The European Commission has approved the fifth Information Market Observatory (IMO) report on the main events and developments in the information market in 1993/1994 (COM(95)492) and submitted it to the Council, the European Parliament and the Economic and Social Committee. The report, prepared by the IMO within the context of the Community's IMPACT (Information Market Policy Actions) programme, covers a wide range of issues and market sectors, taking into account the wider context in which the information services industry now operates. In particular, it highlights the following main points: - The European Union, lagging behind the USA and Japan in the digitization process, is now trying to make up lost ground with a series of initiatives based on the "White Paper of Growth, Competitiveness and Employment", the "Bangemann Report" and the "Action Plan on Europe's Way to the Information Society"; - Technology and market convergence have led to a re-grouping of the information and communication technology (ICT) industry and the information content industry which are now coming together to exploit the new business opportunities created by an emerging information society. There has been a wave of mergers and acquisitions and a growing number of strategic alliances and partnerships have taken place; - The increasing availability of high quality infrastructure will necessitate a mass market for information products and services as a means of generating return on investment and long-term cost effectiveness. The importance and value of the content industry (including print and electronic publishing, films, video, audio and television programme production) is likely to grow as a result; - The biggest challenge to the content industry in meeting the expectations of an information society will be its ability to invest in the development of innovative information products and services. Such investment will be essential if European content companies are to compete with their counterparts in the USA and Japan, and share the rewards of industry growth with ICT industries. However, there is still uncertainty over future consumer behaviour and the level of market demand for electronic information services; - The electronic information services industry has high added-value and strong growth potential, but the European market remains fragmented despite progress made in eliminating barriers; - Policies at a national and European level will be required in order to guarantee the continued availability of diverse, multi-cultural information content, and to strengthen the competitiveness of small European companies.