Parks Points

Evolution of the Connected Home in Europe

by Brett Sappington | Dec. 1, 2014

Adoption of connected CE and services is a key step in the evolution of the connected home in Europe, and Parks Associates' recent consumer research project "Emerging Power of IoT in Europe" finds device adoption is trending upward, with both Spain and the U.K. outpacing the U.S.

Among broadband households, 69% in Spain and 67% in the U.K. own at least one Internet-connected CE, compared to 64% in the U.S. For Germany, adoption lags at 54%.

Adoption of home networking is also significant across all three countries, averaging over 72%. The growing presence of these technologies in European broadband households will be the foundation for the future growth of smart home and connected entertainment solutions.

Connected CE, OTT, and Second-Screen Services

Smart TVs are popular in Germany with 44% adoption among broadband households, a surprising result since, as noted, overall penetration of Internet-connected CE in Germany is a mere 54%.

Strong connected CE adoption also boosts the number of households that can access online content, making Europe potentially fertile ground for OTT video services.

HBO launched its HBO Nordic service directly to consumers in 2012, an OTT service not tied to a pay-TV subscription. HBO has recently stated plans to expand its OTT offering to other markets in 2015. BSkyB offers Sky Now TV OTT video service in the U.K. market to both pay-TV subscribers and non-subscribers. Other operators have also added OTT services or are planning to do so, including Swisscom, Orange, and Liberty Global.

However, the impact of new OTT services on uptake of pay-TV subscriptions and premium pay-TV features is still unknown. Use of PC-to-TV connections is higher in all three European countries compared to the U.S., indicating that consumers are already actively watching online content on the TV.

The Value Proposition: Smart Home and IoT

Protection of loved ones and property is consistently the leading value proposition for smart home services. Therefore, security systems are the ideal foundational service for smart home systems. However, given that the adoption rate for home security systems in Europe varies from country to country (24% of broadband households in the U.K. own a security system, followed by Spain at 16% and Germany at only 7%), individual country markets will evolve in different ways.

The smart home does have strong long-term potential in Europe as a solid majority of broadband households in all three countries find smart home systems appealing, with safety and convenience as the key driving factors for interest, as indicated in the most popular smart devices. Smart smoke detectors and smart door/windows sensors scored highest among the individual devices.

However, current willingness to purchase a smart home is much lower. The early adopter segment is 10-20% of broadband households in Germany and 20-35% of broadband households in the U.K. and Spain, indicating the early stages of this market will proceed slowly and require concentrated marketing and messaging efforts to educate the public.

One thing is for certain - the smart home consumers expect that smart products will be interoperable with other smart home equipment in the home. Over 80% of the countries' broadband households prefer to purchase devices as part of an interoperable system over stand-alone devices that do not work together, even if those individual devices offer more features.

Developing interoperable systems and products is critical to early growth of the smart home market in Europe. To that end, networking standards such as ZigBee, Z-Wave, and DECT ULE are key building blocks for today’s smart home systems, while new alliances such as the Thread group, the Open Internet Consortium, and the Allseen Alliance seek to solve the challenge of interoperability in new ways.

Brett Sappington

Brett Sappington

Senior Director of Research

As senior director of research at Parks Associates, Brett Sappington leads Parks Associates research practice for entertainment, access, and consumer electronics. Brett is an internationally recognized thought leader in the television, broadband, and online video services industries. His personal research focuses on the activities and trends among content producers, broadcasters, networks, and operators and the market forces affecting their businesses. Brett is a regular speaker and moderator at international industry events.

Brett has spent over twenty years in the industry as an analyst, executive manager, and entrepreneur for companies specializing in cloud, communication, and IP-related technologies. He founded and served as vice president for Teligy, a software company focused on software for wired and wireless communications systems. Brett established new divisions for networking and audio/multimedia software for Intelligraphics. He has also been involved in the development and marketing of early-market products for Wi-Fi, VoIP, video-over-IP and other technologies.

Brett holds an MBA from the University of Texas at Austin with a concentration in high-tech marketing and a BA in physics from Baylor University.

INDUSTRY EXPERTISE: International Digital Living Trends, Pay TV (IPTV, cable, satellite/DTH, terrestrial/DTT), Broadband, Television and Movie Content Distribution, OTT and Online Video, Entertainment Consumption Habits, Video Infrastructure and Delivery Technologies, Metadata, Middleware, Content Security, Cloud-based Technologies, UI/UX and Discovery Technologies, Set-top Boxes, DVR/Cloud DVR, and Residential Gateways

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