The document is a presentation by Nick Verkroost of Value Partners on Project Canvas, an initiative in the UK to establish an open internet-connected TV platform. The presentation provides an introduction to Project Canvas, explaining the drivers behind it, an overview of the technical standard and user experience, and findings from a market impact assessment of Canvas. It analyzes how Canvas could positively impact the TV, video-on-demand, and internet service provider markets in the UK while securing investment in digital terrestrial television. The presentation concludes with lessons learned from Project Canvas including the need for public sector involvement to drive industry standards and engagement across the value chain.

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Project Canvas
Nick Verkroost, Value Partners
Madrid, 12th May 2010

2. Introduction
• Explain the drivers behind the Project
Canvas initiative in the UK
• Introduction to Project Canvas, looking at
the technical standard, the platform and
user experience
• Share the findings of Value Partners
Market Impact Assessment of Project
Canvas
For the conditions of use of this document please refer to the front page 1

3. TV-VOD services in the UK are developing rapidly with pay-TV
operators and manufacturers entering the market
Virgin Media: Sky:
iPlayer via cable (launched 2008) Project Darwin (expected 2010)
• Launched BBC iPlayer mid 2007 • True VOD (Sky Player and
- 17m iPlayer views per month iplayer) via IP to TV STB
from 3.6 million subscribers
- 20% of total iPlayer views • New middleware (Fusion from
NDS)
• 58% of subs use VOD (Q4 2009) - can handle web apps
(e.g. Flash)
• Average of 35 views/user/month - uses progressive downloading
TV manufacturers:
Total iPlayer monthly streams (m)
Internet TVs (from 2009)
Virgin Media
84.3
Online and other
• Panasonic launched ibroadband-
17.3
55.3 enabled HDTV offering content
from online partner YouTube
16.2
67.0
direct to the screen
20.4
39.1
20.4 • Samsung with Yahoo! and Intel
developing web-based widgets
May 2008 May 2009 March 2010 for broadband-enabled HDTVs
Source: Value Partners analysis, BBC, Virgin Media, Sky, Press search, Screen Digest
2

4. Fragmented market presents challenges for FTA broadcasters
and non-linear content providers
Why do we need Canvas?
Freeview and • Current DTT platforms offer only linear services
FreeSAT have
• Digital Television Group (DTG) Dbook6 standard enables VOD but does not to
been slow to
support web based applications such as Flash
evolve
• Risk that DTT proposition unable to compete
- Loss of investment in DTT platform
- Restricts TV-VOD to those users who are willing to pay for it
No industry • Content providers must reversion content for different devices
agreed standard
• Electronics manufacturers build to individual specifications
for TV-VOD
• Risk of standards war (e.g. Blu-ray vs. HD DVD)
Service • Content providers must have a commercial relationship with the TV
providers act as platform to obtain a route to market
gatekeepers
• Platform operators control how and when users access content
Source: Value Partners analysis
3

5. Project Canvas is a partnership between content providers and
ISPs to build an open internet-connected TV platform
Canvas consortium 1 Technical standard
• Joint Venture to promote the platform to • Agree with industry a technical standard
consumers and the content, service and for TV-VOD
developer community
• Freely published
• No commercial relationship between the
• Likely to form the DTG’s Dbook7 standard
consortium or any providers of content to the
platform; consortium does not act as a 2 Open platform
gatekeeper to content on the platform
• Build, run and promote an open platform
• Provide an upgrade to existing DTT
• Provide route to market for a wide range of
content and service providers
3 Electronic Program Guide (EPG)
• Create a common and consistent UI
• Seamlessly link linear and non-linear content
• Owned by JV and licensed to manufacturers
Source: Value Partners analysis, Project Canvas, BBC
4

6. Canvas delivers an open platform for content providers, built on
a common technical standard
Canvas platform Delivered through broadcast channel
Individual portals developed Delivered through broadband channel
by content providers or
aggregators
Designed • Canvas combines
Individual Individual Individual and linear DTT
content content content controlled
by content
service, delivered
provider portal provider portal provider portal
providers through broadcast
channel with non-
linear VOD and
Includes links to
web services,
individual VOD VOD & web console delivered via
portals, web Designed broadband
applications and and
centralised controlled • Individual content
functionalities Linear VOD Web by Canvas
PVR consortium
providers design,
(e.g. search) EPG extension apps
operate and
control their own
portals for VOD
In line with existing DTT content and web
Extension of standard linear EPG to include
standards (e.g. Freeview)
direct access to VOD content (e.g. catch-up) applications
and web applications
Source: Value Partners analysis, Project Canvas, BBC
5

7. Central to the Canvas proposition is a common user interface
that seamlessly links broadcast and broadband content
Source: Project Canvas, BBC
6

8. Video On Demand EPG provides access to individual portals
Source: Project Canvas, BBC
7

9. Content providers retain full control of their VOD portal (1)
Source: Project Canvas, BBC
8

10. Content providers retain full control of their VOD portal (2)
Source: Project Canvas, BBC
9

11. Web applications provide access to popular online services and
other features such as games, news feeds, and apps
Source: Project Canvas, BBC
10

12. Web apps may provide an opportunity for service providers to
develop account management portals and sales channels
Source: Project Canvas, BBC
11

13. Canvas creates new opportunities for pay VOD, including the
development of ‘pay-as-you-go’ e-wallets
y
nl
O
e
iv
c at
di
In
Source: Value Partner analysis
12

14. BBC Trust must weigh up the public value of Canvas against an
assessment of market impact, performed by Value Partners
Process
Public Value Assessment 1
• Value to licence fee payer TV market
• Value to society through
BBC’s Public Purposes Market Impact Assessment
• Value for money • Assess likely impact of 2
Canvas on the markets it VOD market
influences
3
ISP market
Source: Value Partners analysis, BBC Trust
13

15. 1 Canvas is forecast to reach 4m households by 2015, securing
investment in the DTT platform
TV market impact
Forecast DTT households, millions Impact on subscriber base, in 2015
Non-Canvas HHs relative to a world without Canvas
Canvas HHs
10.8 11.0 10.9 10.8
10.4 10.6 2-4%
6.8 4-8%
8.0
9.2
9.8
10.3 10.2
DTT
5-9%
platform
4.0
2.9
1.8
1.0
0.4
up to 100%
2010 2011 2012 2013 2014 2015
Source: Value Partners analysis
14

16. 2 Canvas to increase VOD viewing to 5-8% of total viewing by
2015, paving the way for non-linear pay services
VOD market impact
Share of television viewing in 2015, % Opportunities for pay VOD
VCR Catch-up PPV “Archive” PPV,
3% 5% VOD
8% series stacking, DVD
12% 12% PVR
11% Linear
rental direct to TV
85% 83% 80% “Freemium” content, Preview window, for
including reality shows a premium
and ‘play along’ game
shows “watch the next
episode now”
Without Canvas Canvas
Canvas base case high case
Source: Value Partners analysis
15

17. 3 Canvas is likely to significantly increase the demand for
capacity, but not necessarily increase network costs
ISP market impact
Total data traffic in peak hour, Gbps LLU ISPs
5000 Canvas • LLU ISPs are provisioning their network
No Canvas capacities for significant increases in usage
4500 regardless of Canvas entering the market
23% increase
4000 • The increase in broadband traffic resulting from
in data traffic
Canvas would not necessitate any further
3500 increases in capacity
3000 • Canvas would be unlikely to increase
network costs for LLU ISPs
2500
Non-LLU ISPs
2000
• Costs increase in line with usage
1500 Bitstream products on usage-based pricing
1000 • As such, Canvas would increase network
costs as the amount of network usage
500 increases
0 • Limitations in cost increases could be
2010 2011 2012 2013 2014 2015 achieved through CDN technology to
efficiently transmit data across the network
Source: Value Partners analysis
16

18. Lessons learned
Creates value
for broadcasters
Need a catalyst Secures
to drive project investment in
forward DTT platform
Reflections on
Project Canvas
Public sector
Determines
involvement can
single standard
delay process
Engagement
along value
chain is vital
Source: Value Partners analysis
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19. Thank you for listening…
Nick Verkroost
Email: nick.verkroost@valuepartners.com
Tel. +44 (0) 20 7630 1400
Company profile:
Value Partners is a global management consulting firm which draws on 400 professionals from
25 nationalities. We are the leading company in the Digital Media, Broadcasting and Telecoms
sectors, supporting the top managers of multinationals engaged in change, globalisation and
innovation. We deal not only with strategy, but with all those issues which are strategic for our
clients. Our clients span all sectors of the rapidly evolving digital market-place including
television, mobile telecoms, music, new media, the Internet, radio, fixed telecoms and sports.
We have recently worked for the BBC, Vodafone, Ofcom, BT, Virgin Media, ITV, O2 and the
Premier League.
For the conditions of use of this document please refer to the front page 18

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