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Value & Engagement inthe Era of Social Entertainmentand Second Screens

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MethodologyResearch targets Nationally representative survey of adults (Ages 18-54)Geographies UK and USField Dates April 12 - April 15, 2012Sample sizes Total n=2,022 (UK n=1,012; US n=1,010) Total sample +2.18% (in 95 out of 100 cases); Country sample +3.08% (inMargin of Error 95 out of 100 cases) 2

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Setting the scene – 6 years of research 3

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Valuing Entertainment4 4 4

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Appreciation of Value at a Three-Year High Value is up across all of the entertainment sources in 2012, following 2011’s low. 40% 34% 36% 32% 32% 30% 30% 18% 14% 13% 13% 14% Social networking Film producers/ Music companies Cable television Gaming Satellite television sites Movie studios providers companies providers 2011 2012Q8. Thinking about the entertainment provided by each of the following entities, how much value do you think they provide, in general?Base: All respondents (n2022) 5

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Entertainment Everywhere 6

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Frequent Sources of Entertainment TV and the internet remain the most used sources of entertainment year-over-year, while cinema/movie viewership continues to decline 60% 57% 58% 60% 58% 55% 55% TV 49% 47% 50% TV 50% 45% 45% 45% 40% 40% 35% 32% 34% 35% Internet* 32% 30% 30% 30% 27% 24% Internet* 25% 25% 28% 20% 20% 15% 12% 15% Cinema / Movies Cinema / Movies 10% 7% 10% 6% 3% 5% 1% 5% 0% 0% 2010 2010 2011 2012 2010 2010 2011 2012 2011 2012 2011 2012Q4. What source of entertainment do you turn to most often? *NOTE: 2011 and 2012 Internet/Web data was calculated using the sum of data points for Internet –Base: All respondents (n2022) 7 news/information, Internet – download/stream movies, Social network, Online streaming music service, and Video game on social network for comparison with 2010 data. 2012 also includes Internet - download/ 7 stream TV shows

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Video Content: Watching Outside of the Box Though the TV is still the center of the home, audiences are watching entertainment programming and content on other devices other than TV. Content on Devices Other than Television 51% 40% 24% 20% 12% 14% 9% Laptop computer Desktop computer Gaming console Mobile phone Using a HDMI cable Tablet (e.g. an iPad) Online-streaming to connect my laptop equipped television to my televisionQ6. Other than television, which devices are you using to watch entertainment programs?Base: All respondents (n2022) 8

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What is important forconsumers? 9

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Enjoyment and Quality Come First. Followed by ease of purchase and ability to access immediately. Purchase Drivers % Extremely/Somewhat Important 76% My personal enjoyment of the entertainment 91% 89% 77% Excellent visual or sound quality of the entertainment 85% 86% 72% The hours of enjoyment the entertainment will 76% provide 80% 64% Being able to purchase the entertainment easily 74% 75% 66% Being able to access the entertainment immediately 77% 72% 2010 2011 2012Q7. Below are some things people might take into consideration when purchasing entertainment. How important are each of the following things to you, when 10you are considering making an entertainment purchase ? Base: All respondents (n2022)

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Popularity of the content and being the first to have it rise in importance this year. Purchase Drivers % Extremely/Somewhat Important 58% The number of devices with which I can access the 48% entertainment 50% 44% Popularity of the entertainment 31% 43% 55% Having unrestricted ability to share or make copies 42% of the entertainment legally 41% 39% Being one of the first to have new entertainment 17% 31% 2010 2011 2012Q7. Below are some things people might take into consideration when purchasing entertainment. How important are each of thefollowing things to you, when you are considering making an entertainment purchase ? 11Base: All respondents (n2022)

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US respondents are willing to sacrifice sharing to get free entertainment; but won’t compromise on privacy Willingness to Sacrifice for Free Entertainment Advertisement-free entertainment 48% The ability to share the entertainment 41% The ability to access the entertainment on multiple 34% devices The ability to access the entertainment on the device 18% of my choice Visual or sound quality of the entertainment 9% Privacy of my personal information 8% None 15% 2012Q10. Which of the following would you be willing to sacrifice in order to get your entertainment for free?Base: UK respondents (n1010) 12

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The Power of Me: Socialnetworks and Influence 13

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Facebook: The entertainment soap box Over ¾ of Americans and Britons say they have used Facebook, with the majority saying it is the forum for them to discuss entertainment content Sites Used to Discuss Entertainment Content 58% 50% 27% 15% 14% 15% 12% 5% 2% 5%Q15. Which social media sites do you use to discuss entertainment content that you have watched or listened to?Base: All respondents who use any social media sites (n1837) 14

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Liking Content: Not just a status update When enjoying entertainment, Britons are more likely to tell friends and family. Influence isn’t just restricted to social networks. Americans are more internet-focused and will spread their feedback online Actions Taken if Enjoy Entertainment 88% 68% will take action if they Tell a friend 63% enjoy a piece of 66% entertainment Tell a family member 63% 33% Search for more information 34% 29% Use Facebook to Discuss “Like” it on Facebook 38% Entertainment Content: 23% Share a link about it on a social network site 29% 50% 17% Send an internet link about it to friends/… 22% 58% 11% “Tweet” about it on Twitter 11% 3% “Check-in” to an app or website (e.g.… 7% 12% None of the above 11%Q12. Which of the following do you do if you enjoy a piece of entertainment content (e.g. television program, movie, music video, song, playlist, etc.)? Base: All respondents (n2022)Q15. Which social media sites do you use to discuss entertainment content that you have watched or listened to? Base: All respondents who use any social media sites (n1837) 15

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Disliking content: Americans more active When not enjoying entertainment, the majority of Britons are more likely to tell friends and family - again showing the importance of real-world conversations. Americans still more likely to leave criticism online Actions Taken if Don’t Enjoy Entertainment 56% Tell a friend 49% 53% Tell a family member 49% 21% Comment about it on Facebook 25% 10% “Tweet” about it on Twitter 12% Share a link about it on a social network site 9% 12% 74% Write a negative review or comment about it 6% on an online website (e.g. Rotten… 12% will take action if they enjoy a piece of “Check-in” to an app or website (e.g. 3% entertainment GetGlue, Zeebox) 7% 26% None of the above 26%Q12. Which of the following do you do if you enjoy a piece of entertainment content (e.g. television program, movie, music video, song, playlist, etc.)? 16Base: All respondents (n2022)

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The Conversation Curve Audiences are much more likely to comment about entertainment content after they have watched, listened or played. Brands should consider how to amplify and sustain this curve. Likelihood of commenting on a social network Before During After 34% 16% 16% Before While After I have viewed/listened to it I am viewing/listening to it I have viewed/listened to itQ19. Which types of content are you likely to comment about on a social media networks (like Twitter or Facebook) before you haveviewed/listened to it, while you are viewing/listening to it and after you have viewed/listened to it? 17Base: All respondents who use any social media sites (n1837)

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Americans are more likely to interact with talent via social networks and receive the content in real time Preferences for Interacting with Entertainment % Strongly/Somewhat Agree Change from 2011 I would like to use my computer to access 52% additional online content related to my entertainment 55% + 3% I would like to see entertainment provide me 28% with the ability to interact real-time with the content 38% + 10% I would like to use social networks such as 30% Facebook or Twitter to interact with entertainment 41% +11% I like being able to interact with entertainment 27% such as being able to vote for my favorite contestants on reality TV or music talent… 42% + 15% I would like to use my mobile phone or device 31% to interact with entertainment 36% +5% 2011 2012Q9. Please indicate your level of agreement with the following statements?Base: US respondents (n1010) 18

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Incentivizing audiences on social networks Audiences would like free merchandise in order to encourage them to watch content. But if the content is available for free, how can a business model that supplements content with free merchandise survive. What is the cost of free? Encouraging Viewership of Content on Social Media Sites Give you free merchandise if you comment 47% about them 52% Conduct contests to win free stuff (clothes, 40% vacations, etc.) 44% 21% Offer sales on their merchandise 31% 15% Direct you to their company website 19% 13% Offer interactions with celebrity talent 18% 30% Dont know 24%Q16. What could entertainment companies do on social media sites that would encourage you to watch their entertainment content? 19Base: All respondents who use any social media sites (n1837)

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Brands recommending content Britons are more likely to find brand recommendations on a social network invasive, whereas Americans would appreciate the recommendation Brands Recommending Entertainment Content 39% Find this invasive 26% 26% Appreciate the recommendation 32% 24% Watch/ listen to the content 32% Feel negatively towards the brand/ 15% company 11% Feel positively towards the brand/ 11% company 21% 17% Dont know 21%Q17. How would you feel if a brand or company got in touch with you on a social network and recommended entertainmentcontent based on their understanding of your likes and dislikes? 20Base: All respondents who use any social media sites (n1837)

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Automated services do not replace the voice of the individual Consistent with British opinions and recent stories about the decline in use of Facebook auto— sharing apps – British people do not like automated recommendations or sharing features. Likelihood to Use Automatic Notifications 13% 27% Likely 20% Neither likely nor unlikely 21% Unlikely 67% 52%Q18. If social networks could automatically notify your friends about content you are consuming how likely would you be to use this feature? 21Base: All respondents who use any social media sites (n1837)

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What does this meanfor brands? 22

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The Key Themes of the ME Value is Up Value is at three year high, in the study. According to the trade body, the Digital Entertainment Group, U.S. consumers spent $4.5 billion (£2.7 billion) on home entertainment in the first quarter of 2012, an increase of 2.5% from a year ago. Shift in Frequent Sources of Entertainment Television and the Internet remain the most utilized sources of entertainment year-over- year. However, audiences are increasingly turning to other devices to watch entertainment. Over half of survey respondents turn to their laptop to watch entertainment. Enjoyment and Quality Come First This year, personal enjoyment and visual and sound quality remain the top purchase drivers of entertainment. But won’t compromise on privacy when it comes to getting their entertainment for free. Social Opportunities Peak in the Conversation Curve 50% of consumers use Facebook to comment or discuss entertainment content. Most conversations peak after an audience has watched, listened or played, not before or during – consider how best to engage with your audience online. Technology Can’t Dictate Taste Audiences do not like automatic notifications that share what content they have watched/listened/played with their social graph. Audiences wary of receiving automatic notifications from brands. Personalization and tone of voice must cut through the noise. 23

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#socialentThank you 24