European Internet Market Continues Growing

The consumer Internet industry in Europe is undergoing its fastest growth yet seen, according to a report by Datamonitor, which forecasts 64 million households with PC-based Internet access by 2004.

Currently, there are 25 million households in Western Europe with PC-based Internet access, according to Datamonitor’s report “PC-Based Consumer Internet Access in Europe, 1999-2004: 5th Edition,” and growth rates vary greatly across the region. The lowest growth rates will continue to be seen in the Scandinavian markets, where the consumer Internet is most advanced. Datamonitor forecasts the Spanish market to grow by 85 percent during 2000, three times as quickly as in Sweden, which will grow by just 28 percent. By the end of 2000, 18 percent of Spanish households and 40 percent of Swedish households will have PC-based Internet access.

Internet uptake is driven by the demand for access to a variety of interactive content and services. The dramatic growth of many European markets during 1999 is, however, more closely linked to plummeting access costs and increased publicity than the improvement of content.

The continued rapid uptake of Internet access will lead to the development of improved online services and rapidly growing e-commerce revenues. The development of the Internet market will also drive PC sales across Europe.

“The PC is the most versatile Internet access device and also the most widespread,” said Datamonitor analyst Chris Tant. “The market for online content is, therefore, in many ways, a demand for PC-based Internet access that drives both Internet and PC penetration rates.”

But the PC is not the only device used for interactive entertainment. One out of five households in Europe will have interactive TV in 2003, according to Datamonitor. Other alternative access devices will continue to emerge, extending to public Internet access locations, mobile devices, and console devices among others.

The adoption of interactive TV has and will continue to benefit from an already high installed base — 97 percent of European households already have a TV, twice the size of the European PC market. According to Datamonitor, interactive TV and PCs can co-exist along with the Internet. Pay TV companies will target those consumers who have access to the Internet via the PC as well as those who do not.

Interactive TV content aims to complement traditional broadcasting while offering a new range of interactive programming. It will complement traditional broadcast television content to provide consumers with new TV programming such as multiple channel coverage for sports events, with viewers able to choose camera angles, interactive communication via email and videoconferencing, and commerce via shopping and banking services.

“New devices will push accessibility to interactive services as well as generate revenue opportunities for content providers,” said Shilpi Oodit. “The future interactive services market will offer much more potential by growing beyond TV and PC households and encompassing new access devices.”

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