High-definition (HD) TV remains one of the hottest talking points among European digital television markets. HD developments in Europe have trailed that the United States and Asia, but with consumer interest piqued by the World Cup this month, HD content providers and distributors must focus their efforts on capitalizing on the momentum generated by the world’s biggest sports event by rolling out new and varied HD programming.

For content providers, the move to HD is really just beginning, and broadcasters who are out front in ramping up their HD content hope the technology gives them a competitive advantage over other providers, boosts ratings and instills a strong interest in customers not used to watching such a crisp picture. "The dynamism, color and emotions that come with the World Cup put HD in its best light – making it an excellent platform to launch HDTV," says David Gillies, director of technology at Pace Micro Technology, a supplier of set-top boxes to satellite pay-TV operators across Europe.

A New Era

Around the globe, HD market development is dependent on two factors – creating more content and finding a way to deliver that content to consumers in a cost-effective and efficient manner. At the forefront of the push to HD in Europe will be satellite pay-TV operators. Germany’s Premiere already launched HD services, while BSkyB is on the verge of launching services in the United Kingdom. Sky Italia recently announced its plans to launch HD services in conjunction with Eutelsat in Italy.

Hans Seger, Premiere’s chief programming officer, believes the company will convert most of its programming from standard definition (SD) to HD within the next five to 10 years. "Further areas with potential for growth are concerts or lifestyle programs," he says. "So far, we have no concrete plans, but we are talking to a lot of content providers who are highly interested in bringing HD content to Germany." Seger believes Germany will prove a vibrant landscape for HD. "By mid 2008, we expect to have some 500,000 HD subscribers. After the positive result of our field test and the very satisfactory launch of HD, we have every reason to be confident that our HD programs will prove to be very popular," he says.

One of the pioneers in bringing HD to Europe is Alfacam/Euro1080, which already provides HD channels across the continent. Euro1080 launched the first HD broadcasts in Europe via satellite in January 2004, while sister company Alfacam is an independent producer of HD content in Europe. Gabriel Fehervari, CEO of Alfacam/Euro1080, believes the World Cup "is an important signal" for HD to move forward, and the company is ramping up its own HD content production in the wake of the event. "For Alfacam, we are making 600 to 700 productions in HDTV in 2006," he says. "All major events are moving to it. For Euro1080 we are moving after two years of pan-European activity toward a multi-regional model. Between the fourth quarter of 2006 and the end of 2007 we will start up 11 versions of HD1 and 11 regional HD3 culture channels. In 2008 we believe that some public broadcasters will move to HDTV."

As one of the most globally recognized broadcasters, the BBC likely will be a major player in bringing HD content to the United Kingdom, one of Europe’s largest markets. As well as providing HD coverage of the World Cup, the broadcaster is strong in producing documentaries in HD. "We believe for the growth to eventual universality of HD, it’s really important that it’s available to all, free to air," says Seetha Kumar, the BBC’s head of HDTV. However, Kumar believes there are regulatory issues that need to be resolved for the technology to maximize its potential in the U.K. market. "2006 will be a great year for HD in the U.K. if the Ofcom Digital Dividend Review comes to a decision which allows U.K. broadcasters access to the terrestrial frequencies which will be freed at digital switchover, so audiences who have chosen Freeview have access to HD, which is the highest quality viewing experiences we can provide. The BBC can make high-definition broadcasts universal as part of every platform offer we have."

Dave McGlade, CEO of satellite operator Intelsat sees the development of HD accelerating in Europe, as the continent follows the same path as the United States in capitalizing on the momentum created by sports. "It all goes back to the consumer electronics business," he says. "As you drive more HD content and replace SD content, adoption of consumer electronics happens automatically." The 2008 Olympics in Beijing could trigger the same type of HD adoption in Asia, McGlade adds. "Then you will have the whole world."

Some Officials More Cautious

But not every channel provider in Europe is ready to rush headlong into the HDTV market. "Everyone talking about launching an HD channel or has one," says Louis DiMauro, vice president sales, North America, for Ascent Media, which provides engineering and systems integration services for the electronic media. "It’s similar to five to seven years ago when there was a land grab with digital channels. Now it is happening with HD, but there is not much content. Right now the content is reserved for prime time, and the archive of HD content needs to become larger and larger." The amount of available content will grow but that will lead to content providers having to upgrade their equipment as well, a very expensive proposition, says DiMauro. "They will have to take everything from SD, throw it out and start over."

Euronews will not jump on the HD bandwagon just yet, says CEO Philippe Cayla. "We have no plans, as we need to have the agencies using HD first," he says. "So, that is Reuters, VTU, ITN, EBU, etc. If they don’t produce HD pictures, we are not going to broadcast because we would need to have 100 percent of our pictures in HD in order to go with this. We cannot have half of the pictures in HD and the other half in SD. For news channels, we are at the end of the HD chain. You need other journalists using HD cameras all over the world for a news channel like us to be using HD."

The other big obstacle to HD take-up will be persuading more customers to invest money into HD equipment. "HDTV is a new service and, as such, consumers need to be convinced that it is worth investing significant money in," Gillies says. "In addition, interoperability and reliability of new products such as set-top boxes and flat panel displays will be critical to customer acceptance. The industry has accepted this challenge by proactively establishing the HD-ready and HDTV specifications and logos to both educate consumers and maximize product acceptance. … A good year would be a solid growth of the penetration of HD set-top boxes, displaying good customer acceptance of these new services. A steady growth in 2007 would then be the consequence of this solid installed customer base."

While the price of consumer equipment remains expensive for many, Gillies remains confident customers will embrace HD relatively quickly and expects another uptick in consumer equipment purchases during the Christmas season. "To receive real HDTV services, consumers will have to upgrade to a flat panel display with digital inputs according to the HD- ready specification," he says. "Given the continuing drop in prices and already high penetration of these displays, this should not be a blocking issue. On the contrary, as standard definition signals can look poorer on some flat panels than on CRTs, consumers will be looking for services, which can fully utilize the capabilities of these new displays."

Broadcasters also will need to continue technology development on the delivery side in order to push all of this planned HD content to consumers. Patrick Harshman, president and CEO of Harmonic Inc., a provider of broadband optical networking and digital video systems to cable, satellite, terrestrial, telecom and wireless operators, thinks HD will become big around the globe by late 2006 and early 2007. The key will be compression technology, as broadcasters find a way to deliver the HD signal using a bit rate that is closer to today’s SD needs. "The technology is heading that way," he says.

Premiere, which launched HD services in January, also continues to face technology problems that are holding back widespread acceptance in Germany, says Seger. "One of the main lessons we have learned is: Don’t rely too much on technology! We were well prepared for HD at a very early stage," he says. "However, there were various factors which delayed the start of the new TV standard. The development of HD receivers took longer than announced by the manufacturers. Once the receivers were developed, quite a few delivery problems occurred. But now is the time to look forward. We have every reason to be optimistic about the future of HD."

FSS Operators Eye Revenue Growth

But HD will take hold in Europe, and operators see a key revenue generating opportunity going forward. "Our belief is that in around the period 2009, there will be around 130 HD channels in Europe," says Giuliano Berretta, Eutelsat’s CEO. "These are figures by Euroconsult. We subscribe to these and even think these might be on the conservative side. That is our benchmark. We believe around one-third of those will be broadcasting through Eutelsat capacity. That is between 10 and 15 transponders. We think the mass market for HD is going to be in the 2010-2011 time frame."

In 2005, more than one-third of Intelsat’s content delivery revenue came from HD broadcasts, McGlade says. The chance for further growth is obvious as HD content becomes more widespread, but satellite operators will need to improve the use of their own transponder space using improved compression technologies, as well as work in concert with other delivery systems, to meet the HD demand efficiently. Major telcos sitting on large amounts of spare fiber-optic capacity will have an economic advantage over satellite operators in large cities, but "in areas where there is low fiber density, satellite is better for delivery," he says.

Alexander Oudendijk, chief commercial officer for SES Astra, also believes the HD market is showing "significant momentum" in Europe, with more than 3 million HD sets already sold. "We expect more HDTV channels, more HD transmissions over satellite and a larger availability of receivers," he says. "As a distribution way, the satellite is poised to benefit specifically from the development of HDTV as it is – with practically no restrictions on bandwidth – by far the best transmission way for HDTV. We therefore expect that by the end of the year, Astra would carry around 20 HD channels. The number of households with HD ready screens in Europe is expected by experts to increase above 10 million somewhere in 2007."

However, there are obstacles for the take-up of HD in Europe. Oudendijk added, "The main hurdle is clearly the availability of receivers and, to some extent, also of relevant HD content. In general, a choice of more than three to four HD channels should be available in order to become interesting for viewers. As soon as more public and private broadcasters switch to HD, the take-up will accelerate.

Asia will provide an even more unique challenge for HD providers. Some countries, such as Japan, are advanced users of HD and moving to services beyond that such as super HD, officials says. The take-up of HD in other areas will be harder to predict, as there is no demand for a pan-Asian channel, DiMauro says. "Every channel is particular to a region," he says. "It could be the same programming, but you could have to supply 15 different languages. We want to be a global player. We have connectivity from London to Northern Africa to Eastern Europe, and we’re reviewing where there are the most growth opportunities."

Mark Holmes is International Editor for Satellite News. Jason Bates, Assistant Editor of Via Satellite magazine, also contributed to this story.