Broadband Set To Squeeze Portals In Europe

Broadband Set To Squeeze Portals In Europe

Steve Gold

A new report predicts tough times ahead for Europe’s Web portals, as broadband users start to get picky about which sites they use.

The Forrester Research study says that, as the broadband industry evolves, the current crop of portals will face heavy competition from a new generation of content providers.

To survive this highly competitive market, today’s general interest portals must play to their specific strengths, Hellen K. Omwando, an associate Forrester analyst, told Newsbytes.

The collapse of generalized portals, Omwando’s report says, will provide a weapon for content producers to capture consumer revenues.

“The strange thing is that most portals believe that the broadband market is going to boost their revenues, rather than actively change it around,” Omwando said.

“What the portal operators don’t seem to realize is that broadband won’t be their savior – it will actually accelerate their demise,” she added.

Omwando went on to say that content providers stand to be the winners from the European broadband evolution because they will be able to add audio and video to their offerings.

In the longer term, Omwando’s report says that general-interest portals are unlikely to survive as content producers won’t need them, because they own the content and will have access to entertainment gateways.

By 2005, the study says, the profitability of even broadband portals will start to suffer from these effects, as well as the high cost of supporting broadband facilities.

“Overall, the high variable costs of offering broadband content, and operator’s reluctance to lower bandwidth costs will hit U.S. invaders such as MSN, AOL and Yahoo hardest, because they don’t own a delivery network,” the report says.

It’s not all doom and gloom on the portal front, however. The study concludes that adult content sites will secure around 79 percent of paid broadband content in Europe this year.

By 2005, however, the report predicts that adult content sites’ share of the paid-for broadband market will drop to just 17 percent as streaming services take off.

To survive, Forrester says that today’s European portals will need to adapt to a business model that blends narrowband and broadband usage.

Forrester’s Web site is at http://www.forrester.com .

Reported by Newsbytes.com, http://www.newsbytes.com .

13:09 CST

(20011204/Press Contact: Clive Savage, Forrester Research +31-20-305-4868 /WIRES ONLINE, BUSINESS/CONTENT/PHOTO)

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