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The Explosion of Digital Content and TV. Mike Grant, Partner. 2 November 2009. Growth in content consumption is obvious across the media sector. Number of HD channels in Europe. The evolution of digital broadcast distribution systems have supported rapid expansion in TV content

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The explosion of digital content and tv

The Explosion of Digital Content and TV

Mike Grant, Partner

2 November 2009


Growth in content consumption is obvious across the media sector
Growth in content consumption is obvious across the media sector

Number of HD channels in Europe

  • The evolution of digital broadcast distribution systems have supported rapid expansion in TV content

    • over 5000 TV channels now available in Europe, increasing by ~200 annually

    • satellite is currently the leading means of receiving digital TV

    • advent of HDTV (and in future perhaps 3DTV) will drive demand for further capacity

  • Broadband underpins user access to content

    • number of European homes with broadband is similar to number with digital TV (~50% of all homes)

    • capacity of terrestrial broadband networks is increasing fast

    • distribution of video content over broadband is an increasingly viable alternative to traditional TV distribution systems

Unweighted mean downstream speed / price for residential fixed broadband access in Europe

Source: SES, 2009, Analysys Mason, 2009


Exponential rises in internet traffic continues

16 sector

14

12

10

Relative traffic growth

8

6

4

2

0

Oct 2007

Apr 2008

Jan 2008

Feb 2008

Mar 2008

Nov 2007

Dec 2007

Total growth

Uplink

Downlink

Exponential rises in Internet traffic continues

Mobile (UK)

Fixed (Netherlands)

105%

Source: Minnesota Internet Traffic Studies (MINTS)

Source: Hutchison 3G UK Ltd


The industry faces three major challenges

An explosion sector

of content

generation

Competition

in content

aggregation

Fragmentation

of consumption

The industry faces three major challenges

Online

Online

Personal

Personal

Professional

Professional

Content

Content

UGC

UGC

media

media

content

content

production

production

Content

Content

aggregation

aggregation

Distribution

Distribution

STBs

STBs

PVRs

PVRs

Media servers

Media servers

Devices and

Devices and

consumption

consumption


Pc laptop internet usage continues to grow as video consumption becomes more viable

On average, UK users spend around 60 minutes per day online sector

27 million users downloaded 3.2 billion videos in June 2008

average monthly DSL traffic per user rose from 2.4GBin Q3 2008 to 4.1GBin Q1 2009 according to the Carphone Warehouse

online advertising grew 40% in 2007 to GBP2.8bn, 19% of the total market

Time spent online by the US Internet community grew 6% YoY in 2008

78% of downloaded videos in Dec 2008

PC/laptop Internet usage continues to grow as video consumption becomes more viable

Online video consumption

  • Watching videos is a prime activity on the Internet:

    • Google served 5.9bn videos to 150 million US users

    • French Internet users watch in average 88 online videos per month

  • However, users are generally watching for only limited periods – “snacking”

Online video viewing habits

Time spent on TV and Internet by Americans

+4% y-o-y

+6% y-o-y

Source: Comscore November and December 2008

Source: Ofcom, comscore, Nielsen, 2008, company reports


But overall tv consumption remains strong

80% sector

60

54%

70%

60%

Average VoD

% of Viewers Feb

52%

50

50%

views per user

2008

50%

40%

40

pcm

% of Viewers Feb

48%

30%

30

20%

Average VoD

2007

46%

10%

20

views pcm

44%

0%

(millions)

10

42%

TV

VoD users (% of

0

40%

Mobile

phone

Movie

theatre

DVD

Portable

TV subs)

Q3/07

Q4/07

Q1/08

Q2/08

Q3/08

Q4/08

... but overall TV consumption remains strong

Users are adopting new services

TV viewing figures remain robust

TV viewing benchmarks

Source: Ofcom

Content watched by US users who stream video

Virgin Media VoD usage

Source: Virgin Media


And users still engage most in front of the tv

90% Relaxation sector

30% Relaxation

3% Relaxation

… and users still engage most in front of the TV

Main reasons for using media platforms

Source: Ofcom Media Literacy report May 2008. A survey of UK users



Initiatives such as project canvas will offer a new level of experience to tv viewers
Initiatives such as Project Canvas will offer a new level of experience to TV viewers

Draft Project Canvas service structure

Source: the BBC/ Register


Managing content choices and discovery on web tv will be key competitive differentiators
Managing content choices and discovery on “Web TV” will be key competitive differentiators

Project Canvas indicative screenshots:

Source: BBC


The transitioning from dedicated value chains to horizontal platforms will accelerate

Traditional be key competitive differentiators

Future evolution

Rights owners

Rights owners

Games

Newspapers

Broadcast TV

Radio

Production

Aggregation

Distribution

Consumption

Dedicated production, aggregation, distribution and consumption functions

Multiplatform production, aggregation, distribution and consumption functions

The transitioning from dedicated value chains to horizontal platforms will accelerate


Adapting to change will be key to success

Likely to be valued by the market be key competitive differentiators

Those who retain ownership of rights to premium content

Device manufacturers who control form factor and function and are able to create premium aggregation experiences

High street experience and device distributors

Content aggregators who offer a compelling search and discovery experience that consumers want

Likely to be disintermediated or commoditised

Players with only content transport assets

Broadcasters with linear only propositions

Players reliant on sales of physical media

Disney recognise this and are reshaping their business. http://www.contactmusic.com/news.nsf/story/iger-predicts-profound-changes-in-movie-business_1119527

Adapting to change will be key to success

As barriers to entry fall, the media industry is likely to shrink in size. Those who adapt to the new world will prosper


Dr Mike Grant be key competitive differentiators

[email protected]

Analysys Mason Limited

Bush House, North West Wing

Aldwych

London WC2B 4PJ, UK

Tel: +44 (0)20 7395 9000

Fax: +44 (0)20 7395 9001

www.analysysmason.com


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