactive-TV services and advertising.] It's a very pragmatic and interesting approach."
Europe's overall approach to interactive services is fascinating, as well, Dureau said. "The great thing about Europe is that it's a great laboratory to test diverse services to a diverse market. The consumer in Spain is much different than the consumer in Norway."
Monaster agreed. "Interactive service is the real sleeper. With [automated teller machines] too costly in Europe, satellite and banking services could be very important, so how do you build a business around that?"
OpenTV, Dureau noted, is already providing smart-card slots in its set-top boxes to offer home banking services.
Blum also noted the rise of pay satellite radio, which, he said, could reach 83 million households by 2004.
"In some markets, radio is more important than television. News Corp. and Hughes [Electronics Corp.] are involved, but the market is mostly served by a stand-alone set of players," he said. "Worldspace [Management Corp.] is the leading satellite-radio player, but there's a high possibility of global groups acquiring stand-alones. They're ripe for acquisition."
At the end of the day, however, most agreed that questions about DTH's ability to move smoothly from analog to digital; its skill at providing diverse and compelling content from multiple sources; and the industry's thirst for developing the Internet as a viable business must be answered before the satellite business can establish a firm global footprint.
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