Europe Logs On: Microsoft Study

1

EUROPELOGS ON

European Internet Trends of Today and TomorrowApril 2009

2

CONTENTS

Key Findings 03Foreword: John Mangelaars, Vice President, Consumer & Online, Microsoft EMEA 04The European North – South Divide 05Internet Overtakes Traditional TV 07The Changing Media Landscape 08– Media Lines are Blurring and the Consumer is Changing– TV... But Not as We Know It: Digital Changes Everything– Media Becomes Interactive and EngagingThe Trends That are Driving Time Online 13Impact on the Advertising Landscape 15A Window to the Future 17Conclusion 21

3

EXECUTIVE SUMMARY

Since 2004, broadband connections across Europe have grown by almost 95%, from 44 million householdsin 2005 to over 85 million

1

. In fact, broadband Internet connections in Europe today outstrip those in the US,representing 83% of all Internet connections, compared to 70% in America

1

. The explosion in broadband uptakecombined with the relentless pace of technological innovation is driving a major change in consumer behaviourand is transforming our traditional media landscape. In this report, Microsoft analyses the differences in broadbandpenetration levels across Europe, examines the causes fuelling the growth of Internet adoption, assesses theimpact of consumers’ evolving online behavior, and predicts the online trends of the future.

KEY FINDINGS:

•Basedoncurrentgrowthtrends,

Microsoftprojections estimate that Internet consumptionwill outstrip traditional TV in June 2010

, averaging14.2 hours per week against 11.5 hours for TV

2

•

Europeans spent on average 8.9 hours per week,or 1.5 days a month, using the web in 2008, up27% from 2004

– more time than they did readingprint media, watching movies, or playing videogames

1

. By

2010 Microsoft predicts people willspend over 2.5 days a month on the Internet

2

•

Internet use on PCs will drop from 95% todayto only 50% over the next 5 years

as other webenabled devices such as IPTV, games consoles andmobile phones become more popular

3

•

Online video has established itself as the mostpopular online entertainment application, withmore than 1 in 4 (28%) Europeans watching shortor full-length videos – an increase of over 150% since 2006

4

•TheEuropeanNorth/SouthDivide:

Nordic countrieshave an Internet penetration rate of 76% onaverage, compared to 45% in southern Europe

5

•

In absolute numbers, Germany (55 million),the UK (42 million), and France (40 million)have the largest online populations in Europe,while Cyprus (325,000), Ireland (2.4 million)and Portugal (4.2 million) rank amongst thecountries with the least number of users

5

•

Content

(such as news websites and online video)

and communication services

(such as email andsocial networks)

represent 65% of all time spentonline and commerce

represents a third

(33%)

of time spent on the web

6