Media companies, publishers, and portals in German-speaking countries have high hopes for broadband services. However, concerned by the cost of establishing broadband services, firms risk losing their most valuable customers for advertising and eCommerce revenue, according to a new Report from Forrester Research (Nasdaq: FORR).
“By the end of 2002, more than 2.5 million people in German-speaking countries will have broadband access,” said Forrester Analyst Jörg Nußbaumer. “A critical mass of potential customers will be reached in 2003 — with 20% of all households online. With an annual growth rate of 58%, more than 9 million households will have access to Internet services via broadband technologies in 2005. These affluent and media-savvy consumers will have considerable purchasing power, and no media company can afford to ignore this rapidly growing potential market.””The advertising industry will not pay a premium for broadband advertising formats as they still offer little interactivity and cannot retain customers sufficiently. Also, German consumers are not prepared to pay for online content,” Nußbaumer added. “To reduce production and distribution costs, media companies should enter into partnerships with the leading ISPs like T-Online and AOL. With more than 9 million customers, they have access to the mass market and need to deliver compelling content.
“We believe that the broadband market in Germany will grow quickly from its infancy. New and rarely used technologies like clickable streams will increasingly become standard. With the high number of broadband customers and the wide range of available products, interactive advertising will take off by 2003. Advertising that is integrated into streaming media and interactive games cannot be ignored by users and will guarantee far higher ad revenues.
“Smaller publishers will be forced to integrate themselves into broadband networks, as they lack the financial clout and brand awareness to compete. A small number of publishers like Bertelsmann and KirchGruppe will dominate the market by virtue of their enormous range of content and distribution channels.”
For the Report “Profitables Brietband,” Forrester interviewed 39 German media companies and 27 executives at software vendors and eCommerce integrators.