Media Trends Report Q2 2011


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This Media Trends report explores the current environment in which the subscription television sectors of Australia, the United Kingdom and the United States are operating.

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Media Trends Report Q2 2011

  1. 1. May 2011 MEDIA TRENDS – Q2 2011This quarter we can see that the effect of external conditions has influenced some outcomes of themedia and communications sector. The popularity of international events was reflected throughsubstantial ratings increases and the appeal of premium content, sport, original documentary andoriginal drama production continues as an industry focus.The popularity of over the top services also continues to be reflected both through subscriber growthand product development. At the same time positive growth has been seen by a number of mediaand entertainment companies. The number of existing subscription TV customers upgradingservices also grew this quarter. While penetration is still relatively small, the range of connected TVservices and products also continued to expand.Issues associated with future spectrum re-allocation, the online environment and sports rights remainthe focus of regulatory reviews and parliamentary process. While advertising sector forecasts wereimpacted by global events, technological advances continue to increase options for advertisers andconsumers. Digital switch-over rates continue to increase and the development of social mediastrategies remains at the forefront of deepening viewer engagement with content. STV DISTRIBUTION AUSTRALIA AUSTAR results reflect the effect of naturalUNITED KINGDOM disasters in regional areas for Q1 2011BSkyB adds 51,000 new customers and Flooding and cyclones in regional Australiatakes subscriber base to 10.1 million impacted AUSTAR customers in New Southhouseholds Wales, Victoria and Queensland in 2011.BSkyB has reported that it now has over 10.1 AUSTAR put in place arrangements to assistmillion customers with a rise of 51,000 in the customers in affected areas. Total subscriberquarter ending 31 March 2011. Over the same numbers decreased by 8,578 to 755,641 in Q1period BSkyB launched Sky Atlantic and Sky compared to Q4 2010. My Star penetrationLiving, secured exclusive rights to the Football increased by 6% to 205,815 over the sameLeague and Carling Cup and launched the Sky period and revenue remained stable at $174Anytime+ video on demand product. Revenue million. There was significant sales iiigrowth was up 14% to £4.8 billion. i improvement from February 2011 onward. UNITED STATESVirgin Media experiences 47% subscriberslowdown but revenues climb 5.7% for Q1 DIRECTV sees increased subscriber2011 numbers and revenue for Q1 2011Virgin Media revenue for the first quarter to 31 DIRECTV experienced an unprecedentedMarch 2011 was up 5.7% to £982.3m when increase in subscriber numbers adding acompared to the same period last year. While further 611,000 subscribers between Januarythere was a subscriber slowdown over that to March this year. DIRECTVs first quarterperiod Virgin Media reported a 22% rise in the revenues of $6.32 billion increased 13% fromtake-up of premium services and HD the same period last year mainly due to strong iipenetration increased to 41% of customers. subscriber and ARPU growth at DIRECTV U.S. iv and DIRECTV Latin America. Page 1
  2. 2. May 2011 video game system, a Blu-ray player, and/or Over The Top (OTT) Set Top Box the TV set itself. The research notes that (STB) DEVICE TRENDS Internet connected devices in US homes had increased by 24% over the past year withUNITED KINGDOM growth heavily driven by Netflix subscribers. The report also highlights that 30% of NetflixSupermarket giant Tesco takes an 80% subscribers watch video from the Internet viamajority stake in movie streaming service one of these connected devices weekly. InBlinkbox comparison weekly use among all non-Netflix viii subscribers was 3%.In April 2011 Tesco took a majority stake inBlinkbox, one of the most popular movie Netflix continues to attract new subscribers withstreaming sites in the UK with over two million growth over the past few years increasingcustomers. The Blinkbox service is currently substantially to 23.6 m subscribers.available on PC, Mac and PS3 but thecompany has announced that it will beavailable on Samsung connected TV’s and Netflix new subscriber growth per yearother devices throughout 2011. Tesco’s stated 10,000,000aim is to combine the purchase of DVDs withdigital copies. Tesco’s UK CEO Richard 8,000,000Brasher said, “we can link physical purchase of 6,000,000a product to the building of digital collections in va new and seamless way’’. 4,000,000 2,000,000AUSTRALIA 0Hulu files for Australian trademark 2007 2008 2009 2010Amidst the talk that Hulu is coming to Australia,it has been reported that the TV and movie INNOVATIONstreaming service filed for an Australian A FOCUS ON CONNECTED TV’s viTrademark at the end of March 2011. A report by research group DisplaySearch hasUNITED STATES revealed that nearly 20% of all TV’s shipped worldwide in 2010 featured connected TVGoogle plans to overhaul YouTube to take capabilities. This growth is expected toadvantage of connected TV sets continue to over 123 million shipments in 2014.YouTube is planning a number of changes to DisplaySearch forecasts that the connected TVits home page including the introduction market will grow increasingly complex andindividually themed ‘channels’. Twenty of these fragmented with enhanced broadcast services,channels will feature some professionally basic video on demand, configurable apps,produced and original programming. The Wall sophisticated search and navigation andStreet Journal reports that YouTube will spend advanced user interfaces all competing forup to $100 million to commission content customer attention. ix viidesigned for the web. An examination of some of the current productsNetflix the key to online video growth in the connected TV space includes:The Leichtman Research group has reported Sony BRAVIA Internet Video - Available30% of all households have at least one across the BRAVIA LCD TV range. Allowstelevision set connected to the Internet via a Page 2
  3. 3. May 2011consumers to stream approximately 20 specific 40% to Sky Atlantic’s schedule. In April, theInternet channels to the TV including Yahoo!7, medieval fantasy Game of Thrones premieredSBS, Billabong, YouTube, Wired, Golflink, as the channel’s most popular program to dateeHow, Video Detective, Podcasts, Lifestrong, with an average 743,000 viewers beating xiiiFord Models, Epicurious, Blip and audience numbers for Boardwalk Empire.Internet Widgets are available on specific Note: Game of Thrones will make its Australian xmodels. debut on Showcase in July.Samsung Smart Hub HDTV – The Samung AUSTRALIASmart Hub comes with a built-in web browser.It also features Samsung Apps from the HDTV FOXTEL and AUSTAR make AFL broadcastapp store that offers social networking, sport, historypaid and free games and information apps. For the first time in Australian broadcast historyThe TV’s have picture in picture functionality FOXTEL and AUSTAR customers will be ableand come with a dual sided QWERTY-type xi to watch every AFL Home and Away game, thesmart remote. AFL Finals, pre-season competition and the FOXTEL Cup game live and uninterrupted inTelstra BigPond offers a number of IPTV HD. Games will also be delivered via mobileservices through Samsung including BigPond and broadband and through a dedicated AFLTV, BigPond Movies. channel. The Brownlow presentation, historical and memorable matches from the vault will alsoPanasonic Viera Connect – The Viera xiv be available.Connect updates Panasonic’s Viera Castinternet TV. In the US Viera Connect offers Australia’s first multiplatform family actionHulu Plus, Netflix, YouTube, CinemaNow, and thriller to start production in JuneAmazon VOD and archives of several sportssites. Web apps like Facebook, Napster, Commissioned by Movie Network ChannelsSkype, Ustream, and Gameloft are also and produced by Melbourne based productionincluded. The TV also features Viera Connect company Circa Entertainment, Conspiracy 365Market that allows third-party app downloads to xii is a unique Australian television and multi-personalise the TV viewing experience. platform production targeted for the family audience. The series is based on theWhile some services on connected TV’s, such bestselling novels by Australian authoras Telstra BigPond, are usually unmetered for Gabrielle Lord. The 12-part family action thrillerBigPond customers the quality and download will debut on Family Movie Channel in 2012.hours of connected TV services are ultimatelyinfluenced by the individual broadband plan of Tim Winton’s cloudstreet to premiere onthe consumer. Showcase in May NEW DEVELOPMENTS IN The Australian production of Tim Winton’s PROGRAMMING iconic novel Cloudstreet will premiere exclusively on FOXTEL and AUSTAR on 22 May 2011. The three part series which tells theUNITED KINGDOM story of two fictional Australian families in and around Perth in the 1940s and 50s willGame of Thrones debut sets Sky Atlantic premiere on Showcase, a Showtime Movieratings record Channel. xvBSkyB has been having ratings success withthe new channel Sky Atlantic which launched inFebruary this year. HBO programs contribute Page 3
  4. 4. May 2011FOXTEL secures the exclusive rights to new Deadliest Catch, Flying Wild Alaska and xviiiSteven Spielberg series Falling Skies Mythbusters.The 10-part series will air exclusively on FOX8 Warner Bros streams The Dark Knight viashortly after its American debut in June. It Facebook for 30-Facebook creditsopens in the aftermath of a hostile alientakeover of earth. As well as Spielberg as EP Consumers are able to rent a copy of The Darkthe series involves Justin Flavel and Darryl Knight by clicking on a ‘rent’ icon on the filmsFrank, Graham Yost (Justified, The Pacific), official Facebook page. For 30 Facebookscreenwriter Robert Rodat, who earned an credits ($3) viewers have 48 hours to watch theOscar nomination for his screenplay for Saving movie. While watching the film viewers arePrivate Ryan as well as Mark Verheiden able to post comments or interact with friends(Heroes, Battlestar Galactica) and Greg with full Facebook functionality. Warner Bros is xviBeeman as co-executive producers. planning to roll out other films such as Harry Potter and the Sorcerer’s Stone, Inception and xixInternational events, sport and documentary Life as we Know It over the coming months.content drive ratings records Netflix outbids HBO for original content withThe Royal Wedding was watched by more than House of Cards2.2 million people across UKTV, BBC WorldNews, CNN and E! Entertainment. The news Internet video streaming company Netflix hasof Bin Laden’s death attracted 90,000 viewers committed to original content through itsto SKY NEWS at 3.30pm on 2 May 2011. Live purchase of the 26 episode season of House of xxsports viewing broke ratings records in Week Cards starring Kevin Spacey. The Wall14 with the Live: Eels v Cowboys NRL game Street Journal has reported that Netflix outbidproving to be the highest rated broadcast on other cable companies to secure theSTV in 2011 to-date, and the original Australian programming.production, Kalgoorlie Cops, which premieredin Week 16 was the highest rating documentary DIRECTV offers VoD early release movieson STV to-date. xvii 60 days after theatrical debut DIRECTV is partnering with Warner Bros.UNITED STATES Home Entertainment, Universal Pictures, Sony th Pictures Home Entertainment and 20 CenturyAMC and Lionsgate officially make a deal Fox to offer theatrical releases to DIRECTV HDwith Mad Men creator Matthew Weiner DRV customers 60 days after theatrical debut. Titles will cost $29.00 and will be available forWeiner inked a new long-term agreement with two weeks following the day they launch. Theyproducer Lionsgate which includes a fifth and will then be taken off for a period and will returnsixth season with potential for a seventh to the regular PPV/VoD window release andseason of Mad Men, the 1960s original drama price after that time. xxiset in New Yorks advertising world. Note: MadMen airs on Movie Extra in Australia. REGULATORY DEVELOPMENTSMythbusters and other Discovery Channelprograms get an ‘I’m Watching’ button UNITED KINGDOM Digital Economy Act free to proceed afterThe Discovery Channel has launched an iPad failed high court challengeapp with an ‘I’m Watching’ button so thatconsumers can alert Facebook and Twitter Telecoms providers BT and TalkTalk havefollowers as to what they are watching. The failed in their high court challenge to stop somefree app includes clips from Gold Rush, elements of the Digital Economy Act 2010. Page 4
  5. 5. May 2011Under the Digital Economy Act 2010 ISPs will for mobile broadband and 900 MHz Band –be obliged to send notification letters to Exploring new opportunities with a view tocustomers accused of illegal downloading by developing a future spectrum strategy forrights holders. Repeat offenders could then mobile broadband that makes the best use of xxvihave their internet access slowed or blocked current and future technologies. xxiiunder the plan. Anti-Siphoning Bill and BroadcastingProduct Placement ‘P’ logo to be shown on Services Amendment (Media Access) Bill toUK screens be introduced during Winter SittingsLaws were changed to allow product placement The Australian Government has indicated thatin UK television programs for the first time in both bills will be introduced into the House ofFebruary this year. Ofcom has launched a logo Representatives in the Winter sittings 2011.that must be showed when a UK produced The Government released an exposureprogram contains product placement. The logo draft of the proposed anti-siphoning changes inmust appear for 3 seconds at the start and end May. The Media Access Bill relates to xxiiiof the program and after advertising breaks. captioning levels and standards under broadcasting legislation.Ofcom consults prior to ‘largest ever’ 4Gwireless spectrum auction for mobile UNITED STATESservices House votes against ‘net neutrality’ but FCCOfcom has announced plans to conduct the still has Senate supportlargest ever single auction of additionalspectrum for mobile services. Ofcom has said The House has voted to ban the Federalthat the amount of 4G spectrum will be more Communications Commission (FCC) fromthan 80% of the 3G auction that took place in implementing its plans to ensure net neutrality2000. Ofcom is proposing to put in place that were put in place December last year.safeguard caps to protect against long term Republicans said that the plans were a powercompetition issues. The time of the auction grab by the FCC. xxivwill be in the first quarter of 2012. The vote was supported by the US Court ofAUSTRALIA Appeals in the District of Columbia that ruled in xxvii favour of the House.Convergence Review Framing paperreleased for comment The Washington Times reports that the FCC’s net neutrality plans still have the support of theThe recently finalised Convergence Review Democrat controlled Senate and theCommittee has released the first of a number of xxviii President.calls for comment in the form of a framingpaper. The paper outlines the indicative ADVERTISING DEVELOPMENTStimetable for the review and calls for commenton the fundament principles that will guide andshape the review and subsequent Global ad expenditure predicted to grow by xxv 4.2%recommendations to Government. ZenithOptimedia has forecast that the global adACMA releases discussion papers about expenditure market will grow by 4.2% in 2011.future wireless spectrum strategy The forecast was revised down from 4.6% in December because of political turmoil in EgyptThe Australian Communications and Media and the natural disaster in Japan. The forecastAuthority (ACMA) has released two papers, predicts that the US market will make gains thisTowards 2020 – Future spectrum requirements Page 5
  6. 6. May 2011year and next with North American ad spending The latest Federal Government Digitalpredicted to increase 2.6% at $164.8 billion in Tracker survey for Q1 2011 reports that xxix2011. that about 4 in 5 Australian households can now watch digital television (79%),NDS to deliver addressable advertising two percentage points more than theinsertion technology and enhanced previous quarter.audience measurement for DirecTV The analogue signal was switched offNDS is working with DirecTV on the seamless in regional Victoria on 5 May 2011 asinsertion of household addressable ads into the digital television rollout continuesboth live and recorded video content from across Australia.DirecTV’s SD DVR hard drives. NDS says thatthe technology will provide data that will The Deloitte State of the Mediasupport ‘the revenue-generating potential of Democracy survey has showed thataddressable advertising on the DIRECTV watching TV is still the favourite mediaplatform with the ability to generate solid activity for 71% of Americans. xxxfeedback on the ads that have been viewed’. Nielsen has reported that in the fourthFOX SPORTS signs Toyota as the exclusive quarter of 2010 almost 30 hours asponsor for its iPad app as part of a cross month was time-shifted viewing by 25-platform sponsorship deal 64 year olds in the US.The Toyota sponsorship deal which started in In-Sat has reported that the globallate April will run for six months. as part of tablet market will grow to 50 millionToyota’s integrated sponsorship of FOX units in 2014.SPORTS shows both on TV and online. AdamWeimers from Toyota said "this six month, MagnaGlobal is predicting that theexclusive, multi-layered, on-air, online and iPad worldwide outdoor advertising marketpartnership, will continue to allow the Toyota will expand by 8.3% in 2011.Aurion to reach it’s predominantly male targetmarket wherever, whenever and on whatever Screen Australia has released the xxxidevice they desire." guidelines for its All Media Fund that will encourage interactive or multi- platform innovative, risk-taking TRENDS & STATS BRIEF storytelling. Digital UK has confirmed that London’s The Nielson Company has reported analogue switch off will occur before that the average American watched 34 the 2012 Olympic games. hours 39 minutes of TV per week in Q4 2010. An increase of two minutes on An average of 4.142 million people the previous year. tuned into CNN to watch the coverage of the death of Osama bin Laden. At one stage during the night viewer numbers hit 9 million people. The Media Trends Report created by Infodec for Ofcom has confirmed that digital ASTRA television take-up has now reached 92.5% of UK households. Page 6
  7. 7. May 2011ENDNOTESi Sky Corporate, Virgin Media, Austar, DIRECTV, Wired, Advanced Television, Hulu joining Aussie TV market?, Wall Street Journal, Leichtmarketresearch, Sony, Samsung, PC World, The Guardian, FOXTEL, Showtime,, ASTRA, Discovery, The Hollywood Reporter, Netflix, The Hollywood Reporter, The Guardian,’xxiii Ofcom, Ofcom, Convergence Review Committee, ACMA,, Washington Times, The Hollywood Reporter, NDS, MCN, Page 7