M&E industry in Asia Pacific
Building success in the digital era
September 2013
Page 2
Asia Pacific’s consumer engine is driving strong growth in ad
revenues — greatly benefitting M&E companies
1 APAC’s...
Page 3
Digital holds a strong promise for APAC’s M&E industry
By 2017, digital will
account for 27% of
APAC’s total ad
rev...
Page 4
Greater investments in networks, proliferation of mobile devices
and growing online content is driving digital medi...
Page 5
Challenges in monetizing digital media persist; companies are
exploring innovative methods to increase digital reve...
Page 6
Complex challenges of the digital era require M&E companies to
become more agile
An agile organization is utilizing...
Page 7
For digital agility, M&E companies need to leverage technology
throughout their organizations
Digital leaders
forge...
Page 8
M&E companies are innovating their product and service bundles
to serve customers directly
► According to EY‘s surv...
Page 9
Digital leaders view customer engagement as a virtuous cycle
► D2C is more than engagement and distribution but abo...
Page 10
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Peter Markey - Building success in the digital era

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  • GDP:APAC will account for the largest share of the world’s GDP (34%) at US$30.5 trillion by 2017, displacing the Americas (GDP of US$29.2 trillion in 2017).Rising affluence and increasing urbanization: Affluence: APAC’s GDP per capita is expected to grow from US$4,322 in 2012 to US$5141 in 2017.Increasing urbanization: By 2017, 47% of APAC’s population will be urbanized, as against 43% in 2012 (estimated by adding country-wise data).Young population: In 2015, 40% of APAC’s population (1.5 billion people) will be under 25 years (estimated by adding country-wise data).Sources: “Population data,” via Oxford Economics;“GDP data,” via Oxford Economics;“GDP per capitadata,” via Oxford Economics;“Percentage of urban population,” via Oxford Economics;“Global Forecast Model: 2000-2017,” MAGNAGLOBAL, December 2012
  • Share of digital ad revenues: Digital will account for 27% of APAC’s total ad revenues, up from 19% in 2012.Digital’s share in total ad revenues. The share of print and radio will decline.APAC’s digital ad revenues are expected to grow at a CAGR of 15% form US$26 million in 2012 to US$53 million in 2017. In 2015, APAC will displace EMEA to become the second largest region by digital ad revenues — North America: 38%, APAC: 29%, EMEA: 28%, Latin America: 5% (share of global digital ad revenues).Source: “Global Forecast Model: 2000-2017,” MAGNAGLOBAL, December 2012
  • Increasing investment in networksIncreased investment in telecom networks is increasing the reach as well as network capacity in Asia Pacific. APAC accounted for 40% of the global network capex in 2012, at US$127 billion.Government support and subsidies are driving network expansion in certain countries such as in India: The ‘National Broadband Plan’ envisages establishment of a National Broadband Network (an open access optical fiber network), with 160 million broadband connections by 2014. The Government may review reduction of duties levied on inputs and finished products used in providing broadband and Internet services.China:The government is supporting major investment in a fiber optic network that will significantly expand the reach of wired broadband. This efforts aims to increase the country’s average broadband speed 20 mbps by end of 2015.Singapore:The government’s Intelligent Nation 2015 master plan entails development of a next-generation nationwide broadband network (NBN). The Info-communications Development Authority of Singapore (IDA)is providing government leadership in the development of these networks.Malaysia:The government is funding a fiber optic network that connected about 2.2 million urban households by 2012. The government will invest RM 2.4 billion (US$700 million) in the project over 10 years, with Telekom Malaysia covering the remaining costs. The partnership is expected to cost a total of RM 11.3 billion (US$3.28 billion).Wireless subscribers will grow rapidly at a CAGR of 36% over 2012–2017 to reach 2 billion. Penetration of wireless broadband subscribers in APAC is expected to reach 48% by 2017 from 16% in 2012.Proliferation of mobile devicesLow cost and more capable mobile devices are increasing consumer accessibility to media services and driving user engagement.Tablet shipments to grow at a CAGR of 20%from 53.7 million in 2012 to 136 million in 2017; Smartphones shipments to grow at a CAGR of 24%from 235 million in 2012 to 690 million in 2017.Tremendous growth in online contentThe virtuous cycle — digital ad revenues are expected to grow with more online content, which will in turn incentivize more players to venture online.Sources:“Fixed and mobile broadbandforecasts,” via Ovum; “Tablets and other smart devices forecast,” via Ovum;“Mobile Phone and smartphones forecast,” via Ovum;‘Population data,” via Oxford Economics;“Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012–2017,”Cisco whitepaper, http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf, accessed 13 September 2013;“Asia Pacific Strategic Analysis,: China OTT video growing strong, losing money,” SNL Kagan, 11 May 2012, © SNL Financial LC;“Average time spent per day on with online activities, Q4,” via eMarketer.“Recommendations on National Broadband Plan, December 2010,” Telecom Regulatory Authority of Indian, http://www.trai.gov.in/WriteReadData/Recommendation/Documents/Rcommendation81210.pdf, accessed 21 September 2013; “Telecom at a Glance,” Department of Telecommunications website,http://www.dot.gov.in/about-us/telecom-glance, accessed 21 September 2013; “Broadband network expansion in the pipeline,” Industry updates, 5 April 2012, via Factiva, © 2012 China Daily Information Co.;“Cable consolidation gets subsidy lift,” Young China Biz blog, http://www.youngchinabiz.com/en/cable-consolidation-gets-subsidy-lift/, accessed 19 September 2013; “The Role of Government,” Broadband strategies toolkit website, http://broadbandtoolkit.org/2.2, accessed 19 September 2013.
  • Offering premium and customized content onlinePPLive, a peer-to-peer video broadcast site in China struck deals with over 120 broadcasters to offer live sports, self-produced interactive programs. PPLive also provides interactive elements and 24-hour broadcasts for Hunan TV’s China Super Girl reality show.Tencentrecently signed a deal with the Walt Disney Co., to stream a collection of Disney, Pixar and Marvel Studio titles on its Hollywood VIP service. Tencent has similar agreements with Universal, Miramax, Warner Bros. and Lionsgate.Bigflix,India’s on-demand movie provider, partnered with Disney Media Distribution in January 2013 to offer almost 140 Disney action and animation movies on their platform. It also offers movies in HD.Video ‘windows’: In India, Star Sports offers video ‘windows’ of Cricket matches along with live streaming. Subscribers can watch specific ‘windows’ of the match, for example, fall of wicket, an important sixer, etc. These video ‘windows’ can also be shared with other users.Malaysia-based StadiumAstro’sdigital sports initiative, Stadiumastro.com and m.stadiumastro.com (mobile platform) allow subscribers to stream live sports on mobile devices. The company augmented its offerings to provide the Stadiumastro Fantasy game and has monetized it game through micropayments.Offering anytime accessIn Singapore, the site StarHubTV.com offers on-demand or catch-up videos,offering movies such as Madagascar, Meet the Fockers, Star Trek, The Ring and Footloose, as well as series such as Supermodel Me, SpongeBob Squarepants, Love Forward and Dianna Krall – Live in RIO.YoukuToudo, the largest video website in China offers on-demand videos. It serves as a nationwide on-demand video content syndication platform with over 1,500 traditional media partners. China’s YOU on demand also offers online movie streaming services, some of the content is available for free while the rest is monetized.Bigflixin India offers on-demand movies based on the ‘freemium model’. Some movies are offered for free while the rest can be streamed for a subscription fees.Providing interoperabilityBaiduoffers search capabilities across platforms — on desktop computers, tablets as well as smartphones. Baidu’s reached 80 million mobile apps users at the end of 2012.YoukuToudo, offers online videos on different mobile devices.MediaCorpoffered “live” telecast of Singapore’s National Day Parade (NDP) 2013 on Friday across multiple platforms - Toggle, TV, radio, out-of-home and online. Refinery Media, Singapore’s media production companyis offering itsreality TV series,SupermodelMe in China across TV, the Internet and on mobile. In Singapore, the show will be aired on MediaCorp TV and over pay-TV channels, and viewers can catch “webisodes” exclusive to the online video portal.Driving user engagementIncreased user engagement (interactive programs, share/recommend features), has helped companies enhance their audience base, thereby driving ad revenues. By increasing user engagement companies have successful in implementing the ‘freemium’ model.Tencent:Tencent has released the first game targeted at its messaging app WeChat (known as Weixin in China). The game implements the ‘freemium’ model and uses micropayments to offer users in-game products.Successful monetization of online gaming in ChinaProgressive levels of ‘Free-to-play’ games are monetized after generating a large audience base. Popular games like Sony Online Entertainment’s DC Universe Online, Nexon’sMapleStory and NCsoft’sGuild Wars have been monetized through micro-transactions in China. 64% of Chinese gamers pay for online games each month.Tencent’s 2Q13 net profit rose 19% y-o-y to 3.68 billion yuan ($601 million) driven by revenue growth from online games and e-commerce. Tencent expects to benefit from promoting games on its WeChat app. One of the company's first promoted games onWeChatgained 25 million daily active users within 10 days. Tencent is also selling emoticons and other virtual products over the app.Sources: Why No One Likes Mobile Ads and How Companies Hope to Change That,” Technology review website, http://www.technologyreview.com/news/511811/lack-of-ways-to-measure-success-holds-back-mobile-ads/, accessed 19 September 2013).“How Bad Measurement is Holding the Mobile App Economy Back,” Adage website,http://adage.com/article/digital/messy-mobile-app-measurement-holds-back-ad-dollars/241960/, accessed 19 September 2013.“Stadiummastro Home,” Fantasy Stadium website, http://fantasy.stadiumastro.com/default.aspx?page=home&n=newFeatures, accessed 19 September 2013.“Digital TV content guide,” Casbaa website, http://www.casbaa.com/finddigitaltv/channel/FOXonDemand.html, accessed 19 September 2013.“China's Youku: Video On-Demand for the Masses,” Satanford Business website, http://www.gsb.stanford.edu/news/bmag/sbsm0911/feature-koo.html, accessed 19 September 2013.“Bigflix Gets Disney Content; Subscriptions vs Pay Per View,” Medianama website, http://www.medianama.com/2013/01/223-bigflix-gets-disney-content-subscriptions-vs-pay-per-view/, accessed 19 September 2013.“Baidu Reaches 80 Million Mobile Apps Users, Reveals Full 2012 Financials,” Techasia website, http://www.techinasia.com/baidu-mobile-users-2012-q4-report/, accessed 21 September 2013.“MediaCorp to telecast NDP 2013 "live" on multiple platforms,” Channel News Asia website, http://www.channelnewsasia.com/news/singapore/mediacorp-to-telecast-ndp/768728.html, accessed 21 September 2013.“Singaporean reality TV show to be available across multiple platforms in US and China,” Media Hub website, http://www.mediahubaccess.com/reality-tv-show-to-be-available-across-multiple-platforms-in-us-and-china/, accessed 21 September 2013.“The Majority Of Chinese Gamers Now Pay For Online Gaming Content Every Month,” Forbes website, http://www.forbes.com/sites/johngaudiosi/2012/04/03/the-majority-of-chinese-gamers-now-pay-for-online-gaming-content-every-month/, accessed 18 September 2013.“IFPI Digital Music Report 2013,” IFPI website, http://www.ifpi.org/content/library/dmr2013.pdf, accessed 18 September 2013.“Psy only made $32,000 USD from domestic online sales of "Gangnam Style"?,” Allkpop website, http://www.allkpop.com/article/2012/10/psy-only-made-32000-usd-from-domestic-online-sales-of-gangnam-style#axzz2ftPLIY62, accessed 18 September 2013.“Tencent Earnings: Games Help Profit Rise,” Wall Street Journal website, http://online.wsj.com/article/SB10001424127887324823804579012302809883952.html, accessed 21 September 2013.“Baidu mobile revenue to rise,” Investors.com website, http://news.investors.com/090513-670014-baidu-mobile-revenue-to-rise.htm, accessed 21 September 2013; “BAIDU REPORTS 39% RISE IN Q2 REVENUE,” CBR website, http://www.cbronline.com/news/social/baidu-reports-39-rise-in-q2-revenue-260713, accessed 21 September 2013.
  • Source: “Digital Agility – NOW,” EY, June 2013
  • Source: “Digital Agility – NOW,” EY, June 2013
  • Source: “Digital Agility – NOW,” EY, June 2013
  • Source: “Digital Agility – NOW,” EY, June 2013
  • Peter Markey - Building success in the digital era

    1. 1. M&E industry in Asia Pacific Building success in the digital era September 2013
    2. 2. Page 2 Asia Pacific’s consumer engine is driving strong growth in ad revenues — greatly benefitting M&E companies 1 APAC’s GDP will grow at a robust CAGR of 7% over 2012–2017. It will the largest region in terms of GDP by 2017. 2 Rising affluence and increasing urbanization in APAC is expected to fuel consumer spending on M&E. 3 APAC’s young population is driving M&E consumption. Asia Pacific (APAC) M&E drivers Advertising revenues are growing in APAC Source: Global Forecast Model: 2000-2017,‖ MAGNAGLOBAL, December 2012 $138 $144 $156 $168 $181 $196 $0 $40 $80 $120 $160 $200 2012 2013e 2014e 2015e 2016e 2017e InUS$billion
    3. 3. Page 3 Digital holds a strong promise for APAC’s M&E industry By 2017, digital will account for 27% of APAC’s total ad revenues, up from 19% in 2012 Ad revenues in APAC, 2012 and 2017e Source: Global Forecast Model: 2000-2017,‖ MAGNAGLOBAL, December 2012 ► APAC’s digital ad revenues will grow at a CAGR of 15% during 2012–2017 to US$53 million. ► In 2015, APAC will displace EMEA to become the second largest region by digital ad revenues. Digital 19% Television 43% Print 24% Radio 5% OOH 9% Digital 27% Television 43% Print 17% Radio 4% OOH 9% 2012 Total = US$138 billion 2017e Total = US$196 billion
    4. 4. Page 4 Greater investments in networks, proliferation of mobile devices and growing online content is driving digital media consumption Increasing investment in networks ► APAC accounted for 40% of the global network capex in 2012. ► Government support and subsidies are driving network expansion. ► Wireless subscribers will grow at a CAGR of 36% over 2012–2017. Penetration of wireless broadband to reach 48% in 2017. Proliferation of mobile devices ► Low cost and more capable mobile devices are being launched. ► Smartphone penetration will rise from 35% in 2012 to 68% in 2017. ► Tablet shipments will increase at a CAGR of 20% over 2012–2017. Tremendous growth in online content ► Global and local M&E companies are increasingly investing in digital content. ► Social media, online news, blogging and online TV are driving online consumption.
    5. 5. Page 5 Challenges in monetizing digital media persist; companies are exploring innovative methods to increase digital revenues Key challenges in digital media monetization Proliferation of digital M&E companies is increasing competition for online ad revenues Mobile advertising yet to gain traction as ROI measurement remains a challenge Low propensity of consumers to pay for online content such as through subscription and pay-per-use models Offering premium and customized content online, such as international TV shows, live sports programs, video windows and HD content Companies providing differentiated value to drive monetization Providing interoperability through access to content across multiple platforms and devices Focusing on anytime access by providing on-demand movies, TV shows and music online Driving user engagement with interactive programs, share/ recommend features and implementing ‗freemium‘ models Online gaming companies in China have successfully monetized their offerings — 64% of Chinese gamers pay for online games each month
    6. 6. Page 6 Complex challenges of the digital era require M&E companies to become more agile An agile organization is utilizing… The ability to ―fail forward,‖ fast To learn from inevitable missteps, fix them rapidly and move on Cloud-based infrastructure To enable lower-risk rapid deployment and scalability, breaking organisational silos Rapid resource or new product deployment To beat the competition to market in response to new customer opportunities Cutting-edge analytics That identify — in real-time — new customer-serving opportunities Advanced social listening Programs to keep on top of changing customer sentiment ► M&E companies are facing a challenge to keep up with the rapidly changing technologies, platforms and distribution models. ► To overcome these challenges, M&E companies need to be agile and shift from a ―make and sell‖ to a ―sense and respond‖ business model.
    7. 7. Page 7 For digital agility, M&E companies need to leverage technology throughout their organizations Digital leaders forge the agility vision ► 3rd-party cloud solutions allows for rapid scale-up ► Cloud based, back office facilitates real-time planning Tools ► Creating a culture of innovation is the top priority ► Centralised strategy, complimented by local execution ► Lack of skills is a key obstacle to building and maintaining cloud ► 43% of executives prioritise ―acquiring digital skills‖
    8. 8. Page 8 M&E companies are innovating their product and service bundles to serve customers directly ► According to EY‘s survey of 522 global M&E executives, 84% of the executives expect to have direct relationships with their customers by 2015 ► Pillars of D2C: Personalized, differentiated, anytime/anywhere 64% 63% 61% 51% Personalization Anytime/anywhere access Create unique content Supplemental/premium content for a fee How will you ensure customers pay for digital products? Source: ―Digital Agility – NOW,‖ EY, June 2013 Percentage of respondents
    9. 9. Page 9 Digital leaders view customer engagement as a virtuous cycle ► D2C is more than engagement and distribution but about feeding customer feedback into product and service innovation ► Data analytics, mobility, cloud and social are core enablers
    10. 10. Page 10 Thank you

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