European Research Update
Understanding the Growth of Smart Home Adoption in Europe
by Stuart Sikes |
As adoption of connected devices increases, consumer interest in smart home functionality expands, and technology integration advances, Europe is well-positioned to assume more growth in the smart home and connected entertainment industries. Parks Associates research shows approximately 9% of Western European broadband households currently own at least one smart home device. An additional 5% intend to purchase a smart home device over the next 12 months, with intentions highest among consumers in Spain. Over half (57%) of broadband households in Spain, Germany, the U.K., and France own at least one Internet-connected CE device, on which 72% of broadband households in Spain, 57% in Germany, 55% in the U.K., and 51% in France watch Internet video.
Last week, over 200 executives attended the tenth-annual CONNECTIONS™ Europe conference to examine the realities of the IoT markets in Europe and the new opportunities afforded by growing interest in the IoT. Key themes discussed during the event included:
Like the U.S., the European connected home market is on its way to steady growth.
However, while the U.S. has an established foundation of security services to build on, energy providers, insurance companies, telcos, and retailers throughout Europe will have to share the load of driving consumer interest and creating new business models that lower barriers to adoption of new products and services
There is a feeling in Europe that adoption of smart home solutions has lagged, particularly when compared to adoption in the U.S. or when compared to growth rates of smartphones or other popular connected platforms. Actual adoption is stronger than many would have suspected—and growth, while not double-digit growth, is steady and robust. Parks Associates’ latest survey shows overall smart home device adoption among broadband households in the U.K., Germany, Spain, and France is 14% (it is 18% in the U.S.).
The smart home market in Europe continues to progress as service providers and OEMs introduce new offerings and show value to consumers. In the U.K., high-profile efforts by companies such as Nest and British Gas are driving consumer interest in smart home technologies. Additionally, the multiple devices comprising the smart home are starting to leverage their connectivity to expand functionality and create new value-added services.
Familiarity remains an ongoing challenge to industry growth. Familiarity with smart home solutions is highest in France, where 12% of broadband households are very familiar with smart home products and services, compared to less than 10% in the U.K., Spain, and Germany.
Europe has served as an early market for new online video services.
The competitive landscape for video content and services is changing alongside the fundamentals of video quality and content delivery. As the wave of OTT video breaks across European markets—over half of broadband households in Western Europe pay for an OTT subscription to watch TV shows or movies—new opportunities for partnerships are opening up among OTT services, CE manufacturers, and pay-TV providers
Parks Associates estimates there will be nearly 116 million pay-TV households in Western Europe by the end of 2015. Sales of smart TVs will exceed 23 million, and Western European consumers will buy nearly 13 million streaming media devices in 2015. OTT video services will be impacted by new business models, changes with the user interface, and the new role of devices such as smart TVs and streaming media devices.
As the market continues to change, service providers need to offer new and unique services in order to maintain or increase ARPU.
Adoption of connected devices throughout Europe and the world is driving changes in consumer usage habits. In order to unlock the potential that this change provides, understanding and addressing both the unique opportunities and challenges of European markets is critical:
Stuart Sikes is the president of Parks Associates, a market research firm specializing in consumer adoption of technology products and services. Stuart and team assist clients around the world by predicting trends in consumer technologies and identifying evolving business models. The Parks Associates team serves the world’s leading semiconductor, software, consumer electronics, telecom equipment, and entertainment companies, providing them with industry analysis, consumer research, and go-to-market recommendations. Stuart’s recent industry presentations include the outlook for residential energy management, new business models for the connected home, and the evolution of new video services.
Stuart has served technology companies for over twenty years, designing technical service, software, and hardware solutions for companies ranging from global semiconductor manufacturers to one of the nation’s largest airlines. In his positions with companies including AT&T, NCR, OpenConnect Systems, and Intelligraphics, Stuart’s roles have included sales, product marketing, marketing communications, and executive management.
Stuart holds an MBA from SMU and a BA in economics from Vanderbilt University.