Rich opportunities in multimedia content
The multimedia content industry is now worth five per cent of Europe's GDP - more than telecommunications, hardware and software put together. Yet Europe still lags behind the United States in this booming sector of the economy. Euroabstracts asked Frans de Bruïne(1), who heads Directorate D of the Commission's Information Society DG, to explain how the European Union is meeting the challenge of multimedia.
Everyone seems to be talking about multimedia these days, but what exactly is it?Frans de Bruïne: Different people use the word 'multimedia' with rather different meanings. It is therefore hard to come up with a definition of multimedia that everyone would agree with. Of course, for practical reasons we have tried on several occasions to give a workable definition. The Council decision on the INFO2000 programme, which was aimed at stimulating the multimedia industry and ran from 1996 to 1999, defined multimedia content as follows: 'combinations of data, text, sound, graphics, animation, still and moving images, stored in digital form and interactively accessible'.
Another approach would be to look at the function of the multimedia content in the information society and not solely at the form. You could then come up with a definition like: 'digital information, entertainment, education, advertising and any combination of these functions'.
Whatever definition you choose, it is important to realise the enormous potential of the development of the internet and of digital content, both in economic and social terms.
Ideas come and go very quickly in this area. Is multimedia just a passing fashion or is it here to stay?
The word 'multimedia' may be a passing fashion, but the underlying phenomena are most definitely not. We are moving towards a 'knowledge society', in which the adequate management of information resources is essential. The access to and the handling of information (whether it is text, images, sound or a combination of these) will therefore only gain in importance.
How does the European multimedia industry compare with its chief competitors? Are we doing well?
It is worrying that Europe is much stronger in print publishing than in the fast-growing area of electronic publishing, where the US has a clear lead. Besides, in the US there are many sophisticated web services that attract visitors and clients from all over the world. Of the 100 most visited web sites, 94 are located physically in the United States.
Also, if you look at the demand side of the market, for example by measuring the number of internet users, the US has a clear advantage. Some European countries are doing well in this field (Sweden and Finland, for example have a higher internet penetration than the US), but the overall picture for Europe is not brilliant.
Although in many areas the United States seems to be leading the race to the information society, we should not forget there are fields - such as digital television and mobile communication - where Europe has an important edge. If Europe manages to keep its lead in mobile communication and to combine this with its rich content resources to create mobile multimedia products, this will lead to enormous opportunities for European firms.
Who are the main players? Are they new companies or are they established publishing houses who have moved into the market? What are the opportunities for SMEs?
In this dynamic market there is place for both bigger players and for SMEs. Many big players are repositioning themselves in the market through mergers with (or takeovers of) companies that have complementary assets, in order to resist the competitive pressure. You can for example see traditional publishers moving into web services and entertainment consortia merging with internet service providers.
For SMEs the present market developments are particularly challenging for two main reasons. In the first place, SMEs may find new competitors in their national markets, such as content consortia that are expanding. They will have to deal with that competition not in a defensive way, but rather by looking for new niches in this dynamic market and by expanding their own activities into foreign markets.
In the second place, SMEs cannot limit themselves to their national markets, but will have to expand their activities beyond national borders. This necessity is reinforced by the fast development of the internet. Linguistic and cultural customisation of the information products and services is an essential prerequisite for European SMEs to successfully expand their activities. The European programmes (research and non-research like INFO2000) help them to take this important step and look beyond their national borders.
Why has the EU chosen to support the multimedia industry? Could you describe the principal elements of the EU's programme?
The EU supports the digital content industries because the present market barriers and the speed of change in the market prevent European potential being fully realised. Indeed the economic and social potential of the digital content industries is enormous. The size of the content sector is estimated at 412 billion, or 5% of the European GDP, ahead of both telecommunications (221 billion) and hardware and software (189 billion). The industries are still growing fast giving rise to rapid job creation. Important positive social effects can be found in areas like education, health and culture.
Within the IST programme (the research programme for the information society), one key action specifically addresses multimedia content and tools. The most recent call for proposals was published on 10th February of this year. This call covers amongst other issues, multimedia-related developments in the areas of personalising content, education and training and human language technologies. The call closed in May, but two more calls for proposals will follow in June and September this year.
As well as the key action on multimedia content and tools of the IST programme, my directorate has been running over the last four years the INFO2000 and the Multilingual Information Society (MLIS) programmes. These programmes are not research programmes, but exist to finance content-related activities closer to the market. INFO2000 and MLIS have come to an end, but a successor programme is in preparation. In the year 2000 preparatory actions for this successor programme will take place. On 20th April a call for proposals was published in relation to these preparatory actions. Three elements are central in this call:
• Facilitating Europe-wide investment in early stage internet firms
• Stimulating the exploitation of public sector
• Enhancing linguistic and cultural customisation
The stimulation programmes are important, but other activities of the Union also have great relevance for the content industries: I am for example thinking of the eEurope initiative that was launched in December by Mr Prodi and Mr Liikanen and that has the potential to boost Europe's possibilities in the 'new economy'. In addition, it is important to note that the legislative initiatives of the EU have a huge impact on the multimedia market. Thanks to European competition measures in the field of telecommunication, prices in Europe have come down considerably over the last few years, although in general they are still higher than in the United States. Low telephone costs will lead to more internet users, which is obviously a big asset for the European multimedia industries.
What would you say are the main benefits to have come out of the programme so far?
The European programmes offer good opportunities for European firms to build contacts outside their own country and (especially for SMEs) to get experience with international co-operation. They help, at the same time to ease the financial risks that are connected with international co-operation in research or market related projects.
I would like to quote the external mid-term evaluation panel of the INFO2000 programme that stated that "programmes such as INFO2000 have proven to have sizeable multiplier effects on business, environments, public policies and government".
How do you see the multimedia industry five years from now? How important will it be to the European economy?
Five years is an enormous time-span for this industry in which speed of action is crucial. But I expect that, whatever happens, the multimedia industry will be - even more than now - an essential element of the European economy and society.(1) Reinier Frans de Bruïne obtained a master's degree in physics from the University of Delft and a bachelor's degree in economics from Erasmus University, Rotterdam. He held various marketing posts in the private sector before a 15-year period at the Ministry of Economic Affairs in the Hague, with responsibility in the areas of industrial policy and technology policy. Since 1990 he has headed Directorate D, 'Information Society Technologies: Content, Multimedia Tools and Markets', in the Information Society Directorate-General of the European Commission. This directorate has in recent years been instrumental in addressing some key issues in relation to the internet, such as the Bonn Conference on Global Information Networks (July 1997), the Industry Round Table on the Global Business Dialogue (June 1998), the Action Plan to Promote Safe Use of the Internet (December 1998) and the Green Paper on Access to and Exploitation of Public Sector Information (1999). The directorate is currently contributing to the eEurope Action Plan, to be adopted by the European Council in Feira (Portugal) in June.