GLGi: Broadband Video Content  Greg Fawson President and Principal Analyst X Media Research
<ul><li>Council Member Biography </li></ul><ul><li>Greg Fawson is the President and Principal Analyst at X Media Research,...
<ul><li>Topics </li></ul><ul><li>How will broadband video and the inherent social networking aspect impact traditional bro...
<ul><li>About GLG Institute  </li></ul><ul><li>GLG Institute (GLGi SM ) is a professional organization focused on educatin...
<ul><li>Gerson Lehrman Group Contacts </li></ul><ul><li>John Aronsohn </li></ul><ul><li>Vice President and  </li></ul><ul>...
<ul><li>IMPORTANT GLG INSTITUTE DISCLAIMER – By making contact with this/these Council Members and participating in this e...
About X Media Research <ul><li>Industry analyst veteran with 10+ years experience </li></ul><ul><li>Areas of focus: </li><...
Questions <ul><li>What iTV delivery models are working? </li></ul><ul><li>Impact on traditional broadcast / cable TV </li>...
What is Internet Video? <ul><li>Video delivered over open Internet infrastructure or via dedicated streaming video servers...
Types of Internet Video Offerings <ul><li>Movie Streaming </li></ul><ul><ul><li>Cinemanow, MovieLink (now Blockbuster), Ne...
Internet Video Complexity Many Moving Parts – Everyone Has a Stake Content Owners Cable, DBS,  Telco, ISP Operators Device...
Massive Changes Means Opportunity <ul><li>Emergence of digital media and Internet TV places owners and distributors of vid...
Business Models Still Largely Experimental <ul><li>Mix of free, subscription, rental, download to own, advertising support...
User-generated content is coming to TV  Current TV MTV Flux
<ul><li>LOW Quality of Experience (QoE)  </li></ul><ul><li>HIGH Total Cost of Delivery (TCoD) </li></ul><ul><li>NO scalabi...
Consumer Expectations Increasing <ul><li>Improvements in streaming delivery </li></ul><ul><ul><li>ABC, FOX, CW, and others...
Phenomenal Growth <ul><li>Consumers are spending more time online and watching more video online.  Has become a more accep...
Predictions
Prediction #1 <ul><li>Internet TV / Broadband video will evolve away from PC-centric model.  Video to the TV is where its ...
Prediction #2 <ul><li>Internet video will not kill broadcast / cable TV </li></ul><ul><li>It will force content owners and...
Prediction #3 <ul><li>Non-PC devices will account for almost 20% of all Internet Video accesses by 2012 </li></ul><ul><ul>...
Prediction #4 <ul><li>Standalone DMA / STBs like AppleTV and VUDU will remain niche players </li></ul>
Prediction #5 <ul><li>Over 30% of streaming Internet video traffic will be at HD resolution (720p) by 2012 </li></ul>
Prediction #6 <ul><li>TiVO will be the comeback kid </li></ul>
Prediction #7 <ul><li>Internet Video will command a growing portion of overall ad revenue.  Will pull dollars away from tr...
Prediction Analysis
Prediction #1: Internet Will Evolve Away From PC-Centric Model <ul><li>First let’s do the reality check – still will be 10...
Not the Right Experience
The Right Experience
Consumer Want TV Connected to Internet “ Would you like to have your HDTV connected to the Internet?” Source: S2 Data Corp...
Everyone Wants to Get to the TV <ul><li>Media Center Extenders </li></ul><ul><li>Digital Media Adapt ers </li></ul><ul><li...
Why Do People View iTV on the PC? <ul><li>Because the vast majority of the content they can get on the PC is not available...
Consumer’s View of TV is Changing <ul><li>Video 1.0 </li></ul><ul><li>Linear Broadcast </li></ul><ul><li>Limited content <...
Prediction #2: Internet TV Will Not Kill Broadcast TV
Pay-TV and FTA Subscribers are Growing Source: X Media Research
Internet Enhances TV, Does Not Replace <ul><li>Wasn’t eCommerce supposed to kill off the whole retail sector once and for ...
Internet Video Helps Re-Discover TV 29.2 million views within first month 3 of the top 25 YouTube videos Now there are now...
So What’s the Problem?
Internet Video is Cannibalizing Some TV <ul><li>In the United Kingdom traditional broadcasters have seen their share of te...
TV Ad Dollars Are Under Threat <ul><li>Fragmented audiences </li></ul><ul><li>Time-shifting reduces relevance </li></ul><u...
Ad Market Breakdown 2007 Source: X Media Research
Prediction #3: Non-PC Devices Will Account for Almost 20% of all Internet Video Accessed by 2012 <ul><li>Networked Digital...
Gating Factors  <ul><li>Accessing Internet Video on the TV has not been without problems </li></ul><ul><ul><li>Few devices...
Key Factors and Trends Bearing on Internet Video on the TV <ul><li>Broadband penetration </li></ul><ul><li>Home networking...
nDTVs Already on the Market
acTVila.com – Big in Japan!
Internet Video on the TV – Its What Consumers Want! “ Question: If your TV were connected to the Internet, what would be t...
Will Consumers Pay For nDTVs? <ul><li>Over 55% of consumers surveyed would pay more to have their digital TVs connected di...
nDTV Market Forecast Millions of Units Source: X Media Research
Key Stats <ul><li>By 2012 Networked DTVs will account for over 15% of total TVs sold </li></ul><ul><li>By 2012 more than 7...
Gaming Consoles <ul><li>Game consoles fit all the profiles of a successful Internet video delivery platform </li></ul><ul>...
Gaming Consoles Mix Premium and UGC
Connected Consoles on the Rise <ul><li>Over 141 Million connected consoles by 2012 </li></ul>
The Mobile Phone
Mobile Handset Factors <ul><li>Non-Messaging data usage is over 50% now…approaching 60% </li></ul><ul><li>Storage capacity...
Mobile Internet Usage Increasing <ul><li>Adding at least 1 billion more subscribers by 2012 </li></ul><ul><li>Almost 10% o...
The Set Top Box - The Right Platform? <ul><li>In the right place </li></ul><ul><ul><li>Next to the TV, where people need t...
Synergies Between iTV and Pay TV? <ul><li>Cable / Sat have a weakness in interactivity </li></ul><ul><li>Consumers will pl...
Partnering Makes Sense <ul><li>Cable and IPTV providers typically have VoD libraries in the dozens or hundreds of Titles…g...
What Will STBs Need To Have? <ul><li>Interfaces to Multiple Content Providers </li></ul><ul><ul><li>Multiple players </li>...
What Does Sling Acquisition Mean? <ul><li>EchoStar purchases Sling for $380 Million </li></ul><ul><li>Anyone else think th...
Retail and OCAP <ul><li>CableCARD impact is minimal </li></ul><ul><li>Retail markets differ across geographies </li></ul><...
Enter The Hybrid STB <ul><li>Hybrid solutions let operators deliver best of both worlds </li></ul><ul><ul><li>Live linear ...
Connected / Hybrid STB Forecast Source: X Media Research Millions of Units
Prediction #4: Standalone STBs Like Apple TV, VUDU and DMAs Will Remain Niche Players <ul><li>DMAs have been around for ye...
What About Apple TV?
Apple TV Market Will Remain Small <ul><li>Huge buzz surrounding Apple TV launch.  Now Steve Jobs describes it as a “hobby”...
What About VUDU?
Digital Media Adapter/iSTB Forecast Millions of Units Source: X Media Research
CE Devices <ul><li>Important to stay realistic about CE </li></ul><ul><li>Unless you are the iPOD, market share and audien...
Everyone Wants to Be in CE <ul><li>The global CE market is huge </li></ul><ul><li>Wireless more frequently integrated </li...
Internet Video Access Forecast Source: X Media Research Millions of Units
Prediction #5: Over 30% of Internet Video Traffic Will Be at HD Resolution <ul><li>What is HD streaming? </li></ul><ul><li...
What is an HD Stream? <ul><li>Difference between HD broadcast and HD streaming </li></ul><ul><li>HD is determined by the r...
Are we ready for HD streaming? <ul><li>Compression technologies are improving rapidly </li></ul><ul><li>Costs and Economic...
Broadband Subscriber and Speed Growth <ul><li>By 2012 over 500 million broadband subscribers </li></ul><ul><li>By 2012 ove...
Is There a Business Justification? <ul><li>Increasing audience by unique viewing experience in addition to unique premium ...
With Video, Quality Matters: NTT trial <ul><li>Two month Set Top Box trial </li></ul><ul><ul><li>Now in production deploym...
With Video, Quality Matters: NTT Results Viewing Minutes  per Access Source: NTT Trials.  Blind test over  wired  IP infra...
The Move Networks Solution <ul><li>Create compelling and innovative online video experiences </li></ul><ul><ul><li>Place f...
Move is Working <ul><li>Adding over 1 million unique downloads of the Move Networks player each month </li></ul><ul><ul><l...
Required Platform Elements <ul><li>Quality </li></ul><ul><ul><li>Quick start times, continuous viewing, high perceived res...
SD vs HD Streaming Forecast Source: X Media Research
HD Streaming Enables New Business Models <ul><li>Well known fact that number of HDTVs is increasing </li></ul><ul><li>High...
Live Streaming in 2008 <ul><li>2008 things will shake out...Live events will be the true test </li></ul><ul><li>This month...
Prediction #6: TiVo Will Be The Comeback Kid <ul><li>Pop Quiz: How many of us had written TiVO’s epitaph? </li></ul><ul><l...
Why TiVO Will Make a Comeback <ul><li>Like AppleTV, VUDU and all other standalone STB’s TiVO has been limited by hardware ...
Content Integration <ul><li>Newer TiVOs support popular video formats including MPEG4 (H.264), QuickTime and WMV </li></ul...
Demographics Source: exclusive consumer survey conducted by Orb Networks for iTVCon on the general population in June and ...
TV TODAY When you think “TV Today”, what is most important to you: TV image quality Programming choices (thousand channels...
The promise of TOMORROW’s TV With TV being available on many, many screens tomorrow (i.e. in the  coming few years), what ...
How Does a TiVO Comeback Impact iTV? <ul><li>Rhapsody and Unbox are just the beginning </li></ul><ul><li>TiVO has a number...
Prediction #7: Internet Video Will Command an Increasing Portion of Ad Revenue.  <ul><li>Overall Internet advertising doll...
Internet Video is Fragmenting Viewing Audiences <ul><li>More content choices = more audience and content fragmentation = m...
Ad Skipping is Leading Advertisers to Change <ul><li>TiVO / PVR have demonstrated that consumers will skip ads…(reports ar...
Broadband Video Changing Traditional Models <ul><li>Online video offerings increase media fragmentation </li></ul><ul><li>...
iTV Advertising is Good For Advertisers and Consumers <ul><li>TV audiences are evolving </li></ul><ul><li>Still growing, b...
Fewer Ads Can Generate More Revenue <ul><li>“ We are showing fewer ads per search on a much higher quality and much better...
Internet Video Advertising Growth <ul><li>From under $1 Billion in 2007 </li></ul><ul><li>To over $5.5 Billion in 2012 </l...
Where to Invest? What is Needed?
What Will Make TV Better Experience? <ul><li>Personalization </li></ul><ul><li>Interactivity </li></ul><ul><li>Content Sea...
Conclusions
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  • GLGi: Broadband Video Content Greg Fawson

    1. 1. GLGi: Broadband Video Content Greg Fawson President and Principal Analyst X Media Research
    2. 2. <ul><li>Council Member Biography </li></ul><ul><li>Greg Fawson is the President and Principal Analyst at X Media Research, a technology research company focusing on emerging consumer electronic platforms and services. He has been responsible for the development of market intelligence services, launching international operations and creation of numerous industry forums and events. Greg has been a consultant to semiconductor device manufacturers and original equipment manufacturers. He has also published numerous reports on computing, communications and consumer electronics platform architectures and the associated semiconductor device technologies. He has worked on projects such as: Telecom TV (IPTV), Portable Media Players, Digital Video Broadcasting (DVB-T, DVB-H, ISDB-T), and Video Codec’s. Mr. Fawson has also published reports on Mobile Digital TV Broadcast technologies such as DVB-H, MediaFLO, DMB and ISDB-T. His latest work includes analysis of the Digital TV market and the integration of DMA (Digital Media Adapter) functionality. </li></ul>
    3. 3. <ul><li>Topics </li></ul><ul><li>How will broadband video and the inherent social networking aspect impact traditional broadcast / subscriber TV services? </li></ul><ul><li>What is the outlook for CE devices and gaming platforms that deliver broadband video content? </li></ul><ul><li>What do consumers look for most from broadband video and what are potential business models? </li></ul><ul><li>How will operator-deployed CPE (customer premises equipment) evolve to take advantage of IP video delivery? </li></ul>
    4. 4. <ul><li>About GLG Institute </li></ul><ul><li>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. </li></ul><ul><li>GLGi hosts hundreds of Seminars worldwide each year. </li></ul><ul><li>GLGi clients receive two seats to all Seminars in all Practice Areas. </li></ul><ul><li>GLGi’s website enables clients to: </li></ul><ul><ul><li>Propose Seminar topics, agenda items and locations </li></ul></ul><ul><ul><li>View and RSVP to scheduled and proposed Seminars </li></ul></ul><ul><ul><li>Receive a daily briefing with new posts on your favorite tickers, subject areas and from trusted Council Members </li></ul></ul><ul><ul><li>Share Seminar details with colleagues or friends </li></ul></ul>
    5. 5. <ul><li>Gerson Lehrman Group Contacts </li></ul><ul><li>John Aronsohn </li></ul><ul><li>Vice President and </li></ul><ul><li>TMT Global Research Head, </li></ul><ul><li>Gerson Lehrman Group </li></ul><ul><li>850 Third Avenue, 9th Floor </li></ul><ul><li>New York, NY 10022 </li></ul><ul><li>212-984-3673 </li></ul><ul><li>[email_address] </li></ul><ul><li>Aaron Liberman </li></ul><ul><li>Managing Director, Sales and Marketing </li></ul><ul><li>Gerson Lehrman Group </li></ul><ul><li>850 Third Avenue, 9th Floor </li></ul><ul><li>New York, NY 10022 </li></ul><ul><li>212-984-3684 </li></ul><ul><li>[email_address] </li></ul><ul><li>Carly Pisarri </li></ul><ul><li>Process Manager </li></ul><ul><li>Gerson Lehrman Group </li></ul><ul><li>850 Third Avenue, 9th Floor </li></ul><ul><li>New York, NY 10022 </li></ul><ul><li>212-750-1435 </li></ul><ul><li>[email_address] </li></ul>
    6. 6. <ul><li>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. </li></ul><ul><li>You acknowledge and agree that Gerson Lehrman Group does not screen and is not responsible for the content of materials produced by Council Members. You understand and agree that you will not hold Council Members or Gerson Lehrman Group liable for the accuracy or completeness of the information provided to you by the Council Members. You acknowledge and agree that Gerson Lehrman Group shall have no liability whatsoever arising from your attendance at the event or the actions or omissions of Council Members including, but not limited to claims by third parties relating to the actions or omissions of Council Members, and you agree to release Gerson Lehrman Group from any and all claims for lost profits and liabilities that result from your participation in this event or the information provided by Council Members, regardless of whether or not such liability arises is based in tort, contract, strict liability or otherwise. You acknowledge and agree that Gerson Lehrman Group shall not be liable for any incidental, consequential, punitive or special damages, or any other indirect damages, even if advised of the possibility of such damages arising from your attendance at the event or use of the information provided at this event. </li></ul>
    7. 7. About X Media Research <ul><li>Industry analyst veteran with 10+ years experience </li></ul><ul><li>Areas of focus: </li></ul><ul><ul><li>Consumer Electronics </li></ul></ul><ul><ul><li>IPTV Services </li></ul></ul><ul><ul><li>Home Networking Technologies </li></ul></ul><ul><ul><li>Operator Deployed Customer Premises Equipment </li></ul></ul>
    8. 8. Questions <ul><li>What iTV delivery models are working? </li></ul><ul><li>Impact on traditional broadcast / cable TV </li></ul><ul><li>What is the outlook for CE devices such as AppleTV, TiVO and Gaming platforms that deliver Internet Video content? </li></ul><ul><li>How will operator-deployed CPE (Customer Premises Equipment) evolve to take advantage of IP video delivery? </li></ul><ul><li>What companies will benefit most from the Broadband Video explosion? </li></ul><ul><li>Is the Internet ready for HD streaming? </li></ul>
    9. 9. What is Internet Video? <ul><li>Video delivered over open Internet infrastructure or via dedicated streaming video servers </li></ul><ul><li>Can be managed or unmanaged video content </li></ul><ul><li>Can be streamed or downloaded </li></ul><ul><li>Internet Video is not IPTV </li></ul><ul><li>Internet Video is delivered to multiple devices, not just the PC </li></ul><ul><li>Internet Video is NOT only UGC (user-generated content) </li></ul>
    10. 10. Types of Internet Video Offerings <ul><li>Movie Streaming </li></ul><ul><ul><li>Cinemanow, MovieLink (now Blockbuster), Netflix </li></ul></ul><ul><li>Movie Download / Rental </li></ul><ul><ul><li>VUDU, Akimbo, Amazon Unbox </li></ul></ul><ul><li>Video Clips / UGC </li></ul><ul><ul><li>YouTube, Revver, Veoh </li></ul></ul><ul><li>Premium Content </li></ul><ul><ul><li>ABC, Fox, Hulu, NBC, HBO </li></ul></ul><ul><li>Web-Only Content and Channels </li></ul><ul><ul><li>Prom Queen, Lady Wasteland, NoGood.TV </li></ul></ul>
    11. 11. Internet Video Complexity Many Moving Parts – Everyone Has a Stake Content Owners Cable, DBS, Telco, ISP Operators Device Manufacturers Advertisers Internet Infrastructure Content Aggregators Internet Video
    12. 12. Massive Changes Means Opportunity <ul><li>Emergence of digital media and Internet TV places owners and distributors of video at the epicenter of change </li></ul><ul><li>Despite changes, content is still king </li></ul><ul><li>New opportunities exist for companies that can provide the right mix of premium, niche and long-tail content to the TV </li></ul><ul><li>Search and Discovery will be key </li></ul>
    13. 13. Business Models Still Largely Experimental <ul><li>Mix of free, subscription, rental, download to own, advertising supported. Some are proven, some are not </li></ul><ul><li>Each model is constantly changing and nothing is set in stone </li></ul><ul><li>Just look at AppleTV and NBC </li></ul><ul><ul><li>All paid content pulled and moved to an advertising model on Hulu.com </li></ul></ul>
    14. 14. User-generated content is coming to TV Current TV MTV Flux
    15. 15. <ul><li>LOW Quality of Experience (QoE) </li></ul><ul><li>HIGH Total Cost of Delivery (TCoD) </li></ul><ul><li>NO scalability to millions of simultaneous viewers </li></ul><ul><li>HIGH demand and LOW availability of more than “snack” video – Demand for long form, “live,” and HD </li></ul>Internet Video as a Business has been Negatively Impacted by:
    16. 16. Consumer Expectations Increasing <ul><li>Improvements in streaming delivery </li></ul><ul><ul><li>ABC, FOX, CW, and others now streaming long-form video with few negative events </li></ul></ul><ul><ul><li>Larger video sizes, higher quality encodes </li></ul></ul><ul><li>Online video reaching maturity </li></ul><ul><li>Real market </li></ul><ul><ul><li>Broadcasters recognized for moving online streaming from “interesting marketing experiment” to rational business </li></ul></ul><ul><ul><li>Crowded space with vendors and integrators </li></ul></ul><ul><li>Recognized convergence </li></ul><ul><ul><li>Consumers want TV-like experience as measured by responsive, quality video </li></ul></ul><ul><ul><li>Consumers want source and device interoperability </li></ul></ul><ul><ul><li>Promise of lifestyle viewing delivered through substitute technologies </li></ul></ul>
    17. 17. Phenomenal Growth <ul><li>Consumers are spending more time online and watching more video online. Has become a more accepted medium </li></ul><ul><li>In 6 months from about 2 hours per month to almost 3 hours </li></ul><ul><li>In 2007 almost a billion more videos were viewed in November than in June </li></ul><ul><li>Veoh grows from 2.5 million users per month at beginning of year to 21.5 million unique by end of year. Growth of over 760% </li></ul><ul><li>Pick any stat…it all points toward massive growth of online video content and viewership </li></ul>
    18. 18. Predictions
    19. 19. Prediction #1 <ul><li>Internet TV / Broadband video will evolve away from PC-centric model. Video to the TV is where its at! </li></ul>
    20. 20. Prediction #2 <ul><li>Internet video will not kill broadcast / cable TV </li></ul><ul><li>It will force content owners and operators to evolve to new realities and embrace broadband video </li></ul>
    21. 21. Prediction #3 <ul><li>Non-PC devices will account for almost 20% of all Internet Video accesses by 2012 </li></ul><ul><ul><li>Networked Digital TVs, Game Consoles and Operator-deployed STBs and Mobile Devices will lead the way </li></ul></ul>
    22. 22. Prediction #4 <ul><li>Standalone DMA / STBs like AppleTV and VUDU will remain niche players </li></ul>
    23. 23. Prediction #5 <ul><li>Over 30% of streaming Internet video traffic will be at HD resolution (720p) by 2012 </li></ul>
    24. 24. Prediction #6 <ul><li>TiVO will be the comeback kid </li></ul>
    25. 25. Prediction #7 <ul><li>Internet Video will command a growing portion of overall ad revenue. Will pull dollars away from traditional TV advertising as audiences fragment </li></ul>
    26. 26. Prediction Analysis
    27. 27. Prediction #1: Internet Will Evolve Away From PC-Centric Model <ul><li>First let’s do the reality check – still will be 100’s of millions of users </li></ul><ul><li>But as an experience it is </li></ul><ul><ul><ul><li>solitary </li></ul></ul></ul><ul><ul><ul><li>single user </li></ul></ul></ul><ul><ul><ul><li>lean forward </li></ul></ul></ul><ul><li>• To progress it must become </li></ul><ul><ul><ul><li>social </li></ul></ul></ul><ul><ul><ul><li>friends and family </li></ul></ul></ul><ul><ul><ul><li>lean-back </li></ul></ul></ul>
    28. 28. Not the Right Experience
    29. 29. The Right Experience
    30. 30. Consumer Want TV Connected to Internet “ Would you like to have your HDTV connected to the Internet?” Source: S2 Data Corporation Yes No 92.4% 7.60%
    31. 31. Everyone Wants to Get to the TV <ul><li>Media Center Extenders </li></ul><ul><li>Digital Media Adapt ers </li></ul><ul><li>Broadband Set-top Box </li></ul><ul><li>Broadband-Enabled Game Console </li></ul><ul><li>Networked Television </li></ul>
    32. 32. Why Do People View iTV on the PC? <ul><li>Because the vast majority of the content they can get on the PC is not available on the TV </li></ul>
    33. 33. Consumer’s View of TV is Changing <ul><li>Video 1.0 </li></ul><ul><li>Linear Broadcast </li></ul><ul><li>Limited content </li></ul><ul><li>Few streams </li></ul><ul><li>Single device </li></ul><ul><li>One size fits all content </li></ul><ul><li>Scheduled viewing </li></ul><ul><li>Video 2.0 </li></ul><ul><li>Personalized, On Demand </li></ul><ul><li>U nlimited content </li></ul><ul><li>Time and Place shifting </li></ul><ul><li>Multiple devices </li></ul><ul><li>Interactive content </li></ul>
    34. 34. Prediction #2: Internet TV Will Not Kill Broadcast TV
    35. 35. Pay-TV and FTA Subscribers are Growing Source: X Media Research
    36. 36. Internet Enhances TV, Does Not Replace <ul><li>Wasn’t eCommerce supposed to kill off the whole retail sector once and for all? </li></ul><ul><li>The Internet fosters closer ties with audience </li></ul><ul><li>Broadcast is how we discover new programming and how we discover new Internet sites </li></ul><ul><li>Major network TV shows marketed as events </li></ul><ul><ul><li>Lost or Heroes direct to Internet would have much smaller audience </li></ul></ul><ul><li>Broadcast (cable, satellite, OTA) is far more efficient means to reach large audiences </li></ul><ul><ul><li>30M concurrent viewers of American Idol over the Internet hasn’t been possible </li></ul></ul>
    37. 37. Internet Video Helps Re-Discover TV 29.2 million views within first month 3 of the top 25 YouTube videos Now there are now over 62 million Subscribers to the CBS Channel on YouTube “ CBS is learning about its audience as never before” Quincy Smith, President, CBS Interactive
    38. 38. So What’s the Problem?
    39. 39. Internet Video is Cannibalizing Some TV <ul><li>In the United Kingdom traditional broadcasters have seen their share of television viewing sliding. Channel 4 has seen its share of viewing fall by almost 12% over the year, while Five has fallen by nearly 10%. BBC One and Two are also down by 3%, while ITV dropped nearly 2%. </li></ul><ul><li>Veoh reports that 40% of viewing occurs during ‘Prime-time’ </li></ul><ul><li>If we continue to do business assuming people will watch television as they always have,&quot; said NBC's Wurtzel, &quot;it's a dead-end game.&quot; </li></ul>
    40. 40. TV Ad Dollars Are Under Threat <ul><li>Fragmented audiences </li></ul><ul><li>Time-shifting reduces relevance </li></ul><ul><li>Fast-forward button </li></ul><ul><li>New media stealing eyeballs </li></ul>
    41. 41. Ad Market Breakdown 2007 Source: X Media Research
    42. 42. Prediction #3: Non-PC Devices Will Account for Almost 20% of all Internet Video Accessed by 2012 <ul><li>Networked Digital TVs, Game Consoles and Operator-deployed STBs and Mobile Devices will lead the way </li></ul>
    43. 43. Gating Factors <ul><li>Accessing Internet Video on the TV has not been without problems </li></ul><ul><ul><li>Few devices have been flexible for both “walled garden” & “open” services </li></ul></ul><ul><ul><ul><li>Able to upload new software and codec technology </li></ul></ul></ul><ul><ul><ul><li>And have massive power </li></ul></ul></ul><ul><li>Disparate applications and technologies </li></ul><ul><ul><li>The format wars… </li></ul></ul><ul><ul><ul><li>WM9, Flash, DivX and so on </li></ul></ul></ul><ul><ul><li>DRM (Digital Rights Management) issues </li></ul></ul><ul><li>Content wasn’t available on other platforms </li></ul>
    44. 44. Key Factors and Trends Bearing on Internet Video on the TV <ul><li>Broadband penetration </li></ul><ul><li>Home networking penetration </li></ul><ul><li>New compression standard: H.264/AVC </li></ul><ul><li>Internet connected set-top-boxes and game consoles </li></ul><ul><li>Changes in perspective of content rights holders </li></ul><ul><li>TV Quality experience becoming possible </li></ul><ul><li>Device manufacturers becoming content aggregators…or partnering directly </li></ul><ul><li>Middleware getting better – Greater synergy between PC and CE for configuration of services </li></ul><ul><li>What about OCAP and CableCARD? </li></ul>
    45. 45. nDTVs Already on the Market
    46. 46. acTVila.com – Big in Japan!
    47. 47. Internet Video on the TV – Its What Consumers Want! “ Question: If your TV were connected to the Internet, what would be the most important content?” Source: S2 Data Corporation Answers High Interest Pictures / Images 57.3% Music 38.0% Video 73.6%
    48. 48. Will Consumers Pay For nDTVs? <ul><li>Over 55% of consumers surveyed would pay more to have their digital TVs connected directly to the Internet </li></ul>
    49. 49. nDTV Market Forecast Millions of Units Source: X Media Research
    50. 50. Key Stats <ul><li>By 2012 Networked DTVs will account for over 15% of total TVs sold </li></ul><ul><li>By 2012 more than 70 million TVs will be directly connected to the Internet </li></ul>
    51. 51. Gaming Consoles <ul><li>Game consoles fit all the profiles of a successful Internet video delivery platform </li></ul><ul><ul><li>Powerful processor </li></ul></ul><ul><ul><li>Storage </li></ul></ul><ul><ul><li>Location </li></ul></ul><ul><ul><li>Connectivity </li></ul></ul><ul><ul><li>Broadband Content Services </li></ul></ul><ul><ul><li>Social Media Platform </li></ul></ul><ul><li>High broadband attach rate </li></ul>
    52. 52. Gaming Consoles Mix Premium and UGC
    53. 53. Connected Consoles on the Rise <ul><li>Over 141 Million connected consoles by 2012 </li></ul>
    54. 54. The Mobile Phone
    55. 55. Mobile Handset Factors <ul><li>Non-Messaging data usage is over 50% now…approaching 60% </li></ul><ul><li>Storage capacity rising – could be up to 5 GB soon </li></ul><ul><li>Screen resolution and processing getting better </li></ul><ul><li>Application/Media Processors </li></ul><ul><li>Mobile TV (Unicast and Broadcast) gaining traction </li></ul><ul><ul><li>At very least it is generating awareness </li></ul></ul><ul><ul><li>Over 160 million subscribers by 2012 </li></ul></ul>
    56. 56. Mobile Internet Usage Increasing <ul><li>Adding at least 1 billion more subscribers by 2012 </li></ul><ul><li>Almost 10% of all mobile subscribers will subscribe to high speed data plans like EVDO / UMTS </li></ul><ul><li>Developing a Better Web Browsing Experience Matters </li></ul><ul><li>Anecdotal evidence that iPhone owners browse more </li></ul><ul><ul><li>Combination of better experience, type of user, device capabilities </li></ul></ul>
    57. 57. The Set Top Box - The Right Platform? <ul><li>In the right place </li></ul><ul><ul><li>Next to the TV, where people need their media </li></ul></ul><ul><li>Always on, always available </li></ul><ul><ul><li>Doesn’t get turned off like a PC </li></ul></ul><ul><ul><li>Doesn’t leave the house like a mobile phone </li></ul></ul><ul><li>Has both storage and a display </li></ul><ul><li>Service Providers offer installation and maintenance </li></ul><ul><li>Better for long-form content than PC </li></ul>
    58. 58. Synergies Between iTV and Pay TV? <ul><li>Cable / Sat have a weakness in interactivity </li></ul><ul><li>Consumers will place a premium on convenience </li></ul><ul><li>Internet TV content complements Channel lineup </li></ul><ul><ul><li>Particularly FTA / DTT countries like Europe </li></ul></ul><ul><ul><li>Already retail and hybrid STB model </li></ul></ul><ul><li>Quality of service </li></ul><ul><li>Niche and long-tail availability </li></ul><ul><li>Comprehensive search and discovery </li></ul>
    59. 59. Partnering Makes Sense <ul><li>Cable and IPTV providers typically have VoD libraries in the dozens or hundreds of Titles…getting bigger </li></ul><ul><li>They can benefit by partnering with content aggregators to offer more niche / long-tail </li></ul><ul><li>Content is already going over their network anyway </li></ul><ul><li>Additional ARPU? </li></ul><ul><ul><li>Certainly on VoD </li></ul></ul><ul><ul><li>Maybe on ads (already being done with some VoD content) </li></ul></ul><ul><ul><li>Pay model for Internet TV? </li></ul></ul><ul><ul><li>Can they get in on the online video download / rental action? </li></ul></ul>
    60. 60. What Will STBs Need To Have? <ul><li>Interfaces to Multiple Content Providers </li></ul><ul><ul><li>Multiple players </li></ul></ul><ul><li>Support for Multiple Media Formats </li></ul><ul><ul><li>Ability to update </li></ul></ul><ul><li>Transcoding </li></ul><ul><li>Intuitive Content Management </li></ul><ul><li>Quality of Service </li></ul><ul><li>Networking technology built in </li></ul>
    61. 61. What Does Sling Acquisition Mean? <ul><li>EchoStar purchases Sling for $380 Million </li></ul><ul><li>Anyone else think that was for the installed base of a couple hundred thousand Sling users? </li></ul><ul><li>Technology will be integrated in EchoStar STB business </li></ul><ul><ul><li>Brings place-shifting to mainstream </li></ul></ul><ul><ul><li>Adds social media element with Clip and Sling </li></ul></ul><ul><li>Time-Shifting wasn’t mainstream until operator adoption </li></ul>
    62. 62. Retail and OCAP <ul><li>CableCARD impact is minimal </li></ul><ul><li>Retail markets differ across geographies </li></ul><ul><ul><li>US vs. Europe vs. Asia </li></ul></ul><ul><li>Can OCAP save the day? </li></ul>
    63. 63. Enter The Hybrid STB <ul><li>Hybrid solutions let operators deliver best of both worlds </li></ul><ul><ul><li>Live linear programming over cable / sat / telco network </li></ul></ul><ul><ul><li>Content over IP broadband connection </li></ul></ul><ul><li>Increased content </li></ul><ul><li>Community / Social networking component </li></ul><ul><li>Greater personalization </li></ul>
    64. 64. Connected / Hybrid STB Forecast Source: X Media Research Millions of Units
    65. 65. Prediction #4: Standalone STBs Like Apple TV, VUDU and DMAs Will Remain Niche Players <ul><li>DMAs have been around for years, but have never broken the 1 million unit mark…not even close </li></ul><ul><ul><li>Lack of marketing </li></ul></ul><ul><ul><li>Lack of big players </li></ul></ul><ul><li>Plagued by lack of consumer awareness </li></ul><ul><li>No real functionality for access to Internet video without PC </li></ul><ul><li>Despite proliferation of home networks still difficult to set up for most users </li></ul>
    66. 66. What About Apple TV?
    67. 67. Apple TV Market Will Remain Small <ul><li>Huge buzz surrounding Apple TV launch. Now Steve Jobs describes it as a “hobby” </li></ul><ul><li>Content remains relatively limited </li></ul><ul><li>High barrier to entrance - $299 - $399 </li></ul><ul><li>Pay for the privilege of paying does not resonate with consumers </li></ul><ul><li>NBC pulls content…comprised about 40% of iTunes video sales </li></ul><ul><li>Media companies seem unwilling to let any one company dominate video market like iTunes in music </li></ul>
    68. 68. What About VUDU?
    69. 69. Digital Media Adapter/iSTB Forecast Millions of Units Source: X Media Research
    70. 70. CE Devices <ul><li>Important to stay realistic about CE </li></ul><ul><li>Unless you are the iPOD, market share and audience are relatively small </li></ul><ul><li>Whole hosts of new hybrid device categories are going to be created… </li></ul><ul><ul><li>IP connectivity and mix of functionality changes device classification </li></ul></ul><ul><ul><li>CE manufacturers will experiment with Frankenstein devices </li></ul></ul><ul><ul><li>What is a DVDDMAVODSTB? </li></ul></ul>
    71. 71. Everyone Wants to Be in CE <ul><li>The global CE market is huge </li></ul><ul><li>Wireless more frequently integrated </li></ul><ul><li>IP connectivity becoming key for content and social media / content sharing </li></ul><ul><li>Greater integration of third party applications such as players and services in to CE </li></ul><ul><ul><li>At least that’s the goal of almost every content aggregator </li></ul></ul>
    72. 72. Internet Video Access Forecast Source: X Media Research Millions of Units
    73. 73. Prediction #5: Over 30% of Internet Video Traffic Will Be at HD Resolution <ul><li>What is HD streaming? </li></ul><ul><li>Do we need HD streaming? </li></ul><ul><li>Are we ready for HD streaming? </li></ul><ul><li>Real-world examples of HD Streaming </li></ul>
    74. 74. What is an HD Stream? <ul><li>Difference between HD broadcast and HD streaming </li></ul><ul><li>HD is determined by the resolution – 1280 x 768 </li></ul><ul><li>Compression required for Internet delivery </li></ul><ul><li>Minimum HD reached at 750kbps to 1.5mbps </li></ul><ul><li>Requires hardware acceleration to render video </li></ul><ul><li>Requires decision making by the player client </li></ul>
    75. 75. Are we ready for HD streaming? <ul><li>Compression technologies are improving rapidly </li></ul><ul><li>Costs and Economics are improving </li></ul><ul><ul><li>HD streaming is not practical using standard CDNs </li></ul></ul><ul><ul><li>New approaches are using standard HTTP web servers </li></ul></ul><ul><li>Broadband speeds are increasing </li></ul>
    76. 76. Broadband Subscriber and Speed Growth <ul><li>By 2012 over 500 million broadband subscribers </li></ul><ul><li>By 2012 over 80% of total Internet users will have download speeds greater than 3 Mbps </li></ul><ul><li>By 2012 over 30% of total Internet users will have download speeds approaching 10 Mbps </li></ul>
    77. 77. Is There a Business Justification? <ul><li>Increasing audience by unique viewing experience in addition to unique premium content </li></ul><ul><li>Provide a premium venue for advertisers in a rapidly growing delivery channel </li></ul><ul><li>Deliver improved metrics and accountability to advertisers </li></ul><ul><ul><li>Replace sampling with actual viewing statistics </li></ul></ul><ul><ul><li>Longer viewing times delivers more data </li></ul></ul><ul><li>Measurable and instrumented delivery environment </li></ul><ul><ul><li>What impact does HD have on my bottom line? </li></ul></ul>
    78. 78. With Video, Quality Matters: NTT trial <ul><li>Two month Set Top Box trial </li></ul><ul><ul><li>Now in production deployment </li></ul></ul><ul><li>300 subscribers in the Tokyo area </li></ul><ul><li>FTTH (48%), ADSL (52%) </li></ul><ul><li>Service: Live & VOD </li></ul><ul><li>Format:MPEG2 (6 Mbps / 3 Mbps) </li></ul><ul><li>100 titles: movies, music, animation (30 - 120 mins) </li></ul><ul><li>Blind test </li></ul><ul><ul><li>50% DF Raptor FEC </li></ul></ul><ul><ul><li>50% No-FEC </li></ul></ul><ul><li>User access definition </li></ul><ul><ul><li>Watched for at least 3 minutes </li></ul></ul>
    79. 79. With Video, Quality Matters: NTT Results Viewing Minutes per Access Source: NTT Trials. Blind test over wired IP infrastructure. Averaged over user accesses of more than 3 minutes
    80. 80. The Move Networks Solution <ul><li>Create compelling and innovative online video experiences </li></ul><ul><ul><li>Place focus on customer content by putting it in the best light </li></ul></ul><ul><ul><ul><li>HD or high quality, no stalling and buffering, advanced controls </li></ul></ul></ul><ul><ul><li>Provide an adaptive delivery protocol capable of HD streaming </li></ul></ul><ul><li>Deliver video at low costs </li></ul><ul><ul><li>No specialized media servers </li></ul></ul><ul><ul><li>Leverage traditional Web server architecture, caching, and other cost-saving technologies </li></ul></ul><ul><li>Provide a scaleable solution </li></ul><ul><ul><li>Deliver millions of concurrent streams </li></ul></ul>
    81. 81. Move is Working <ul><li>Adding over 1 million unique downloads of the Move Networks player each month </li></ul><ul><ul><li>Even with writers strike still getting more than a million new a week of Move Player. </li></ul></ul><ul><li>Over 30 Million deployed by end of 2007 </li></ul><ul><li>Average viewing time of more than 50 minutes per session </li></ul><ul><li>ABC is streaming 4 of their shows in HD </li></ul><ul><li>YouTube is jumping on board the quality bandwagon </li></ul>
    82. 82. Required Platform Elements <ul><li>Quality </li></ul><ul><ul><li>Quick start times, continuous viewing, high perceived resolution </li></ul></ul><ul><ul><li>Control at point of delivery to provide QoE (Quality of Experience) </li></ul></ul><ul><ul><li>Provide aggregate QoS (Quality of Service) over open Internet </li></ul></ul><ul><li>Scalability </li></ul><ul><ul><li>Leverage Web standards for infrastructure and protocol </li></ul></ul><ul><ul><li>Ease of network expansion </li></ul></ul><ul><ul><li>Scale to millions of simultaneous viewers </li></ul></ul><ul><li>Profitability </li></ul><ul><ul><li>Increase revenue opportunities (viewing time and viewing sessions) </li></ul></ul><ul><ul><li>Lower costs associated with delivery </li></ul></ul><ul><ul><li>Measure and adjust video features and performance attributes </li></ul></ul>
    83. 83. SD vs HD Streaming Forecast Source: X Media Research
    84. 84. HD Streaming Enables New Business Models <ul><li>Well known fact that number of HDTVs is increasing </li></ul><ul><li>Highly compressed and low resolution web video is not going to play well on the TV unless quality improves </li></ul><ul><li>HD enables more long-form content to be streamed to multiple devices enabling new business models </li></ul><ul><li>Intelligent players will be embedded into more devices </li></ul><ul><li>HD or high-quality enables better user experience with live events </li></ul>
    85. 85. Live Streaming in 2008 <ul><li>2008 things will shake out...Live events will be the true test </li></ul><ul><li>This month in January ESPN is going to be live streaming some X Games content </li></ul><ul><li>Live streaming of the Olympics will happen. </li></ul><ul><ul><li>Move will be working with several partners and streaming to over 16 countries </li></ul></ul>
    86. 86. Prediction #6: TiVo Will Be The Comeback Kid <ul><li>Pop Quiz: How many of us had written TiVO’s epitaph? </li></ul><ul><li>Hardware sales have not been outstanding </li></ul><ul><li>Virtually any pay-TV subscriber can get “TiVO” </li></ul><ul><ul><li>The TiVO concept has been cloned to a degree </li></ul></ul><ul><li>Silver lining is: Cable / Sat / Telco homegrown DVR software and EPG are dismal </li></ul>
    87. 87. Why TiVO Will Make a Comeback <ul><li>Like AppleTV, VUDU and all other standalone STB’s TiVO has been limited by hardware costs and additional dollars for service </li></ul><ul><li>TiVO interface, content search and discovery and content partnerships are compelling </li></ul><ul><li>Software model and partnerships with operators will yield profits and scale more quickly than hardware + service model </li></ul><ul><li>TiVO is really the first to combine premium content access with Internet content…direct to the TV </li></ul><ul><li>Moving beyond STB to PC and CE devices </li></ul><ul><li>“ Unbreaking” TV Advertising </li></ul>
    88. 88. Content Integration <ul><li>Newer TiVOs support popular video formats including MPEG4 (H.264), QuickTime and WMV </li></ul><ul><li>Has the advantage of providing a single method of search and discovery of network television and content on the Internet </li></ul><ul><li>People just want content…don’t really care how it is delivered </li></ul>
    89. 89. Demographics Source: exclusive consumer survey conducted by Orb Networks for iTVCon on the general population in June and July 2007 – basis of 231 respondents
    90. 90. TV TODAY When you think “TV Today”, what is most important to you: TV image quality Programming choices (thousand channels vs. a dozen…)
    91. 91. The promise of TOMORROW’s TV With TV being available on many, many screens tomorrow (i.e. in the coming few years), what will be most important to you: Being able to pick only what you want – even if the quality is not HD, or top notch Watching top notch quality TV, all the time but only from a choice of TV programs packaged by you cable or satellite company?
    92. 92. How Does a TiVO Comeback Impact iTV? <ul><li>Rhapsody and Unbox are just the beginning </li></ul><ul><li>TiVO has a number of content partners lined up </li></ul><ul><li>Will provide ‘proof-of-concept’ for operators integrating Internet TV into mainstream services </li></ul>
    93. 93. Prediction #7: Internet Video Will Command an Increasing Portion of Ad Revenue. <ul><li>Overall Internet advertising dollars will grow </li></ul><ul><li>However…will also pull away some ad dollars from Television </li></ul>
    94. 94. Internet Video is Fragmenting Viewing Audiences <ul><li>More content choices = more audience and content fragmentation = more targeted advertising </li></ul><ul><li>Advertisers will sacrifice greater reach for more targeted audiences </li></ul><ul><li>Used to pay premium for reach…now will pay premium for target audiences </li></ul><ul><li>Increased relevance of ads is the result </li></ul>
    95. 95. Ad Skipping is Leading Advertisers to Change <ul><li>TiVO / PVR have demonstrated that consumers will skip ads…(reports are in the 70% range) </li></ul><ul><li>Advertisers are losing trust in television advertising because they do not know who watches ads and who the audience really is </li></ul><ul><li>Complete lack of interactivity with advertising on TV </li></ul><ul><li>Ad skipping measurement is getting better, but still does not compare to the web </li></ul>
    96. 96. Broadband Video Changing Traditional Models <ul><li>Online video offerings increase media fragmentation </li></ul><ul><li>Consumers have more choices </li></ul><ul><ul><li>Consumer can choose from millions of videos rather than dozens of linear channels </li></ul></ul><ul><li>Broadband video is changing the way consumers view content </li></ul><ul><ul><li>Video mashups, etc. </li></ul></ul><ul><li>Online video advertising will look more like online advertising than broadcast video advertising </li></ul><ul><ul><li>Based on true delivered CPM </li></ul></ul><ul><ul><li>Detailed reporting on ad delivery with corresponding interaction metrics and demographic information (where available) </li></ul></ul>
    97. 97. iTV Advertising is Good For Advertisers and Consumers <ul><li>TV audiences are evolving </li></ul><ul><li>Still growing, but data shows younger generation is spending less time on TV </li></ul><ul><li>Advertisers can show fewer ads…they can not be skipped </li></ul><ul><li>Measurement is instantaneous </li></ul><ul><li>Advertisers can adapt quickly </li></ul>
    98. 98. Fewer Ads Can Generate More Revenue <ul><li>“ We are showing fewer ads per search on a much higher quality and much better monetization. The targeting and the technical work that we are doing is producing a better return for advertisers, better revenue for us and even fewer advertisements on a comparison basis.” Eric Schmidt Google CEO Earnings Analyst Call January, 2007 </li></ul>
    99. 99. Internet Video Advertising Growth <ul><li>From under $1 Billion in 2007 </li></ul><ul><li>To over $5.5 Billion in 2012 </li></ul>
    100. 100. Where to Invest? What is Needed?
    101. 101. What Will Make TV Better Experience? <ul><li>Personalization </li></ul><ul><li>Interactivity </li></ul><ul><li>Content Search and Discovery </li></ul><ul><li>Social networking </li></ul><ul><li>Targeted advertising </li></ul><ul><li>Enabling technologies </li></ul>
    102. 102. Conclusions

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