The closure of two of Germany’s HDTV channels in recent weeks has cast a shadow over European hopes for a rapid transition to High Definition Television, according to analysis published by the Strategy Analytics Broadband Network Strategies service. This report, “HDTV Channels Shut Down: A Sign Of Things To Come?” concludes that Europe’s television providers should concentrate their resources initially on building pay television rather than advertising-based business models in order to reach the critical mass of HD content and receivers necessary to make HDTV a self-sustaining business.

ProSiebenSat1, one of Germany’s leading commercial television broadcasters, closed its two HDTV channels on February 15th after concluding that audience figures were insufficient to justify their continued transmission. The decision leaves Germany with only a handful of HD channels, most of them only available to pay TV subscribers.

“It was always highly ambitious to expect advertising revenues alone to support HD channels in the early years,” comments David Mercer, Principal Analyst. “Significant audiences cannot be built until the market has been seeded with millions of HD receivers--and this was always going to take a number of years.”

The report finds that only 5 percent of Europeans who currently own an HD-Ready TV are, in fact, watching HDTV channels. In spite of these early difficulties, the report concludes that the number of European HDTV subscribers will grow steadily towards 3.5 million by the end of 2008. By 2012, Strategy Analytics predicts that 20 percent of all European households will be watching HD channels.

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Strategy Analytics, Inc focuses on market opportunities and disruptive forces in the areas of Automotive Electronics and Entertainment, Broadband Connected Home, Mobile & Wireless Intelligent Systems Implementation Strategies andHigh Frequency Market intelligence. Headquartered in Boston, MA, with offices in the UK, France, Germany, Japan, S. Korea and China, Strategy Analytics works with clients through annual multi-client services, management team workshops and custom consulting engagements. For more information, please visit www.strategyanalytics.com