MULTIMEDIA MARKET STILL SEEKS KILLER APPLICATION.

LONDON--(BUSINESS WIRE)--Despite steady growth in the European multimedia market in recent years, producers are still looking for what is termed in the business as the "killer app" - the defining application that will carry multimedia from the fringes of the data-processing market place to the centre stage.

According to a new report by international market research publisher Frost & Sullivan, many small and medium sized companies have been active in the multimedia field since 199,1 but the pace has now hotted up as larger companies including Philips, Kodak and IBM position themselves to take a share of the US$2.3 billion European market.

The market is expected to grow at an average annual rate of 10.5 per cent to be worth US$4.3 billion by 1999.

The core debate in the industry has been whether the "killer app." will come from the consumer or business sector.

"As the market grows," says Frost & Sullivan, "it will begin to merge with the telecommunications industry on one side and the television industry on the other."

"The introduction of personal videoconferencing on the desktop PC will have a major effect on the working environment in offices, but there is still considerable debate on how multimedia will be introduced into the home."

"There is a global interest in links between communications companies and programme producers. The belief is that television broadcasting will be revolutionised in terms of its delivery, format and content. Use of cable to the home will enable interactive television and massively increased choice of channels," continues Frost & Sullivan.

The report, which analyses eight multimedia product sectors, eight end-user categories and five application sectors throughout Western and Eastern Europe, forecasts that the consumer end-user sector will be the largest by 1999, when it will account for 20 per cent of the market. This will be followed by the manufacturing sector with 18 per cent and distribution with 13 per cent. Transport, banking, utilities and the petrochemical sector will all hold less than 10 per cent.

Multimedia platforms, worth US$1.3 billion in 1993, currently account for 56 per cent of the market by product sector. This figure is expected to fall to 46 per cent, the drop being offset by multimedia software which should be worth almost US$1.1 billion by 1999.

Training, worth $508 million, currently dominates the market in terms of application. This is followed by information applications worth $387 million, entertainment worth $314 million and communications applications worth $260 million.

Training functions, whilst remaining important, will become less significant as other uses grow faster, most notably communications and entertainment.

Distribution of products remains a problem for many multimedia suppliers in Europe, as fitting into the existing computer distribution business - largely dominated by resellers - has not proved easy.

"Many smaller companies have attempted to cosy up to existing large suppliers, whether they be manufacturers or distributors," conclude Frost & Sullivan. "However, the distribution approach depends on the emphasis of the product - whether it be consumer or professional business - so the distribution structure for the industry as a whole is extremely complex."

Frost & Sullivan is an international high-technology research firm. All Frost & Sullivan reports are based on extensive interviews with marketing and technical experts from selected companies in each market segment. Primary research is validated by thorough analysis of available secondary research. Frost & Sullivan is the leading publisher worldwide of high-technology research reports.

Code: 3133-73 Publication Date: 1994

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