Motorola's Strategy for Media Distribution


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This presentation is the result of a 24 hour case competition sponsored by Boston University and Motorola. The question was, "how can Motorola play a leading role in the future of digital media?" Our presentation suggest that they leverage their position in the set-top box market to make the livingroom the center of content distribution.

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Motorola's Strategy for Media Distribution

  1. 1. Team ROKR Garret Dodge Damian Fernandez-Lamela Ryan Hudson Bala Venkatrao March 31, 2007
  2. 2. Seamless Mobility: Enabling Cool Experiences Cable TV/Music System Upstairs TV IP Set-top box Consuming content at any time in any place Wireless Carrier
  3. 3. How can Motorola play in the media delivery ecosystem?
  4. 4. The Video Long Tail “ Blockbuster: The top 100 titles account for 69.4% of sales. Netflix: The top 100 titles account for 38.8% of sales. “
  5. 5. A New Opportunity Peer IP STB Peer IP STB Create a P2P media distribution network TV/Music System Upstairs TV Home IP STB Wireless Carrier
  6. 6. The Video Long Tail
  7. 7. A Global P2P Content Distribution Platform <ul><li>Source content from anywhere </li></ul><ul><ul><li>Displaced local content </li></ul></ul><ul><ul><li>Sporting events </li></ul></ul><ul><ul><li>Niche content </li></ul></ul><ul><ul><li>Consumers </li></ul></ul><ul><li>Distributed to any platform </li></ul><ul><ul><li>TV </li></ul></ul><ul><ul><li>Phone </li></ul></ul><ul><ul><li>Computer </li></ul></ul>
  8. 8. Set Top Box P2P Architecture
  9. 9. Value Proposition for Consumers <ul><li>Access to interesting but currently unavailable content </li></ul><ul><li>“MyChannel” user generated content broadcasted to friends and family </li></ul><ul><ul><li>Video, digital picture slideshow, tvblog </li></ul></ul><ul><li>Easy to use and makes content readily available on the preferred large screen viewing platform </li></ul>
  10. 10. Value Proposition for Content Providers <ul><li>Professional </li></ul><ul><ul><li>Provides a new platform to reach millions of consumers </li></ul></ul><ul><ul><li>New revenue stream from premium subscription and/or targeted advertising network </li></ul></ul><ul><ul><li>Information about viewers </li></ul></ul><ul><li>Amateur/Consumer </li></ul><ul><ul><li>Novel distribution platform to reach previously unreachable audiences </li></ul></ul><ul><ul><ul><li>Friends and family photo/video channel </li></ul></ul></ul><ul><ul><ul><li>Bloggers </li></ul></ul></ul>
  11. 11. Value Proposition for Operators <ul><li>Cable </li></ul><ul><ul><li>Premium fees for currently unavailable content </li></ul></ul><ul><ul><ul><li>Monthly subscriber packages </li></ul></ul></ul><ul><ul><ul><li>A la carte viewing </li></ul></ul></ul><ul><ul><li>Increase average revenue per user, by co-sharing revenue opportunities with Motorola </li></ul></ul><ul><ul><li>Opportunity to participate in monetization model through ad insertion </li></ul></ul><ul><li>Cellular </li></ul><ul><ul><li>Drive adoption of premium data packages </li></ul></ul><ul><ul><li>Increase usage of photo and video capability </li></ul></ul>
  12. 12. Value Proposition for Motorola <ul><li>Increased sales of premium STBs driven by cable operator desire to sell long tail content packages (higher ARPU) </li></ul><ul><li>Control of a valuable P2P content distribution network </li></ul><ul><ul><li>Monetize through revenue share with cable operators </li></ul></ul><ul><ul><li>Monetize through ad network partnership </li></ul></ul><ul><li>Extend the vision of seamless mobility to include content creation drive premium mobile device sales </li></ul>
  13. 13. DRM <ul><li>Closed P2P system controls content accessibility across network </li></ul><ul><li>Permissions managed at STB level </li></ul><ul><li>Limited piracy exposure in user content </li></ul><ul><ul><li>User generated content submission tied closely to authenticated cable accounts </li></ul></ul><ul><li>Limitations </li></ul><ul><ul><li>Apple DRM doesn’t play well with others </li></ul></ul>
  14. 14. Revenue Potential Source: 2006 Annual Report/eMarketer 4691.5 2551.2 1563.8 815.6 401.9 Total Revenue ( $ millions) 2816.1 1200.3 316.5 18.0 0 Service Revenue ($ millions) 60 48 24 6 0 Revenue per subscriber ($) 0.35 0.25 0.15 0.05 0 % STB Using P2P Services 1875.4 1350.9 1247.3 797.6 401.9 STB Revenue ($ millions) 80 80 80 80 40 Profit on Unit (20%) ($) 23 17 16 10 10 Box Upgrades (millions) 134.1 100.025 87.925 59.9 50.24 Total Motorola Boxes (millions) 447 400.1 351.7 299.5 251.2 World Broadband Households (millions) 2010 2009 2008 2007 2006  
  15. 15. Competition <ul><li>Is Apple a game changer? </li></ul><ul><li>Yes. </li></ul><ul><ul><li>Accelerates innovation – and partner’s willingness to work with Motorola </li></ul></ul><ul><ul><li>iPhone: will be adopted and push advanced capabilities to the mainstream (at a high price point) </li></ul></ul><ul><ul><li>Leverage on iPod / iTunes </li></ul></ul><ul><li>And no… </li></ul><ul><ul><li>AppleTV: opens segment to iPod enthusiasts but limited broader appeal </li></ul></ul>
  16. 16. Competition <ul><li>Microsoft </li></ul><ul><ul><li>Xbox as STB, Windows media center PC’s, Vista </li></ul></ul><ul><li>Cisco </li></ul><ul><ul><li>Scientific-Atlanta acquisition </li></ul></ul><ul><ul><li>Likely approach: WiFi/WiMax phone network </li></ul></ul><ul><li>Other players: Sony, Samsung, Slingbox, etc. </li></ul><ul><li>FCC regulation changes the STB game in July 2007 </li></ul><ul><ul><li>First generation 3rd party STBs will have limited functionality </li></ul></ul>
  17. 17. P2P/Online Competition <ul><li>Joost </li></ul><ul><ul><li>Founders of Kazaa and Skype </li></ul></ul><ul><ul><li>P2P video distribution platform (PC) </li></ul></ul><ul><li>Google/YouTube </li></ul><ul><li>News Corp / NBC </li></ul><ul><li>MobiTV </li></ul><ul><ul><li>Computer/Cell phone distribution </li></ul></ul><ul><ul><li>1+ million subscribers at $10/month </li></ul></ul>
  18. 18. Implementation <ul><li>Customers </li></ul><ul><ul><li>Partnerships with cable operators like Comcast and demand for HD STB upgrades will enable rapid deployment of P2P STB network </li></ul></ul><ul><li>Hardware and Software </li></ul><ul><ul><li>Uses IP STB technology through Kreatel acquisition </li></ul></ul><ul><ul><li>Develop real time P2P video technology in-house or acquire P2P start-up based on university research </li></ul></ul><ul><li>Partner for Initial Content </li></ul><ul><ul><li>Content network partnerships (i.e. Brightcove, Yahoo) </li></ul></ul><ul><ul><li>User generated (i.e. Flickr) </li></ul></ul>
  19. 19. Assumptions <ul><li>The company will be able to secure the partnerships with carriers and cable co. </li></ul><ul><li>Motorola can successfully create the technology layer and it is possible to enforce the IP protection </li></ul><ul><li>Feasibility of deals for copyright management with content providers </li></ul><ul><li>FCC won’t block the deployment and the new device will be compliant with the new FCC rules regarding third party providers of set top boxes </li></ul>
  20. 20. Why Motorola? Why Now? <ul><li>Motorola is uniquely positioned to address this high margin market opportunity </li></ul><ul><ul><li>Motorola alone has position in both phone and STBs </li></ul></ul><ul><ul><li>Operator/carrier partners have revenue motivations for pushing extended seamless mobility framework </li></ul></ul><ul><ul><li>Competitive pressure from Apple entry will push partners to seek alternatives </li></ul></ul><ul><ul><li>Multi-billion dollar, high margin, recurring revenue opportunity </li></ul></ul>
  21. 21. Questions?
  22. 22. Appendix STB Growth Driven by HD & Broadband Adoption
  23. 23. References <ul><li>Motorola Mobile TV solutions, Connect Home, Service provider </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><li>Sling media is currently offering a product that provides some functionalities </li></ul><ul><ul><li> </li></ul></ul><ul><li>Sony Freeview microsite </li></ul><ul><ul><li> </li></ul></ul><ul><li>Cisco acquired Scientific Atlanta </li></ul><ul><ul><li> </li></ul></ul><ul><li>Microsoft TV IPTV Edition and Microsoft phone </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li> </li></ul></ul><ul><li>Nokia licenses Spyglass web technology for digital set-top boxes </li></ul><ul><ul><li> </li></ul></ul>