Future of Connected TV Mindshare

“A TV connected to theinternet via a set top box, a games console, or the TV itself”2

“Connected viewers will be more important than Connected TVs”4

1. Connected TV penetration & usage will lag behind Second Screens 5

Connected TV is behind and won‟t catch up Household penetration (%) 90 2nd Screen Devices 80 70 60 Connected TVs 50 40 30 20 10 0 2008 2009 2010 2011 2012F 2013F 2014F 2015F Source: TGI / Enders Analysis / Mindshare estimates6

There are question marks over consumer appetite for CTV Reported Connection Rates Reasons for purchasing last TV set (%) of Connected Devices (% HH) Better picture quality 36 PS3 (wireless) 80 Bigger screen size 32 Wanted digital-ready TV 20 New Samsung (wireless) 75 Bargain price 15 Wanted a new TV to save space 10 Xbox 360 50 Bought a console 5 Wanted a more energy-efficient TV 5 Samsung (total) 50Wanted TV capable of accessing internet 3 3DTV 2 Source: Mintel 2011 Source: Informa / Videonet 7

Pay operators will be the primary gatekeepers to CTV8

The number of homes with „open‟ CTV access will berelatively small over next 5 years Connected Households by TV platform 2016F (m, %) Sky 6.0 (23%) Unconnected 10.6 (41%) 3.6 (14%) Virgin 1.3 4.6 (5%) (18%) Other Freeview Source: Enders / Mindshare estimates 9

By contrast, second screen usage has grown organically Do you multi-screen in tandem with TV? How often? What are you doing? Daily 23 Browsing online 813-4 Times per week 9 Social Media 48 2-3 times per week 9 Gaming 22Once a week or less 14 Related Content 21 Never 44 Chatting online 19 Source: Oliver & Ohlbaum Consumer Survey 2011 10

Second screens are platform agnostic11

Connected TV penetration & usage will lag behind Second ScreensMost of the opportunities that Connectivity creates are better suited to the Second Screen 12

A Connected TV opens the door to many opportunities Companion contentOn demand content Social Interaction Content sharing Transactions13

But the fundamental role of TV remains the same Passive Entertainment Social focal point The big screen, quality experience14

Companion content on the second screen goes with thegrain of natural viewing behaviour15

Personal nature of social makes it better suited tosecond screen ‘Having social applications on your phone or tablet is perfect. If you had it on your TV, you would be distracted from the main attraction (the TV show)’ ‘General’ Social16

Social TV commentary is more complementary and lessintrusive on the second screen Social TV commentary ‘My concern would be the conflict within families between those using the screen for social things and those using it for entertainment.’

Social TV recommendations on the second screen canbe more personalised ‘I would prefer it if the TV could link to other devices so those wanting to chat online could do so without impacting the viewing experiences of others’ Social programme recommendation

Viewers are keen on transactions prompted from the TV Wow! Nice one… At last an idea that would really, truly benefit me through TV Content driven transactions19

The opportunity for browsing makes the second screenthe natural place for transactions The whole advantage of the Internet is the ability to shop around and find the best deal, not just buy what you see first Second screen ad tags (Zeebox)20

The Second Screen allows TV to be both personalised & communal21

Question is who will control the second screen experience? Programme Broadcaster Platform 3rd Party Social Network 22

Connected TV penetration & usage will lag behind Second ScreensMost of the opportunities that Connectivity creates are better suited to the Second ScreenConnected TV usage will mostly focus on Video 23

Consumers still primarily want TV from their TVs 61 Preferred apps on a Connected TV platform (% agreement) 48 36 34 30 28 27 26 24 13 10 7 6 4 BBC Normal Skype YouTube 4OD ITV Facebook LoveFilm Amazon iTunes Tesco Flickr Twitter John iPlayer TV Player Lewis Q. Please select the four apps you would like to use on a Smart TV24

TV usage will continue to grow, driven by video viewing TV Usage (Mins per day, Inds) 262 246 10 Other 5 4 27 VOD 18 15 PVR timeshift 219 210 Live 2011 2016F Source: BARB / Mindshare estimates25

Services that depend on inter-device connectivity willgain traction Home network Content bookmarking Remote control content sharing26

Limited appetite for „long tail‟ of apps on the connected TV ‘The TV serves a purpose; it does what it says it does and does not need to do anything more than that – that’s what computers are for.’27

The applications of connectivity will migrate todifferent screens Transactions On demand content Social Interaction Content sharing Companion content28

Connected TV penetration & usage will lag behind Second ScreensMost of the opportunities that Connectivity creates are better suited to the Second ScreenConnected TV usage will mostly focus on VideoFor advertisers, the real opportunity lies on the second screen 29

Addressable advertising is made possible through CTV,and viewers are broadly open to the idea ‘faceless’ 3rd parties vs Trust in brand Decline of serendipity & ‘event’ ads30

But there are many structural challenges to overcome Data Analysis Trading Creative31

Addressability outside of the pay operators will beconstrained Connected Households by TV platform 2016F (m, %) Sky • Harder to build viewer data 6.0 (23%)Unconnected 10.6 (41%) • Likely limited to VOD 3.6 (14%) Virgin 1.3 4.6 (5%) (18%) Other Freeview Source: Enders / Mindshare estimates32

We estimate that addressable advertising will make up less than 8% of TV ad revenue by 201633

Second screen presents greater opportunity for advertisers • Platform agnostic • Greater potential reach • Diversity of applications34

Opportunities lie alongside both programming… Brand provided companion content35

Opportunities lie alongside both programming… Programme prompted transaction36

…and the ad break Synchronised second screen brand ad37

…and the ad break Synchronised second screen DR ad38

Connected TV penetration & usage will lag behind Second ScreensMost of the opportunities that Connectivity creates are better suited to the Second ScreenConnected TV usage will mostly focus on VideoFor advertisers, the real opportunity lies on the second screen 39

“Connected viewers will be more important than Connected TVs”40

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Future of Connected TV Mindshare

by Mindshare on May 28, 2012

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Future of Connected TV Mindshare Presentation Transcript