Specialist media industry analyst house, Understanding & Solutions, recently staged Europe’s premier HD conference in Barcelona, Spain.

Jim Bottoms, the consultancy’s co-founder and joint managing described a European market that is bursting with promise and potential, but has several major challenges to overcome. According to Understanding & Solutions, European consumer expenditure on consumer electronics in 2007 is pegged at 75b Euros.

High Definition will help revitalize CE’s many product segments over the coming years. If you look at the market more closely you see that High Definition broadcast subscriptions are still in their infancy and many consumers believe they are watching in HD just because they own an HD Ready television. In the UK less than 4 per cent of Sky subscribers take HD services and 4.5 per cent of Virgin subscribers take HD services.

In France less than 2 per cent of CanalSat subscribers take HD; while in Italy only 1.2 per cent of Sky Italia subscribers are HD.

“Lack of original HD content for broadcast provides an opportunity for Hi Def discs,” Jim Bottoms says to HD World. “European revenues from online video will make no real impact for at least five years, so Hi Def has an essential role to play in bolstering the declining DVD market.”

“We forecast that Hi Def DVDs will account for 27 per cent of the home video market value by 2011,” he continues. “By 2011, online video will still only account for 6 per cent of the market. Despite much higher profit margins for online video, High Definition disc sales will still derive double the revenue for studios in 2011.”

A key finding to come out of the Barcelona conference is that the rapid transition to HD Ready flat screen TVs in Europe is creating a “content gap” that European broadcasters in most territories will struggle to fill. Unlike the US, where almost 100 HD channels are creating bandwidth constraints, European broadcast operators have significant spare capacity, but countries like France and the UK still only have a limited number of channels, none of which have enough HD content available to provide original programming 24 hours a day. The primary reason is the cost of original programming, which is often restricted by the budgets of Europe’s public service broadcasters.

Hardware pricing is another issue, particularly when there is a danger of obsolescence.
Nevertheless, studio executives attending the conference expressed confidence in the future of High Definition discs, and continue to support their respective choices with new releases containing progressively more advanced interactive features.