The Business Case for Broadband Entertainment

SUMMARY

Product overview

The Business Case for Broadband Entertainment is a follow-up to the acclaimed report Delivering the Broadband Home. New fixed and mobile services and devices: forecasts 2003E008, which examined the potential revenues from a range of various possible services offered over broadband. The new report looks in more detail at the entertainment business and the role of broadband network operators within it. There are already some successful businesses in this market, such as FastWeb in Italy, and many other operators are now launching as the technology becomes affordable and the business becomes better understood by the owners.

The report examines in depth the issues involved in making a business case for delivering entertainment services over broadband networks in Western Europe and discusses the strategic importance of such offers to telecoms operators. The main focus of the report is delivering TV and related services such as video on demand (VOD); it provides an introduction to the issues involved in acquiring such and examines whether it is worthwhile for a telecoms operator to become a aggregator and the difficulties involved in differentiating such a service from other pay-TV offers. The report also looks at the evolving market for online music download services, and the prospects for generating revenue from online games. The report includes forecasts of the overall market size and compares sample business cases for:

• pay-TV plus VOD and broadband offer over unbundled loops
• pure broadband offer over unbundled loops
• VOD on satellite business using storage on the customer premises.

The Business Case for Broadband Entertainment answers your key questions:

• Which countries offer a real opportunity for entertainment over broadband?
• How does the market for TV work?
• Should a network operator attempt a aggregation business?
• Will music be a major opportunity for broadband network operators?
• How can a broadband provider make money from games?
• Do you need a fibre network to make a successful triple-play business?
• Is it really worth the extra risk to launch a triple-play business on DSL?
• Are new entrants or incumbents best placed to launch TV on BB?

Who should read this report?

• Incumbent telecoms operators, who need to understand whether and how to enter an entertainment on broadband business
• Cable operators, who need to understand how their competitive landscape is developing
• New entrant broadband operators, who need to understand how entertainment fits into their business model
• Broadband equipment vendors, who need to understand the services their customers will wish to offer over their equipment
• Broadcasters and TV companies, who need to understand how the new transmission media will alter the pay TV business

TABLE OF CONTENTS

0 Summary

1 Entertainment over broadband is a growing phenomenon

1.1 Entertainment over broadband consists of TV, music and games

1.2 Overall market size in 2008

1.3 Operators must consider whether entertainment is worth the gamble

2 Technology and market evolution pave the way for interactive entertainment

2.1 New technologies make new services possible

2.2 Regulation is complex but is not shaping the market

2.3 New players are entering the market from all parts of the value chain

2.4 Current TV markets vary tremendously between countries, while games and music are more similar

3 The inability to capture value leaves small margins for broadband operators

3.1 Exclusive premium content is key to creating content packages

3.2 Satellite aggregators and studios dominate the TV value chain

3.3 The value chains for music and games are structured similarly to that for TV

3.4 Pricing has to match payment structures

4 The business case for entertainment can be more strategic than financial

4.1 Significant infrastructure and content investment eats into TV margins

4.2 The business case for TV depends on ramping up subscriber numbers quickly to cover the minimum charges

4.3 Music and games help a business case rather than make one

5 Telecoms operatorsf future in entertainment is uncertain

5.1 Entertainment-on-broadband providers have a number of critical decisions to take

5.2 Broadband service providers need to consider their brand positioning

5.3 Telcos have to choose whether to gamble for the high stakes

Actions

Analysys Research: related reports and services

Custom Research: meeting your information needs

Analysys Consulting: exploiting the broadband opportunity

List of Figures and Tables

• Figure 1.1: Three main service types for entertainment over broadband
• Figure 1.2: Entertainment over fixed broadband market size by segment, 2003-2008
• Table 2.1: Different technologies for carrying TV over broadband to the home
• Figure 2.1: Current developments to extend the reach and rate of xDSL
• Table 2.2: TV market in ten European countries
• Figure 2.2: Pay-TV spend per customer for Western Europe in 2003
• Figure 3.1: Value chain for TV over broadband
• Figure 3.2: Value chain for music and games over broadband
• Table 3.1: Selected pay-TV offerings in Europe
• Table 3.2: New TV-over-broadband offers in Western Europe
• Table 4.1: Key assumptions for broadband entertainment business model
• Figure 4.1: Cash flows for broadband with DSL TV business model
• Figure 5.1: Decision tree for broadband entertainment service providers