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7 predictions about the
future of media

Bl INTELLIGENC

P-'i; v~. eir3. l"<2': i iv—r: .ei; ::li ms i‘.3'"ll‘ : ;lal. a, ...
1. DIGITAL WILL INHERIT THE EARTH

7 Bl INTELLIGENCE
DIGITAL MEDIA CONSUMPTION IS GROWING. 
EVERYTHING ELSE IS SHRINKING

US Consumer Media Consumption Share

2011 2012 2013 2...
And averages do not tell the

whole story. ..

BI INTELLIGENCE
THE SHIFT IS GENERATIONAL

Digital is Reaching The new Generation
Top 5 Media Mentions Among All Adults,  2013
Aged 75+
Ag...
THE FUTURE OF MEDIA IS THE TWO
GENERATIONS ON THE LEFT. ..

otal US Population by Age and Generation’,  millions

final mmm...
MILLENNIALS AND GEN-Z

- First digital native generation(s)

- Already 45% of population and largest share of earners

° P...
18-24 TV VIEWING DOWN ~30% IN 4 YEARS

Traditional TV* Viewing Trends Among 18-24 Year-Olds
Weekly time spent in Iloun,  b...
Meanwhile. ..

1 Bl INTELLIGENCE
DIGITAL MEDIA CONSUMPTION GROWING EVERY
YEAR,  ESPECIALLY MOBILE

Growth In Digital Media Time Spent

Desktop Mobile App M...
I. 'lILLEIINlALS CHECK THEIR PHONES
EVERY 10 MINUTES

2 BI INTELLIGENCE
My smartphone never leaves my side, 
night or day

87.0%

THEY KEEP THEM IN
REACH 24 HOURS A
DAY

Agree Disagree

Bl   Sou...
When I wake up,  the first thing I do Is reach for
my smartphone

80.0%

THEY CHECK THEM
FIRST THING IN THE
MORNING

Agree...
So here's a glimpse at the past, 

present,  and future of media. ..

BI INTELLIGENCE
THE PAST (~2000):  3% DIGITAL

100%
1 90%
3 80%
I 70% Smartphone
50% Computer/ laptop/ tablet
l 50% Radio
40% Print
30% W
...
THE PRESENT (~20’I5):  40% DIGITAL

Smartphone
Computer/ laptop/ tablet
Radio

Print

TV

0%
Bl   Source:  Business Inside...
THE FUTURE (~2030):  80%+ DIGITAL

I 100%
90%

80%
70% Smartphone

50% Computer/ laptop/ tablet

50% Radio
40% Print
30%
2...
2. SUBSCRIPTIONS FOR THE WIN! 

BI INTELLIGENCE
Remember when pundits said digital

content had to be free because no one
would ever pay for it? 

2 Bl INTELLIGENCE
BI INTELLIGENCE
STREAMING VIDEO SUBS CLIMBING FAST

Streaming Video Subscription Revenue
Us

ca
V1
3
E
.9
E

2014 2015E 2016E 2017E 2018E ...
STREAMING MUSIC SUBS CLIMBING FAST

Streaming Music Paid Subscribers
us

in
C
.9
ii

‘ 2014E 20155 2016E 2017E 2018E 20l9E...
EVEN "PRINT" SUBS CLIMBING FAST

New York Times Digital Revenue
Global

Subscriptions

Advertising

I I I I I I I’

‘ Q1 1...
The new pundit story is that there's

one right model — subs or ads

BI INTELLIGENCE
The truth is that both work,  as do a

la carte sales. 

BI INTELLIGENCE
Most media companies have dual

revenue streams. 

BI INTELLIGENCE
"FREEMIUM" IS OFTEN THE BEST APPROACH

Paid Digital Subscribers As % Of Total Digital Users

25%

5% 2%

0% T r I‘ m
Spoti...
3. (NATIVE) DIGITAL ADVERTISING WILL
CONTINUE TO THRIVE

A B1 INTELLIGENCE
The best definition of "native ads”. ..

BI INTELLIGENCE
"NATIVE ADS"

Ads that fit the way content and stories

in the medium are consumed

BI INTELLIGENCE
III

In digital,  ”search” and ”scro|  are the

dominant ways content is consumed

BI INTELLIGENCE
BI INTELLIGENCE

BEHOLD THE POWER OF NATIVE DIGITAL ADS

$25 - Digital Advertising Revenues
(Global)

$20
$15

$10

Billio...
"Read,  watch,  and listen’’ are also

digital formats. 

BI INTELLIGENCE
But the experience is different

than in legacy media. 

BI INTELLIGENCE
Native digital brand ads will increasingly

take advantage of the digital difference. 

I BI INTELLIGENCE
4. THE EXISTENTIAL CRISIS OF AD
BLOCKING WILL RESOLVE ITSELF — BUT
CAREFUL WHAT YOU WISH FOR

I BI INTELLIGENCE
AD BLOCK USAGE IS RISING

Adblock Monthly Active Users
In Millions

I ‘I ‘I ‘I ‘I ‘I ‘I ‘I ‘I ‘I ‘I I 'I

Ian1O Jun 10 Jan...
ESPECIALLY AMONG MILLENNIALS. ..

Share Of Global Internet Users Who Have Blocked Ads In The Past Month
(By Age)

55-64 17...
AND TECHIES

Ad-Block Usage Rates By Vertical
(Global)
Travel 5%

Finance 10%
Local 10%
Lifestyle 10%

Business
News
Sport...
There is a lot of self-interested finger-

pointing,  moralizing,  and rationalizing
going on — from all parties

BI INTEL...
ONE THING IS CLEAR. ..

If all ads are blocked,  most free

content will cease to exist. 

BI INTELLIGENCE
So what will happen? 

I BI INTELLIGENCE
Quality will improve! 

BI INTELLIGENCE
Publishers,  platforms,  and

advertisers will focus more on user
experience and choice

I BI INTELLIGENCE
People will choose to view ads

from and/ or subscribe to
publishers and platforms they like

BI INTELLIGENCE
These decisions will not all

be voluntary. 

I BI INTELLIGENCE
5. THE NEXT BIG PLATFORM IS. ..

BI INTELLIGENCE
As smartphones get mature and

boring,  everyone is hunting for the
next big platform. 

I BI INTELLIGENCE
Many candidates have been

suggested — glasses,  watches,  cars, 
virtual reality. ..

BI INTELLIGENCE
None of these will be the

next big platform. 

I BI INTELLIGENCE
Smart glasses flopped. 

BI INTELLIGENCE
Cars won't become media and

communications platforms — other
platforms will be used inside them. 

I BI INTELLIGENCE
VR is promising,  but it's

still too early. 

BI INTELLIGENCE
VR INSTALLED BASE STILL SMALL

Estimated Global Virtual Reality Headset Shipments

M
U1

IN! 
0

I-*
U1

U1 I-| 
O
Shipmen...
Complicated to use

Screen resolution low

AND EXPERIENCE
STILL LEAVES MUCH TO
BE DESIRED

Display often nausea-inducing

...
THE NEXT BIG PLATFORM WILL BE. ..

Messaging apps! 

BI INTELLIGENCE
Smartphone Activities Performed At Least Once Each Day

Accessing email

Text messaging

 Searching on the Internet
IS   S...
SOCIAL NETWORKS ARE BIG. ..

Monthly Active Users
Global

Top 4 Social Networking Apps

'0
: 
.9
S

r —r- 1 r- -I- -r -1- ...
BUT MESSAGING APPS ARE ALREADY BIGGER

Monthly Active Users
Global

Top 4 Social Networking Apps

Top 4 Messaging Apps

—r...
THE TOP 4 HAVE ALMOST 3 BILLION USERS

Monthly Active Users
Global,  03 2015

1000
800

600
400

B1    E SOIJFCC C:3mp: u“...
FACEBOOK OWNS TWO — PLUS INSTAGRAM

Facebook Messenger Monthly Active Users

In

E
.9
2

Bl INTELLIGENCE
SNAPCHAT 200 MILLION USERS AND COUNTING

Estimated Snapchat Monthly Active Users (Global)
In Millions

50

O

9
bp-

0.9»
...
YOU CAN DO EVERYTHING IN THESE APPS

Chat

Stickers

E-commerce

Payments

QR Codes

Bl INTELLIGENCE
GENERATION DIGITAL IS NUTS ABOUT THEM

% Of Smartphone Owners Who Use Messaging Apps
Us

Bl  Source:  Pew Research Center,...
6. TV NETWORKS WILL SOON FEEL
NEWSPAPERS’ PAIN

1 Bl INTELLIGENCE
TRADITIONAL TV HAS PASSED ITS PEAK

Households With Pay TV Vs.  Subscription OT1',  U. S.,  2010-2015E,  Millions

PayTV H...
PAY TV SUBSCRIBERS ARE SHRINKING

Cable TV Subscribers (US)
51.0

50.5

E 50.0

0
g 49.5

E
49.0
48.5

48.0
Q1 14 Q2 14 Q4...
VIEWERSHIP IS FALLING. ..

Primetime Household TV Ratings
6'2 Big 4 U. S. TV Networks Average

6.0
5.8
5.6

5.4

To
E
4:
‘...
N l; :_= .ir lhill’ ii is: 

ill ‘. l.L‘l"_l'5lL. L.. l'? ZI5I. L*l'ZIE
NETFLIX ~70 MILLION SUBS AND GROWING

Netflix Subscribers
Estimates in millions,  Global

International

(II
E
.2
Z

I I’ ...
HULU ~10 MILLION AND GROWING

Hulu Subscribers

Estimates in millions,  Global

Millions

;  2011 I 2012 . 
Bl   Source.  ...
AMAZON PRIME ~45 MILLION AND GROWING

Amazon Prime Members
Estimates in millions;  Global

III
C
.9
2

2011 2012 2014 201S...
APPLE TV 35+ MILLION AND GROWING

Apple TV Installed Base GI°baI Us

in
C
.2
E

I I I I I I I I I I I

i 2007 2008 2009 20...
FACEBOOK REACHES MORE 18-24 THAN FREE TV

Facebook vs.  TV Daily Reach
(U5)

Four TV Networks

7% 68%

. C
U
G
U
K
0-‘
C
Q...
NETFLIX IS WATCHED MORE HOURS PER MONTH
THAN ALMOST EVERY OTHER NETWORK

Total hours of viewing per month per network

B] ...
NETFLIX HOUSEHOLDS WATCH 60 HOURS OF
NETFLIX PER MONTH,  2X ANY NETWORK GROUP

A. ..-ug-woo-uunnuooww-o. -.. .~. o¢. 

no ...
YES,  TV STILL DOMINATES VIEWING TIME

Monthly Consumer Time Spent On Video,  U. S.,  2015E,  Hours

Ad-Supported Paid Dow...
BUT DIGITAL VIEWING UP ~100% IN 3 YEARS

Monthly Consumer Time Spent On Video,  U. S.,  2012-2015E,  Hours
Paid Downloads ...
And the TV audience is increasingly

a specific demographic. ..

BI INTELLIGENCE
MEDIAN VIEWER AGE

MSNBC and CNN:  60

Broadcast Networks:  62-64
FOX News:  68

BI INTELLIGENCE
WHY IS DIGITAL GROWING? 

Convenience. 

BI INTELLIGENCE
WHY IS DIGITAL GROWING? 

We can watch what we want to

watch when we want to watch it
— on any screen. 

BI INTELLIGENCE
So what's going to happen? 

BI INTELLIGENCE
First,  ignore people who say "TV

will die. "

BI INTELLIGENCE
Old media don't die.  They just find

their niche(s).  See radio and print. 

BI INTELLIGENCE
There are three key parts of ”TV” —

and two of them are thriving. 

BI INTELLIGENCE
1. Digital TV networks will

continue to thrive

BI INTELLIGENCE
ITUNES AND NEFLIX ALREADY DWARF
AVERAGE CABLE NETWORKS

Cable Network vs.  Digital Content Revenue 2007-2014

. I
I
-1
"I
...
YUTUBE REVENUE CSING IN N
BROADCAST NETWORKS

YouTube Ad Revenue Vs.  CBS Ad Revenue And AMC Networks Revenue
$12,000

$10...
2. Access providers will continue to

thrive — unless (until? ) real price
competition

2 Bl INTELLIGENCE
CABLE'S FUTURE IS BROADBAND

Cable Subscribers Millions By Service (US)

I TV Broadband

53 53 54

50 49 so so so 51 49 51...
WIRELESS'S FUTURE IS BROADBAND

Wireless data service spending in the US
flMMmaUflW

6.9 

f— —I— —I— T’ —I'—' —I— —I’ T’ —I...
3. Traditional TV networks will go through

~decades of pain

BI INTELLIGENCE
2 Bl INTELLIGENCE
Money follows eyeballs. 

2 Bl INTELLIGENCE
WHEN EYEBALLS LEFT PRINT THIS HAPPENED

Newspaper Ad Revenue (Print vs.  Online)
$60,000 1

$50,000
$40,000 ‘
$30,000

In ...
THERE ARE TOO MANY NETWORKS

Channels Receivable And Watched Per TV Household
us

Average TV Channels Received Average TV ...
THERE ARE TOO MANY (MEDIOCRE) SHOWS

Average original TV series each year vs.  survival rate

Number ul Ollllnll VV Series...
So get ready for years of

consolidation and pain. 

BI INTELLIGENCE
FORTUNATELY,  TV IS AWASH IN MONEY

Paid Downloads
Revenues,  U. S.,  2015E,  USD Billions 52.0

4;

Pay TV Subscriptions ...
So they'll suffer in style. 

Bl INTELLIGENCE
7. POWER AND WEALTH WILL BE

MORE CONCENTRATED THAN EVER

BI INTELLIGENCE
DIGITAL MEDIA IS THE NEW "BIG MEDIA"

201 4 Revenue
Select Media Companies

$66.0

$48.8

$27.4

(Billions)

$13.8 $13.3 $...
And "big media” companies are now

distinctly medium-sized. 

BI INTELLIGENCE
THIS IS THE NEW "BIG"

201 4 Revenue
Select Media Companies

$233.7

In
C
.9

'5

Apple AT&T Comcast Google ‘
Bl   Source:...
THANK YOU! 

BI INTELLIGENCE
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7 Predictiones about the future of media - Business Insider

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7 Predictiones about the future of media - Business Insider

  1. 1. 7 predictions about the future of media Bl INTELLIGENC P-'i; v~. eir3. l"<2': i iv—r: .ei; ::li ms i‘.3'"ll‘ : ;lal. a, aw; l e‘-. ‘ei'ytl'iii"-g : :ligitai
  2. 2. 1. DIGITAL WILL INHERIT THE EARTH 7 Bl INTELLIGENCE
  3. 3. DIGITAL MEDIA CONSUMPTION IS GROWING. EVERYTHING ELSE IS SHRINKING US Consumer Media Consumption Share 2011 2012 2013 2014 2015 Mobile im% Desktop/ laptop 5.895 29% / J 3.3% TV Radio BI INTELLIGENCE
  4. 4. And averages do not tell the whole story. .. BI INTELLIGENCE
  5. 5. THE SHIFT IS GENERATIONAL Digital is Reaching The new Generation Top 5 Media Mentions Among All Adults, 2013 Aged 75+ Aged 65-74 _ Aged 55-64 Read newspapers/ " magazines Aged 45-54 Aged 35-44 Aged 25-34 Go online on a computer/ Aged 16.24 laptop/ netbook/ tablet _ Watch TV Listen to the radio Total Use a smartphone I 100 BI INTELLIGENCE
  6. 6. THE FUTURE OF MEDIA IS THE TWO GENERATIONS ON THE LEFT. .. otal US Population by Age and Generation’, millions final mmmn max Eanxmnmn -69 ml-on -15 mil-on ~66 mloon - million '1. of I (Z2%ol Powmon) (239-owopuahm) (21 Popunnn) (24 Popu. -non) l | _ I nun-mum I I '29 mm was an Pow-non) IIIIIIIII 0 4 8 ‘I21620242B323640M48525660646872768034B392 -Genz M-Ilomou IGonX Bnbyaoomors Slenleonorutoon I(‘xuohuGorIerwon BI INTELLIGENCE
  7. 7. MILLENNIALS AND GEN-Z - First digital native generation(s) - Already 45% of population and largest share of earners ° Profoundly different media habits l Bl INTELLIGENCE
  8. 8. 18-24 TV VIEWING DOWN ~30% IN 4 YEARS Traditional TV* Viewing Trends Among 18-24 Year-Olds Weekly time spent in Iloun, based on total 18-24 population 26 20 5-‘ U1 4-: C U 0. III in L 3 O I i-| C 1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 ‘Traditional TV refers to all ll/ O + D/ R./ time-sfmfted TV viewing during the quarter. Bl INTELLIG ENCE Scum, Nlclscfl
  9. 9. Meanwhile. .. 1 Bl INTELLIGENCE
  10. 10. DIGITAL MEDIA CONSUMPTION GROWING EVERY YEAR, ESPECIALLY MOBILE Growth In Digital Media Time Spent Desktop Mobile App Mobile Browser 118,299 97,440 77/031 778,954 621,410 409,847 MOBILE TIME SPENT E E in G. ) 0-! 3 .5 E '5 at O I- 47s, ss3 480,967 550.522 Jan—13 Jan—14 Jan—1S S= Ju(£C- i: cmS-; u;-'c- I‘-"C‘CI| J l'. »’-; -'. m l'. "ul'. 3 J‘.1lf_ll"'T"l 8. l‘-"DC| lE' l*»/ Iv: -tri. -., U S _ Tr: ‘.a3 BI INTELLIGENCE
  11. 11. I. 'lILLEIINlALS CHECK THEIR PHONES EVERY 10 MINUTES 2 BI INTELLIGENCE
  12. 12. My smartphone never leaves my side, night or day 87.0% THEY KEEP THEM IN REACH 24 HOURS A DAY Agree Disagree Bl Source: Zogby Analytics, cited by KPCB (Mary Meeker — Lmkedln SlldC‘SI‘u3'C)
  13. 13. When I wake up, the first thing I do Is reach for my smartphone 80.0% THEY CHECK THEM FIRST THING IN THE MORNING Agree Disagree Bl Source: Zogby Analytics, cited by KPCB (Mary Meeker — Lmkedln SlldC‘SI‘u3'CI
  14. 14. So here's a glimpse at the past, present, and future of media. .. BI INTELLIGENCE
  15. 15. THE PAST (~2000): 3% DIGITAL 100% 1 90% 3 80% I 70% Smartphone 50% Computer/ laptop/ tablet l 50% Radio 40% Print 30% W i 20% ; 10% i 0% ‘3 B] 1 NT}; [_[_1(; ENCE Source: Business Insider estimates, Olcom
  16. 16. THE PRESENT (~20’I5): 40% DIGITAL Smartphone Computer/ laptop/ tablet Radio Print TV 0% Bl Source: Business Insider estimates, Olizom
  17. 17. THE FUTURE (~2030): 80%+ DIGITAL I 100% 90% 80% 70% Smartphone 50% Computer/ laptop/ tablet 50% Radio 40% Print 30% 20% 10% 0% Bl Source. Business Insider estimates, Oicom TV
  18. 18. 2. SUBSCRIPTIONS FOR THE WIN! BI INTELLIGENCE
  19. 19. Remember when pundits said digital content had to be free because no one would ever pay for it? 2 Bl INTELLIGENCE
  20. 20. BI INTELLIGENCE
  21. 21. STREAMING VIDEO SUBS CLIMBING FAST Streaming Video Subscription Revenue Us ca V1 3 E .9 E 2014 2015E 2016E 2017E 2018E 2019E Bl Note. Includes VldC‘0 services that stream long-form TV and movie iength content i’e. g., Nerflix and Hulu). Does not include short-form video content services (0.9, YouTuDe).
  22. 22. STREAMING MUSIC SUBS CLIMBING FAST Streaming Music Paid Subscribers us in C .9 ii ‘ 2014E 20155 2016E 2017E 2018E 20l9E 1 Bl Source: Bl Intelligence estimates based on historical data from the RIAA
  23. 23. EVEN "PRINT" SUBS CLIMBING FAST New York Times Digital Revenue Global Subscriptions Advertising I I I I I I I’ ‘ Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 B1 Source. New York Times
  24. 24. The new pundit story is that there's one right model — subs or ads BI INTELLIGENCE
  25. 25. The truth is that both work, as do a la carte sales. BI INTELLIGENCE
  26. 26. Most media companies have dual revenue streams. BI INTELLIGENCE
  27. 27. "FREEMIUM" IS OFTEN THE BEST APPROACH Paid Digital Subscribers As % Of Total Digital Users 25% 5% 2% 0% T r I‘ m Spotify Hulu WhatsApp Pandora Match Group NYT Linkedln I Source; Bl Intelligence estimates
  28. 28. 3. (NATIVE) DIGITAL ADVERTISING WILL CONTINUE TO THRIVE A B1 INTELLIGENCE
  29. 29. The best definition of "native ads”. .. BI INTELLIGENCE
  30. 30. "NATIVE ADS" Ads that fit the way content and stories in the medium are consumed BI INTELLIGENCE
  31. 31. III In digital, ”search” and ”scro| are the dominant ways content is consumed BI INTELLIGENCE
  32. 32. BI INTELLIGENCE BEHOLD THE POWER OF NATIVE DIGITAL ADS $25 - Digital Advertising Revenues (Global) $20 $15 $10 Billions $5 _ Google S O I ‘I I ‘O ‘O ‘O N N N 5’ mo '50 Note: Based on GAAF’ revenue. ‘ Source. Company Filings, BI Intelligence estimates I '1 I I II N-'»'v'r’« o"c>"o"“o"~o" I I I I I I '3’ '3’ '9‘ N? ‘ N? ‘ N? ‘ N 1' ,5 0- 0- 0- 0- 0- “O “J 5- N ‘L "5 I I I I I '9 Q’ '3’ '3’ '3’ '19 '50 v0 '9 “I9
  33. 33. "Read, watch, and listen’’ are also digital formats. BI INTELLIGENCE
  34. 34. But the experience is different than in legacy media. BI INTELLIGENCE
  35. 35. Native digital brand ads will increasingly take advantage of the digital difference. I BI INTELLIGENCE
  36. 36. 4. THE EXISTENTIAL CRISIS OF AD BLOCKING WILL RESOLVE ITSELF — BUT CAREFUL WHAT YOU WISH FOR I BI INTELLIGENCE
  37. 37. AD BLOCK USAGE IS RISING Adblock Monthly Active Users In Millions I ‘I ‘I ‘I ‘I ‘I ‘I ‘I ‘I ‘I ‘I I 'I Ian1O Jun 10 Jan11 Jun 11 Jan 12 Jun 12 Jan 13 Jun 13 Jan 14 Jun 14 Jan 15 Jun 15 BI INTELLIGENCE
  38. 38. ESPECIALLY AMONG MILLENNIALS. .. Share Of Global Internet Users Who Have Blocked Ads In The Past Month (By Age) 55-64 17% » 45-54 M 35-44 25-34 16-24 35% . 0% 5% 10% 35% 40% Bl Source: Globalweblndcx
  39. 39. AND TECHIES Ad-Block Usage Rates By Vertical (Global) Travel 5% Finance 10% Local 10% Lifestyle 10% Business News Sports Entertainment Adult Comics 25% Technology 25% Games 30% Note. Estimated to nearest 5% increment BI INTELLIG ENCE Soum page“,
  40. 40. There is a lot of self-interested finger- pointing, moralizing, and rationalizing going on — from all parties BI INTELLIGENCE
  41. 41. ONE THING IS CLEAR. .. If all ads are blocked, most free content will cease to exist. BI INTELLIGENCE
  42. 42. So what will happen? I BI INTELLIGENCE
  43. 43. Quality will improve! BI INTELLIGENCE
  44. 44. Publishers, platforms, and advertisers will focus more on user experience and choice I BI INTELLIGENCE
  45. 45. People will choose to view ads from and/ or subscribe to publishers and platforms they like BI INTELLIGENCE
  46. 46. These decisions will not all be voluntary. I BI INTELLIGENCE
  47. 47. 5. THE NEXT BIG PLATFORM IS. .. BI INTELLIGENCE
  48. 48. As smartphones get mature and boring, everyone is hunting for the next big platform. I BI INTELLIGENCE
  49. 49. Many candidates have been suggested — glasses, watches, cars, virtual reality. .. BI INTELLIGENCE
  50. 50. None of these will be the next big platform. I BI INTELLIGENCE
  51. 51. Smart glasses flopped. BI INTELLIGENCE
  52. 52. Cars won't become media and communications platforms — other platforms will be used inside them. I BI INTELLIGENCE
  53. 53. VR is promising, but it's still too early. BI INTELLIGENCE
  54. 54. VR INSTALLED BASE STILL SMALL Estimated Global Virtual Reality Headset Shipments M U1 IN! 0 I-* U1 U1 I-| O Shipments (Millions) 2015E 2016E 2017E 2018E 2019E 2020E Bl Source, Bl Intelligence Estimates. 2015
  55. 55. Complicated to use Screen resolution low AND EXPERIENCE STILL LEAVES MUCH TO BE DESIRED Display often nausea-inducing Prices steep I BI INTELLIGENCE
  56. 56. THE NEXT BIG PLATFORM WILL BE. .. Messaging apps! BI INTELLIGENCE
  57. 57. Smartphone Activities Performed At Least Once Each Day Accessing email Text messaging Searching on the Internet IS Social networking Getting news alerts THE MOBILE Playing games Listening to music Reading Watching videos or movies Getting directions BI INTELLIGENCE Source Saleslorce
  58. 58. SOCIAL NETWORKS ARE BIG. .. Monthly Active Users Global Top 4 Social Networking Apps '0 : .9 S r —r- 1 r- -I- -r -1- -r- 1- r r -r -1 r 1- r- 4011 1012 2012 3012 4012 1013 2013 3013 4013 1014 2014 3014 4014 1015 2015 3015 B1 Source, Companies, Bl Intelligence estimates
  59. 59. BUT MESSAGING APPS ARE ALREADY BIGGER Monthly Active Users Global Top 4 Social Networking Apps Top 4 Messaging Apps —r- 1 r- -r -r -1- -1- 1- r r -r -1 r 1- r- 4011 1Q12 2012 3Q12 4012 1Q13 2Q13 3Q13 4013 1Q14 20,14 3Q14 4Q14 1015 2Q1S 3Q15 Bl Source, Companies, Bl lntolhgc-nco estimates
  60. 60. THE TOP 4 HAVE ALMOST 3 BILLION USERS Monthly Active Users Global, 03 2015 1000 800 600 400 B1 E SOIJFCC C:3mp: u“x-:5, 32 | ~‘teHxgon: (~ E-; I"n: ;tc-5
  61. 61. FACEBOOK OWNS TWO — PLUS INSTAGRAM Facebook Messenger Monthly Active Users In E .9 2 Bl INTELLIGENCE
  62. 62. SNAPCHAT 200 MILLION USERS AND COUNTING Estimated Snapchat Monthly Active Users (Global) In Millions 50 O 9 bp- 0.9» , » 0- ‘la I Source, Companies, Bl Intelligence estimates
  63. 63. YOU CAN DO EVERYTHING IN THESE APPS Chat Stickers E-commerce Payments QR Codes Bl INTELLIGENCE
  64. 64. GENERATION DIGITAL IS NUTS ABOUT THEM % Of Smartphone Owners Who Use Messaging Apps Us Bl Source: Pew Research Center, March ‘|7~Apnl 12, 2015
  65. 65. 6. TV NETWORKS WILL SOON FEEL NEWSPAPERS’ PAIN 1 Bl INTELLIGENCE
  66. 66. TRADITIONAL TV HAS PASSED ITS PEAK Households With Pay TV Vs. Subscription OT1', U. S., 2010-2015E, Millions PayTV Households Digital Subscription (OTT) Households 100.9 100-8 99.3 93 2010 2011 2013 2014 2015E Bl Leichman Research Group, US. CD'S‘. .'S Bureau, Activate analysis l
  67. 67. PAY TV SUBSCRIBERS ARE SHRINKING Cable TV Subscribers (US) 51.0 50.5 E 50.0 0 g 49.5 E 49.0 48.5 48.0 Q1 14 Q2 14 Q4 15 Q1 15 Q2 15 I Source; Lelchtman Resca'ch Group
  68. 68. VIEWERSHIP IS FALLING. .. Primetime Household TV Ratings 6'2 Big 4 U. S. TV Networks Average 6.0 5.8 5.6 5.4 To E 4: ‘J . . (5 3 . » . . 0: en > >- . c .2 3 5.2 5.0 II! E o . C In In 3 o I -. . O i“ an I: 1: M as ‘E o J: ill .1. 3 o I E OJ 2 .2 2 4.8 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 I Source; Nielsen
  69. 69. N l; :_= .ir lhill’ ii is: ill ‘. l.L‘l"_l'5lL. L.. l'? ZI5I. L*l'ZIE
  70. 70. NETFLIX ~70 MILLION SUBS AND GROWING Netflix Subscribers Estimates in millions, Global International (II E .2 Z I I’ I I I’ I I I I I I I Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 B1 INTELLIGENCE 5°u'C01N0‘*l'>< l
  71. 71. HULU ~10 MILLION AND GROWING Hulu Subscribers Estimates in millions, Global Millions ; 2011 I 2012 . Bl Source. Hula, BI Intelligence Estimates
  72. 72. AMAZON PRIME ~45 MILLION AND GROWING Amazon Prime Members Estimates in millions; Global III C .9 2 2011 2012 2014 201SE B1 1 I G E Sr: iu'-: »: Di: utsC"e Bai'i<, CC2ITIC; ]l'l')" Rc-'. :Ci‘.5
  73. 73. APPLE TV 35+ MILLION AND GROWING Apple TV Installed Base GI°baI Us in C .2 E I I I I I I I I I I I i 2007 2008 2009 2010 2011 2012 2013 2014 2015 2015 2017 2018 3 Bl So-. .rcc-: Bi Intelligence estimates
  74. 74. FACEBOOK REACHES MORE 18-24 THAN FREE TV Facebook vs. TV Daily Reach (U5) Four TV Networks 7% 68% . C U G U K 0-‘ C Q1 U 5 OJ 0. Age 18-24 Age 25-34 Age 35-54 BI INTELLIGENCE
  75. 75. NETFLIX IS WATCHED MORE HOURS PER MONTH THAN ALMOST EVERY OTHER NETWORK Total hours of viewing per month per network B] ]N']‘E[_[_[G ENCE -m. 5:, -M. r-. /EUIA REDEF
  76. 76. NETFLIX HOUSEHOLDS WATCH 60 HOURS OF NETFLIX PER MONTH, 2X ANY NETWORK GROUP A. ..-ug-woo-uunnuooww-o. -.. .~. o¢. no I m I] 1‘. I 10 I 1‘- H) l u 7 V 7 I I , M M . , 21'‘ um’. .. mu m 1.. ... . v. ... m. r». .. W. .. . us A. » u. ..-. .-. . Alrwvvl-1n uw . .. ... .n All um. .. u-mm « nu Jul w. m—» man. s hnnn . u . ,.. .r 1 , ..n. .,. ... '>4V>’4 . -.. ,._. .. ‘. ._, .. . .. . ... .., .._, ... .. . ..«. . B] | NTELL]G ENCE -_-m ‘: }::1u| -:, MEDIA REDEF
  77. 77. YES, TV STILL DOMINATES VIEWING TIME Monthly Consumer Time Spent On Video, U. S., 2015E, Hours Ad-Supported Paid Downloads 9% / _ 5% Total: 177 hours Subscription TV 14% Traditional TV / 72% / Bl Source: Dngntalsmuths, cMarl<cIor, GfK. Szmdvme, NICISCH, TDG, Activate analysis
  78. 78. BUT DIGITAL VIEWING UP ~100% IN 3 YEARS Monthly Consumer Time Spent On Video, U. S., 2012-2015E, Hours Paid Downloads Ad Supported Subscription 7.s 15 25 __y 3.5_ B1 Source: Digitalsmiths, cMarkctcr, GIK, Sandvine, Nielsen, TDG, Activate analysis
  79. 79. And the TV audience is increasingly a specific demographic. .. BI INTELLIGENCE
  80. 80. MEDIAN VIEWER AGE MSNBC and CNN: 60 Broadcast Networks: 62-64 FOX News: 68 BI INTELLIGENCE
  81. 81. WHY IS DIGITAL GROWING? Convenience. BI INTELLIGENCE
  82. 82. WHY IS DIGITAL GROWING? We can watch what we want to watch when we want to watch it — on any screen. BI INTELLIGENCE
  83. 83. So what's going to happen? BI INTELLIGENCE
  84. 84. First, ignore people who say "TV will die. " BI INTELLIGENCE
  85. 85. Old media don't die. They just find their niche(s). See radio and print. BI INTELLIGENCE
  86. 86. There are three key parts of ”TV” — and two of them are thriving. BI INTELLIGENCE
  87. 87. 1. Digital TV networks will continue to thrive BI INTELLIGENCE
  88. 88. ITUNES AND NEFLIX ALREADY DWARF AVERAGE CABLE NETWORKS Cable Network vs. Digital Content Revenue 2007-2014 . I I -1 "I -1 ‘I l 2007 2008 2009 2010 2011 2012 2013 2014 I Bl Source: News Reports, Company Filings
  89. 89. YUTUBE REVENUE CSING IN N BROADCAST NETWORKS YouTube Ad Revenue Vs. CBS Ad Revenue And AMC Networks Revenue $12,000 $10,000 CBS Ad Revenue $8,000 $6,000 YouTu be Ad Revenue 9 III C .2 2 §§ $4,000 $2,000 $- AMC Networks Revenue 2007 2008 2009 2010 2011 2012 2013 2014 S . N-R“ , C Fli , Bll ll '. ,BfAMrill Bl ource eus i_ports ompany wigs nteigencc-E: tI: ;‘1g]: bapReSe: r:h
  90. 90. 2. Access providers will continue to thrive — unless (until? ) real price competition 2 Bl INTELLIGENCE
  91. 91. CABLE'S FUTURE IS BROADBAND Cable Subscribers Millions By Service (US) I TV Broadband 53 53 54 50 49 so so so 51 49 51 52 50 49 l 49 49 49 49 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Not»: Select map: -i cable oroxiidcis BI INTELLIGENCE SO. .’CC l_C“C"IITlfllI F‘esea'c" Group
  92. 92. WIRELESS'S FUTURE IS BROADBAND Wireless data service spending in the US flMMmaUflW 6.9 f— —I— —I— T’ —I'—' —I— —I’ T’ —I— —I— —I— —I 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 BI INTELLIGENCE 5°~'°°1T'A
  93. 93. 3. Traditional TV networks will go through ~decades of pain BI INTELLIGENCE
  94. 94. 2 Bl INTELLIGENCE
  95. 95. Money follows eyeballs. 2 Bl INTELLIGENCE
  96. 96. WHEN EYEBALLS LEFT PRINT THIS HAPPENED Newspaper Ad Revenue (Print vs. Online) $60,000 1 $50,000 $40,000 ‘ $30,000 In Millions $20,000 $10,000 $- T I’ I I I I I I i I’ I I l 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* B1 SOu| ’CCl Newspaper Association Of America, ‘Estimate
  97. 97. THERE ARE TOO MANY NETWORKS Channels Receivable And Watched Per TV Household us Average TV Channels Received Average TV Channels Watched 1791 189.1 168.5 136.4 151.4 17.3 17.7 . . . 17.5 2008 2009 2013 B1 Source: Nielsen
  98. 98. THERE ARE TOO MANY (MEDIOCRE) SHOWS Average original TV series each year vs. survival rate Number ul Ollllnll VV Series Alvin‘ I MI! Veer Islirrutrd Primetime Original Suipted IV sane! ‘ Survwal Kale‘ , ul-: ., I‘-‘IELIIA REDEI5
  99. 99. So get ready for years of consolidation and pain. BI INTELLIGENCE
  100. 100. FORTUNATELY, TV IS AWASH IN MONEY Paid Downloads Revenues, U. S., 2015E, USD Billions 52.0 4; Pay TV Subscriptions TV Advertising $103.1 $67.0 Ad Supported# T Subscription 577 55.5 Source. BIA/ Kelsey, Digital TV Research, eMa"r<eIer, Googie, Hulu, Nefilix, PwC, Bl SNL Kagan, SIBUSIB, Dug: ta| Market Outlook, TDG, Activate ‘
  101. 101. So they'll suffer in style. Bl INTELLIGENCE
  102. 102. 7. POWER AND WEALTH WILL BE MORE CONCENTRATED THAN EVER BI INTELLIGENCE
  103. 103. DIGITAL MEDIA IS THE NEW "BIG MEDIA" 201 4 Revenue Select Media Companies $66.0 $48.8 $27.4 (Billions) $13.8 $13.3 $12.5 $5-5 $4.6 $3.2 I I I I I I I Google Disney Time CBS Viacom Facebook Netflix Yahoo Gannett AOL NewYork Warner Times Bl Source: Company Filings, BI Intelligence estimates I
  104. 104. And "big media” companies are now distinctly medium-sized. BI INTELLIGENCE
  105. 105. THIS IS THE NEW "BIG" 201 4 Revenue Select Media Companies $233.7 In C .9 '5 Apple AT&T Comcast Google ‘ Bl Source: Company Filings, Bl Intelligence estimates
  106. 106. THANK YOU! BI INTELLIGENCE

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