Thursday, February 19, 2004
On the Path to European HDTV
Source: Inside Digital TV
Inside Digital TV via NewsEdge Corporation : Vol. 7 No. 4
By Steve Odom, IMS Research
There has been a significant shift during the past nine months about HDTV in Europe. When IMS Research first began interviewing European broadcasters and consumer electronics manufacturers for the recently published study, "The Worldwide Market for High Definition Television," most manufacturers seemed quick to dismiss HD in Europe. There seemed to be a cultural pride in the superior resolution of Europe's PAL TV standard, compared with NTSC, and perhaps some lingering memory of the monies spent on the HD-MAC system in the late 1980s. The next logical step appeared to be moving from interlaced PAL to progressive-scan PAL.
However, unlike countries such as the United States and Japan, whose governments helped push them to HD broadcasting, market forces are gathering that are beginning to "pull" Europe into HDTV. Three recent events highlight Europe's HDTV progress.
First, Euro1080, Europe's first HD channel began satellite broadcasts in HD on Jan. 4, 2004. Four hours of daily HD content, such as concerts, sporting events and cultural events, are now available to any European with a 60cm satellite dish, an HD set-top box or PC tuner card, and an HD display. Major sporting events will be broadcast on a separate channel to sports clubs, pubs, and other public venues. Of note, several cable operators, including Noos in France and Telenet in Belgium, are conducting trials of Euro1080 over their systems. More cable companies are expected to follow.
Second, Euro1080's launch coincides with the availability of DVB set-top boxes to decode both SD (MP@ML) and HD (MP@HL) for display use in retail stores and demonstration sites through at least one European distributor, Quali-TV.com. The boxes are manufactured by Taiwan-based Zinwell. Until now, retail stores showing off their flat-panel displays could not present true HD content. Upconverted content was on display. Euro1080 and Quali-TV officials both estimate that 2,000 - 3,000 of these boxes are now being used in retail stores, demonstration sites, and by a few very early adopters. According to Rob de Vogel, Vice President of Euro1080, at least eight other manufacturers are developing HD set-top boxes for the European market. Super Bowl
Third, unrelated to Euro1080, the German broadcaster Premiere transmitted, via satellite, the recent Super Bowl in HD from the United States. Any 60cm satellite viewer in Europe with a PC HDTV tuner card could receive the broadcast. Sony had a special screening of this broadcast at its Berlin media showcase center, with close to one hundred viewers in attendance. Premiere is considering more events on a case-by-case basis.
Besides, consumers naturally migrating towards the highest application of a technology, all players in the television value-chain seem to have a vested interest in seeing HD roll out in Europe. This vested interest in HD is evident in the investors and partners in Euro1080. Television manufacturers want to use HD to help sell more high-end large screen displays. Thomson and Pioneer have both made financial commitments to Euro1080. Both benefit from HD content being available to help show off their flat panel displays.
Astra, the European satellite operator, provides Euro1080 with special transponder leasing rates. Astra, of course, is interested in HD because of the higher bandwidth requirements.
Euro1080's sister company, Alfacam, is the largest independent producer of HD content in Europe, working on more than 1,200 projects a year, including the 2004 European football championship and the 2004 Athens Summer Olympics. Until Euro1080, that content was going to Japan and Australia for broadcasts. The common ownership of Euro1080 and Alfacam allows for special terms to be offered to broadcasters which are helping to facilitate more European HD content. According to Mr. de Vogel, "More than half, to three quarters of our content is based on what we call co-production with public broadcasters. That is ... we [with Alfacam] bring in the equipment to produce it in HD, the broadcaster pays us a price for SD, they get the SD signal and we get the HD (European transmit rights). That reduces the production costs for the HD portion."
With HD set-top boxes available via retail, content available through Euro1080, and soon, HD-DVDs, the affordability of displays is the biggest gating factor. Competition and increased panel manufacturing capacity will help to significantly erode display pricing over the next five years. IMS Research forecasts plasma displays, for example, to fall in price an average of 32 per cent a year through 2008. A principle factor in this price erosion is the fierce competition between display types. Sharp, Samsung, and LG-Philips have made billion dollar investments on next generation LCD facilities. Matsu****a, Fujitsu-Hitachi, and Pioneer have spent billions on plasma facilities. All will put significant resources behind their chosen display type to drive volumes through these plants.
Flat panels are certainly not the only viable alternative. Thomson's new 6.5 inch deep DLP-based rear-projection models provide a thin, potentially cheaper, alternative to both LCD and plasma displays. Intel's entry into LCoS manufacturing will help foster the development of yet another competing display type.
Competition also is heating up between traditional consumer electronics companies and computer manufacturers, such as Gateway, Dell, and HP. Gateway sells more plasma televisions in the United States than any other manufacturer. If Dell's direct model is successful in selling televisions, margins throughout the value-chain could be pressured downward. Solid Foundation
The combination of HD content and cheaper displays is beginning to provide a solid foundation for market growth. IMS Research forecasts the European market for HD displays to grow 220 per cent per year to reach 4.7 million displays sold in 2008, or about 15 per cent of worldwide shipments. Much of that growth will be concentrated in the later years as the price premium of HD over enhanced definition (ED) flat panel displays diminishes. Until then, much of the flat panel market in Europe will continue to be concentrated in ED, which is not too much different than Gateway's success in the United States being achieved by selling ED plasma displays to reach lower price points. As screen size increases, the higher resolution of HD becomes more apparent, but in screen sizes below 42 inches, the lower resolution of ED is less discernable to the average viewer. The latter point is important for the European market, where average screen sizes are smaller than in the United States.
As the first-mover, Euro1080 will be an important company to watch. If the company is successful in gaining satellite subscribers and carriage on cable systems, other broadcasters will follow. The company already has been successful in developing industry partnerships and investors. Those positive signs signal growing support and interest for HD in Europe.
Further information can be found in IMS Research's report: The Worldwide Market for High Definition Television, 2003 Edition. Contact Steve Odom, IMS Research, email:
[email protected] , Web site:
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