The document discusses strategies for commercializing interactive television (iTV) through free-to-air broadcasters in Australia. It notes that iTV differs from the internet in its user experience and need to be navigated with a remote control. A successful iTV system would drive revenue by allowing advertisers to reach viewers and provide interactivity to broadcast content. It proposes a model where set-top boxes are sold through retailers and ISPs to allow free-to-air broadcasters to expand their advertising reach and monetize additional content delivery through broadband.

1. The iTV Company A Strategy for Free To Air + Interactive Television An Industry Strategy for Commercialising Digital iTV

3. Why is iTV Different to Internet? Design Differentiation. iTV Content must; Not “burn” television screens. produced in TV sized pages Be Navigated with Remote control Be predominately “rich media” (Audio / Video) based in the method of information distribution. Provide “television” styled Fonts, text and imagery User Experience People Relax in front of the television, even when their concentrating on the programming. interact with content (lean to) vs. Viewing content (lean back) A Successful system will use a remote control In most cases – iTV will be driven by social decisions, made in the householders lounge room.

4. Advertising Revenue iTV Revenue Competes with all TV Connected Sectors

5. What’s Happening to the Media Sector? In 1996 The Standard is Free to Air TV Pay TV Just launched in Australia Computer Game Consoles were beginning to use More Televisions Flash Version 1 Was Released Microsoft Introduces DirectX. Sony Releases their First PC – VAIO Apply Stocks Sink to a 10 year low of less than $18.00 per Share (US) Microsoft WebTV is introduced, allowing users to browse the web from their TV IN 1997 – Intel Releases it’s first MMX Chip. In 2006 Foxtel Reaches 1.27 Million Subscribers Intel Introduces “Core Duo” Ebay Purchases Skype for approximately $2.6 Billion Skype Announces 100 Million Registered users Google announces plans to purchase YouTube for 1.65 Billion (USD) http://www.computerhope.com/history/2000.htm http://www.computerhope.com/history/19902000.htm http://www.researchandmarkets.com/reports/446873/foxtel.htm Effective Advertising = Free To Air Effective Advertising = Broadband

6. Free to Air Needs; Interactivity to Survive Free To Air Broadcasters have been loosing Advertising Revenue to Competing technologies This means, for Australians; The funds available to FTA Broadcasters to purchase content has been declining. The quality of international content Australia has decreased. Internet has become a leading source for Television. Faster Broadband means Media can be delivered more quickly. Faster Computers means Programming can be encoded into “broadband ready” formats more quickly. Today, Television shows are becoming available on the internet prior to scheduling in the USA. Australia, needs a commercial organisation to organise the capability to deliver to FTA’s a systems, carriage and STB solution, based on international standards Free To Air Television is a licensed service. FTA’s must controls the “rating” of content distributed. Free to Air Television houses Australia's best and Brightest Media Talent. FTA’s make their business work via Advertising Revenue The more advertising dollars, the better the content. Consumers don’t pay for content. Advertisers do... Free To Air Television has an Emerging standard for connecting to IPTV. Interactive (DVB-T) Television is feasible in 07/08 Interactive Television needs an iTV Set-Top Box . ISP and retailers want to sell Set-Top Boxes, as do consumer electronics manufactures. Why Free to Air? “ Free to Air (FTA) Television is like the beach. It’s free to use, for all Australians.”

7. Business Processes - EXPANSION Existing Broadcast Services Pay for Air-time Linear Viewing Period 1 Channel - To Everyone IPTV enabled - iTV Broadcast Pay for Air-time Leverage 1 Channel to everyone Enable Sub-Channelling Via Broadband Pay per Minute Viewed Pay Per MB Enhancement to Content Offering via On-Demand Enhancements to Broadcast via Interactivity Capability to provide Non-Linear Content. Broadcasters Sell the STB and the IPTV Service as a Means to Acquire Advertising Revenue Providing Free To Air Broadcasters an “interactive Feed” to combine Broadcast with Broadband through the Set-Top Box. Free To Air Broadcasters are able to expand their (“Advertising”) Territory

8. How does it work? STB’s are sold on an outright basis, or on a contract period. The STB is subsidised, if the end-user purchases with a subscription contract. The STB’s are sold through ISP’s and Retailers. Installation is available. ISP’s and Retailers sell the boxes because they get a margin for each STB Sold, and they get an on-going fee paid (%) for the advertising used by the STB, throughout the contract period. Broadcasters Encourage the use of the Platform so that their interactive advertising is used by free to air users. Broadcasters (Inc. FTA’s) purchase a Set-top Box Portals. Free To Air broadcasters use the portals to expand their media Territory An interactive space on TV A Sales and CRM Function The ability to Extend TV advertising to the Set Top Box The Ability to Save Programming The Ability to provide a Unique Video feed to each end-users, based on what the end-user is looking for; Research Advertising Product Placements Association to Broadcast Shows and the Practical implementation in the household, of the show’s purpose. IE: Cooking a meal, that was presented by a show... ISP’s Needs to Sell iTV Set-Top Boxes

9. FTA provide ISP / IPTV Solutions Market Power – to establish “Critical Mass”. Revenue Drivers – for acquiring free to use content. A “walled garden” environment – to distribute content. The ability to “add value” with broadband programming.

10. Premium Content Providing Additional Channels Via Broadband Programming

11. STB Subscriptions Customers pay a fee per month, over a contract period to purchase the Set Top Box The Contract Fee is incorporated with a content package subscription The Content Subscription provides a “fund” for the use of premium services, on the STB.

12. Additional Content - IPTV Broadband Content Channels On Demand – Premium Services Hollywood Content Episodic Content Adult Content Other Niche Content iTV Interactive Television Other Content for Channelling for Interactive Television Use Karaoke, User Generated Content, etc.

13. Technology Overview What technologies are involved with iTV?

14. TV Technologies The Broadcast Layer DVB – The Digital Video Broadcast Standard Transport DVB-T – The Terrestrial Transmission Standard DVB-S – The Satellite Standard DVB-C – The cable Standard DVB-MHP – The Interactive Standard for DVB-T MPEG2 – The Video Standard, for Digital Broadcast and DVD. DVB-CA – The conditional access standards (Smart-Cards)

15. DVB – Enabling iTV Through the MPEG Layer, Free to air Broadcasters are able to insert Code This code can be used to “trigger” software located in the set top box or iTV Receiver. Once the “trigger” has been received by a set top box, that has been pre-programmed with a response to the trigger – the Set-top box can use the “broadband enabled” connection to open / interact with - new content

16. iTV Technologies The Interactive Layer ITV – An Emerging Broadband TV Standard Video Encoding Standards - H.264 / VC1 Comparably Low-Bit rate Digital Video Standards Meta-Data – Description and integration Mpeg 7, Mpeg 21 Web Functionality (HTML Standards) Generate Content Use Paths Generate Non-Video Content Capability to Track Usage Patterns What content Precise viewing information Ability to integrate Sales Interfaces E-Commerce Customer Relationship Management

17. Existing IPTV Sales Cycle Number 1 Rule to business. Make sure there’s more Money coming in, than money going out. Purchasing the Environment prior to making sales Sell Premium Content to Broadband Connected End-Users

18. Revenue Model for iTV / IPTV Network Operator A path to profitability Leveraging ISP’s as Broadband Sales Channels for Media.

19. Integration of Technology with Broadcasters iTV FEED Integration Server Infrastructure housed in FTA for Secure “Broadcast Information Feeds”, between Content Assets and the Distribution Network Distribution Network Integration Supply of iTV Portal and GUI Interface. Integration of Portal with Existing Broadcaster Web-Site Properties Operational Enablement Supply of consulting and technology integration services to enable the business applications of supplying iTV services, in-line with the existing core-business of broadcasters.

20. On-Going iTV Charges to Portal Owner (i.e. Portal Owner = Broadcaster) Monthly Portal Fees Payments to Network Operator; Cost of Supporting Portal Cost of Technology Licensing Cost of basic data-distribution Per Video Minute - Uploaded New Standard Definition Content uploaded to Network New High Definition and Standard Definition Content uploaded to network Per “View” User Fee Each Video Minute Served from the Network to a STB Separated Standard Definition and High Definition Charges. Each Mb of Web-Data Served from the network to a STB. Users are able to save portal content to STB. This means, that upon the Subscribers request, the content can be saved and viewed or transported from the set-top box to other users / devices (subject to licensing. Etc.)

21. Mark-up Distribution Costs to Advertisers Capability to provide immersive “channel” like sub-portals for content owners and Advertisers “ digital introductions” to potential customer a pre-sales channel to goods and services connected to Content Broadcast Revenues Revenue Drivers for Portal Owners

22. IPTV Distribution, Production and Post Production Charges ITV Service Installation Enterprise Portal Intergration (STB and Web) Installation Charges Broadcast iTV Platform - Feed Fee (inc. Web) Monthly Charges Broadcast iTV SERVER Equipment Purchase Per Unit (Min. 2 Required) Content Enablement Production - Software Tools (API Specs, etc.) Per CPU New Content Charge - Per GB of Content Uploaded to iTV Head-END HD New Content Charge - Per GB of Content Uploaded to iTV Head-END (SD + HD Title) Encoding Charges - Per Title or Per Hour (h.264, WMV, etc.) Set-top box development & deployement fees STB - Software / Activation Fees STB Intergration Fee (New STB Hardware via CE) Distribution Charges - Content Usage Charges (Per Feed. Whether Forward and store or otherwise.) IPTV (video) Content Delivery (Per Minute) - Standard Definition (576i + 5.1 / 2.0) IPTV (video) Content Delivery (Per Minute) - High Definition (upto 1080i DTS) IPTV (Web Content) Delivery (Per MB to STB)

23. Continue to sell Web-Portals, as an extension to STB Portals Use Web-Distribution to enhance STB Offering Provide RSS like “feeds” to ISP’s, so that they are able to provide content services to their users, through Web-Browsers. What about Web Distribution?

24. THE END Thankyou for your time. Timothy Holborn The iTV Company Pty. Ltd. [email_address]