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GLGi: Cable, Satellite, and IPTV
 

GLGi: Cable, Satellite, and IPTV

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  • Talking Points: “ New York-based Cablevision reported slower first-quarter subscriber growth and said its customer cancellation rate, known as churn, was affected by FiOS.” (http://uk.reuters.com/article/technology-media-telco-SP/idUKN0321991020070504) 80% are bundled customers for Verizon, contributing to lower churn Comcast: DirecTV: The Bridge, Aug. 28; Time Warner: Dish: http://www.fool.com/investing/general/2007/08/10/low-churn-happy-directv-investors.aspx Verizon: AT&T: Calc. Cox: www.multichannel.com/article/CA6463876.html Cablevision (based on 2Q calculation): http://www.tmcnet.com/usubmit/2007/08/08/2847043.htm

GLGi: Cable, Satellite, and IPTV GLGi: Cable, Satellite, and IPTV Presentation Transcript

  • GLGi: Cable, Satellite, and IPTV James Meyers
    • Council Member Biography
    • James Meyers is the Chief Executive Officer at Alpha Media, an entertainment media company with international sales and distribution operations, US sales and distribution operations, cable television assets, plus international production operations. He is responsible for managing corporate strategy development, new alliances within the entertainment and investment communities, and overall operations. He has over 20 years of experience in the entertainment, media and telecommunication industries. Previously, he was the Chief Executive Officer at Cinema Entertainment, an interactive television channel producer; and the President and United States Resident Officer at DIRECTV International, where he was responsible for managing investment, development and operations.
    • Topics
    • Review of the competitive advantages of the main players in the space
    • Discussion on the possibilities of consolidation
    • Investigation of broadband media/over-the-top companies and their market viability
    • About GLG Institute
    • GLG Institute (GLGi SM ) is a professional organization focused on educating business and investment professionals through in-person meetings. It is designed to revolutionize the professional education market by putting the power of programming into the hands of the GLG community.
    • GLGi hosts hundreds of Seminars worldwide each year.
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    • GLGi’s website enables clients to:
      • Propose Seminar topics, agenda items and locations
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    • Gerson Lehrman Group Contacts
    • John Aronsohn
    • Vice President,
    • Technology, Media & Telecommunications
    • Gerson Lehrman Group
    • 850 Third Avenue, 9th Floor
    • New York, NY 10022
    • 212-984-3673
    • [email_address]
    • Christine Ruane
    • Senior Product Manager
    • Gerson Lehrman Group
    • 850 Third Avenue, 9th Floor
    • New York, NY 10022
    • 212-984-8505
    • [email_address]
    • IMPORTANT GLG INSTITUTE DISCLAIMER – By making contact with this/these Council Members and participating in this event, you specifically acknowledge, understand and agree that you must not seek out material non-public or confidential information from Council Members. You understand and agree that the information and material provided by Council Members is provided for your own insight and educational purposes and may not be redistributed or displayed in any form without the prior written consent of Gerson Lehrman Group. You agree to keep the material provided by Council Members for this event and the business information of Gerson Lehrman Group, including information about Council Members, confidential until such information becomes known to the public generally and except to the extent that disclosure may be required by law, regulation or legal process. You must respect any agreements they may have and understand the Council Members may be constrained by obligations or agreements in their ability to consult on certain topics and answer certain questions. Please note that Council Members do not provide investment advice, nor do they provide professional opinions. Council Members who are lawyers do not provide legal advice and no attorney-client relationship is established from their participation in this project.
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  • Cable, Satellite, and IPTV: Consolidation, Convergence, and Competition James J. Meyers CEO, Alpha Media October, 2007 James J. Meyers CEO, Alpha Media
  • Table of Contents James J. Meyers CEO, Alpha Media
    • Everyone Must Bundle
    • Customer Service
    • Owning The Customer
    • Consolidation
    • Over-The-Top And Online Video
  • The Growth of Cable, Satellite, and Telco Cable Satellite Telco 1920s Telco 1947 Mobile 1950s Cable Cable Telco Cellular Broadband Big Dish Broadband Telephone Television 1900-1940 1940-1980 1980 - Present Telephone Early 1980s 1984 1993 1997 2006 James J. Meyers CEO, Alpha Media Small Dish 1994
  • Satellite / Cable Landscape James J. Meyers CEO, Alpha Media Subscribers (in millions) Source: Company Reports Subscribers as of 2Q 2007 (% change between 4Q 2006 and 2Q 2007) -0.01% +2.3% +2.9% -0.2% -1.0% -0.04% +7.8% +8.2% +7.5% +21.0% +6.3% +16.7% +6.1% +0.4% +94.4% +10.0% +49.2%
  • Telco Landscape
    • AT&T: TV via U-Verse (51,000; up 183.3% from 4Q 2006 ),
    • Bellsouth/ DIRECTV and SBC/Dish Network (1,846,00; up 25.07% from 4Q 2006)
    • ** Verizon: TV via FiOS (515,000; up 148.8% from 4Q 2006)
    • DIRECTV (785,000; up 45.4% from 4Q 2006)
    • *** Qwest: TV via DIRECTV (572,000)
    James J. Meyers CEO, Alpha Media Subscribers (in millions) Source: Company Reports Subscribers as of 2Q 2007 (% change from 4Q 2006 to 2Q 2007 noted) +3.1% +12.4% +1.7% +74.0% +56.3% +9.8% +1.7% +28.5% +4.4% +9.5% +1.4% -16.1% -2.66% -0.7%
  • Customer Satisfaction: Service Providers James J. Meyers CEO, Alpha Media 96% 89% 82% 73% 73% 72% 70% 68% - 56% Source: Changewave
  • Customer Satisfaction Satellite / Cable James J. Meyers CEO, Alpha Media 1,000 point scale based on seven categories: Overall Satisfaction, Performance and Reliability, Cost of Service, Billing, Image, Offerings and Promotions, and Customer Service . Source: J.D. Power and Associates 2004 2007
  • James J. Meyers CEO, Alpha Media Average Monthly Churn Sources: Company Annual report, SEC filing, MultiChannel News *Churn represents Verizon FiOS television service **Churn represents AT&T U-verse television service, U-Verse Churn over 4%
  • James J. Meyers CEO, Alpha Media Average Revenue Per User (ARPU) USD$ Source: Companies +12.6% +5% +3.6% +5.7% +7.2% *% change from 4Q 2006 to 2Q 2007 +10.0% +11.6%
  • Satellite Bundles: An Overview James J. Meyers CEO, Alpha Media Source: Companies Legend Billed separately Billed together Future Services
  • James J. Meyers CEO, Alpha Media DVR / HD Bundle X = Implemented O = Planned to Implement DVR and HD services are becoming two additional weapons wielded by Satellite, Cable, and Telephone companies whom are vying for customers and increasing ARPU Source: Companies *by end of 2007 HD-DVR Multi-room DVR Programming DVR via Web Programming DVR via cell phones # of Specialty Channels Comcast X O O O 23 HD Channels Time Warner X X O O 26 HD Channels Cox X O O O 50 HD Channels* AT&T X O X X 26 HD Channels Verizon X X O O 28 HD Channels EchoStar X X O TBA 70 HD channels DirecTV X O O O 100 HD Channels* Tivo X X X X N/A
  • Consolidation *Verizon aggressive: over 1 million subs by year’s end *Demand for HD may force upgrades; the larger the CTV company, the easier it is to borrow *Satellite merger would equal 30m+ subs, 5m more than biggest cable provider *Cable: 9 providers with 1m+ subs 12 providers with 100k – 1m subs ATC
  • Download Speeds by Provider James J. Meyers CEO, Alpha Media Source: Company Reports *Average DL Speed in U.S. = 1.9 Mbps
  • James J. Meyers CEO, Alpha Media U.S. High-Speed Households Units (Millions) Source: Company Reports / Bridge Media Group Research / Leichtman Research Group Cable – 58% of market, DSL – 42% of market (2007)
  • Internet Use and TV Viewing Source: Institute for Business Value Consumer M&E Study TV and the internet are on equal footing as entertainment sources James J. Meyers CEO, Alpha Media
  • Over-the-Top and Online Viewership James J. Meyers CEO, Alpha Media Over-The-Top (OTT ): the provision of a TV service ‘over the top’ of someone else’s network infrastructure James J. Meyers CEO, Alpha Media (in millions) Source: Emarketer 32% 41% 51% 60% 67% 73% 78% 80% *% of U.S. internet users
  • OTT: Up-and-Coming Players *Content to ultimately transition to set-top boxes IBM study: 30% of viewers prefer free/ad based services — however, 20% prefer the HBO model of pay-for-subscription Source: Companies Company Year Founded Free to Use? Beta? Other Jump TV 2000 X No Covers numerous international stations Akimbo 2003 X (part free / part subscription) No Only available in US and Canada; programs downloaded, not streamed Babelgum 2005 X Yes Restricted to high-quality content ; in Beta phase Joost 2006/2007 X Yes In Beta stage; sign-up through invite only Veoh TV 2007 X Yes A type of video browser; “searchable” interface Vuze 2007 (April) X Yes DVD and HD-quality content; open source
  • Most-Viewed Video Content Sites James J. Meyers CEO, Alpha Media User-generated content is still the dominant preference, but professional, higher-quality content is becoming a major player Source: Institute for Business Value Consumer M&E Study
  • James J. Meyers CEO, Alpha Media Consumer Spending on Internet Video USD$ Billions Source: Adams Media Research / Parks Associates
  • OTT Companies: Pay/Subscription-Based Source: Companies Company Year Launched Type of Service Average Pricing Content Major Studio / Network Affiliations Vongo 2006 Pay-per-view / VOD $9.99 / month, unlimited Feature films; TV series Disney, Sony Blockbuster / Movielink 2002 (purchased by Blockbuster in Aug. ‘07) Rental / Download to own Varies from $0.99 to $4.99 (to rent); $19.99 (to own) Feature films; TV series and mini-series Most majors (e.g. Sony, Warner Bros., NBC) Apple TV / iTunes 2005 (offering video) Download to own $1.99 per TV show; $9.99 to $14.99 (to own) Feature films; TV series Disney, MGM, Paramount; NBC not renewed Cinema Now 1999 Rental / Download to own $19.95 (to own); $3.99 (to rent) Feature films; TV series; limited HD films; adult content Fox, Miramax, New Line, Sony, Touchstone Netflix 1998 Rental / Download $16.99 / month (includes 17 hours on PC) Feature films; TV series All major studios and networks
  • Broadband Use Worldwide Leading Countries in Household Broadband (2006) Source: Point Topic
  • Countries to Watch: fiber leaders
    • Japan
    • 100 MBPS/ $23
    • Digital Living Room, Mathushita, Sony, Toshiba, Sharp, Hitachi
    • Integrating w/ All New TVs
    • Korea
    • 51 MBPS/ $40
    • Digital Living Room Samsung
    • Integrated Home Networking
    • USA
    • 30 MBPS / $180
    • Digital Living Room
    • MICROSOFT
    Source: Washington Post / FTTH Council / Company Data James J. Meyers CEO, Alpha Media
  • James J. Meyers CEO, Alpha Media Thoughts
    • Bundling is becoming essential for long-term survival
    • Consumer-focused industry innovations are key to success
    • Being first mover is important. Execution is crucial
    • Video capabilities of Telco, Cable and Satellite providers are mirroring the increase in HDTV households
    • Options for broadband video are growing at a rapid pace. Growth in infrastructure is essential for growth in this sector
      • Foreign providers should be followed closely as they are pushing the envelope of speed and applications over broadband and fiber