Datamonitor Europe has produced a frank report detailing the unpredictability of the consumer interactive video market. So unpredictable is it in fact, that the company is including a disk with the report, containing the computer model used to generate its findings. This enables readers to re-run the model if they have access to some figure […]
Datamonitor Europe has produced a frank report detailing the unpredictability of the consumer interactive video market. So unpredictable is it in fact, that the company is including a disk with the report, containing the computer model used to generate its findings. This enables readers to re-run the model if they have access to some figure that we didn’t have, or want to run different scenarios, said analyst Danny Toole. The model generates its revenue predictions for the interactive television market by combining 10 other sets of predictions. Looking at them in detail, it becomes clear exactly why firm figures should be taken with a pinch of salt. For each country modelled, the analysts start by projecting how the total number of cable and telephone connections in the country will grow over time. From there they estimate the percentage of this network that will be upgraded to handle interactive television. This gives a forecast for the total number of lines capable of running interactive services. Then for each of three markets – video on demand, games and home shopping, the modellers look at projected uptake and awareness projections. This gives a percentage of people who are expected to use it, which when combined with the projected number of capable lines, gives an estimated number of connected subscribers.
Take this information, and combine it with an estimate of usage rate, run it through a projected tariff structure, and projected revenues emerge. Finally, try to decide how the revenue will be split between content providers, service operators, network operators and equipment suppliers. Toole admitted that where some of the figures, such as the rate at which the telephone networks will grow, are quite firm, others, such as the rate of consumer take-up, are still wide open. He insists the structure of the model is sound, and so will yield more accurate figures over time. As it is, Datamonitor’s most conservative scenario shows total European interactive video revenues reaching $4,500m by 2000, $52,900m at the most optimistic. In other words, they don’t know, and an intelligent guess is as good as any research. The Consumer Interactive Video Services report is available from the London company for $2,000.