The document discusses the evolution of digital media strategies from 2014, highlighting three waves of technological disruption and the increasing dominance of mobile devices in internet consumption. It outlines shifts in consumer behavior, particularly the move from traditional media to mobile platforms and apps, as well as the changing landscape of digital advertising and revenue generation. By 2020, significant portions of media consumption are expected to shift away from traditional formats, indicating urgent adaptation needs for media businesses.

1. Digital media strategies
Media consumption and supplier strategies
Douglas McCabe | douglas.mccabe@endersanalysis.com | 07966 015 469
4 March 2014

2. Three waves of tech disruption
Digital media strategies 2014
Web emerges - 1995 Penetration grows 75% penetration
Ongoing evolution
and disruption
Smartphones
emerge - 2007
50%+ penetration
Growth to 75% in
UK by 2015
Tablets emerge
2010, 400m sold by
2013
Penetration grows
to 50% of homes by
2015
2
Steadily increasing impact on
newspapers and magazines,
with circulation declining and
consumption shifting away
Mass audience moves
online
Systemic deflation of
online ad revenues, waves
of new entrants
Mass migration of time,
attention and ad revenue
Further major disruption
in user behaviour and
competitive landscape

3. Mobile is becoming the predominant access platform
0
25
50
75
100
125
150
175
200
225
250
Global quarterly unit shipments (m)
PCs iPhone & Android smartphones Tablets
[Source: Gartner, Apple, Google, Enders Analysis]
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Global install base (m)
PCs iPhone & Android smartphones Tablets
[Source: Apple, Google, IDC, Enders Analysis]
Digital media strategies 2014 3

4. UK consumer is going ‘mobile’
17
24
13
70
0
40
0
10
20
30
40
50
60
70
80
Mobile internet devices in use, UK (m)
Residential broadband lines Smartphone units
Tablet units [Source: Enders Analysis]
70%
61%
51%
44% 40% 37% 35% 34% 33%
16%
18%
20%
21%
21%
22% 22% 22% 23%
14%
21%
29%
35% 39% 42% 43% 44% 44%
0%
20%
40%
60%
80%
100%
2012 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f
Share of internet consumption (% of total)
PC Smartphone Tablet
Excludes TV-based and offline app usage
[Source: Enders Analysis]
Digital media strategies 2014 4

5. Mobile is transforming internet consumption
Digital media strategies 2014 5
492 506 519 519 558
489 479 483 533 519 521 535 504
244
270
299
358
417
397 408 410
476 475 442 435
429
52
53
52
65
69
75 71 77
87 90
84 86
90
787
829
870
942
1,045
960 958 969
1,096 1,084
1,047 1,056
1,023
0
250
500
750
1,000
1,250
Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13
PC Mobile app Mobile browser 2+ PC users, 18+ mobile device users; mobile includes tablets from Feb 2013
[Source: comScore]
US time spent online by device (bn minutes)

6. Audience and consumption shifting from browser to apps
0
10
20
30
40
50
60
70
Stated cumulative app store downloads (bn)
iOS Android
[Source: Apple, Google]
21%
48%
10%
10%
11%
Facebook
Facebook and other social apps
Other social apps, no Facebook
No social apps
No smartphone
Survey of UK 15-24s
[Source: Enders Analysis/TNS-RI survey]
Digital media strategies 2014 6
UK 15-24s’ use of social apps, May 2013 (% of mobile users)

7. Mobile internet provides many alternatives modes of interaction
Digital media strategies 2014 7
Desktop internet Mobile internet
Website in web browser – unchanged since 1990s
Niche apps (email, IM, music)
Website in web browser, web search
Apps and app stores – no clarity on roadmap
In-app payments, hybrid apps, widgets, voice
search, social messaging, barcodes, location, push
notification etc
Over 50 social messaging apps have more than 1m
downloads on Google Play
Search is no longer the dominant acquisition channel
Web is no longer the dominant interaction model

8. Atomisation and silos
Digital media strategies 2014 8
Atomisation
• Existing trend on the desktop web to unbundle
content
• Embedding within social networks detaches
content from the original site
• Content is shared, tagged, pinned – spreading
far away from the origination point
• Cards turn your content into packets that can
go anywhere
Silos
• Apps generate far higher engagement than the
web – if you can get an install
• Compelling model for browsing content in a
specific vertical – and gaming, of course
• Google and Apple exploring ways to deep-link
into apps from the web

9. Twitter building rich advertising inventory
Digital media strategies 2014 9
[Source: Twitter]
Drive app
installs
Link
to app
Collect names and
email addresses

10. Facebook revenue by source
Digital media strategies 2014 10
0
500
1,000
1,500
2,000
2,500
Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13
Revenue $m
Desktop ads Mobile ads Payments & Other
[Source: Facebook, Enders Analysis]

11. Changing nature of search: from web to Google Now
Digital media strategies 2014 11
Text
search
Type a search term in a box
Google gives you list of
pages that it thinks contain
the right answer, based on
key words
Example
What’s the weather like in
Bristol?
Result: a link to the BBC
weather site page for
Bristol
Answer
Type a search, or do a voice
search with GoogleVoice
or Siri
Google or Siri gives you
what it thinks is the
answer, plus links
Example
What’s the weather like in
Bristol?
Result: “ the weather is
terrible”, plus links
Predict
Google has seen your email
and knows you’re going to
Bristol, so it puts the weather
on your home screen
Siri knows why you’re going
Example
Intelligently suggest info on
weather, travel, restaurants,
traffic in Bristol, London
…and…

12. Activity and device usage: time of day analysis
Digital media strategies 2014 12
Device use by time of day
Morning Transit Work Noon Work Transit Evening Night
Smartphone
Tablet
Desktop - -
Types of news contents by order of importance
Social interactions: Facebook, google+, twitter
[Source: Monday Note]
Smartphone Desktop
Tablet Smartphone Desktop
News stories Morning briefings News stories
Features Quick updates / alerts Data
Morning briefings News stories Infographics
Videos Videos Videos

13. Newspaper digital revenue starting to gather momentum
Digital media strategies 2014 13
99% 98% 98%
92% 92% 90%
76%
68%
54%
1% 2% 2%
8% 8% 10%
24%
32%
46%
0%
20%
40%
60%
80%
100%
Express Sun Mirror Mail Times Telegraph Independent Guardian FT
UK national newspapers’ print versus digital revenue, 2013 (% of total)
Print Digital
Circulation and advertising revenue only; excludes Metro
[Source: Enders Analysis]

14. By 2020, 15% of viewing will not be to theTV set, rising to 29% among 16-34s
Digital media strategies 2014 14
97 94 92 90 88 86 84 83 82 81 81
2
2
2
2
2 3 3 4 4 4 4
1 4 6 8 10 12 13 13 14 15 15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014f 2015f 2016f 2017f 2018f 2019f 2020f
Connected viewing as a share of total viewing (%)
TV: Live linear/PVR time-shift TV: On demand/DVD Viewing to other screens
[Source: Enders Analysis, based on BARB/InfoSys+ and other sources]

15. Home video returns to growth: digital spend offsetting packaged media decline
16.2
18.2
20.0
21.1 21.0 20.6 20.1 19.4
17.3 16.3
14.6
12.9
11.8
0.7
0.7
0.7
0.7 0.8 1.0 1.3
1.6
2.1
2.3
3.4
5.2 6.5
16.9
18.9
20.7
21.8 21.8 21.6 21.4 21.0
19.4
18.6
18.0 18.1 18.2
0
5
10
15
20
25
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
US digital home video expenditure ($bn)
Physical formats Digital/over-the-top
Includes all retail and rental spending on physical and digital f0rmats [Source: DEG]
Digital media strategies 2014 15

16. Mobile monetisation is rising fast after slow start
Digital media strategies 2014 16
34
38
35
36
38
41
38 39 39
5
7 6 6
8
11
12
13
16
0
10
20
30
40
50
Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13
US internet advertising spend per device user ($)
PC Mobile/tablet [Source: Enders Analysis based on IAB/PwC, comScore]

17. Common challenge of adapting to multiple devices, screen sizes, platforms & use cases
Digital media strategies 2014 17
Move to media consumption over
mobile devices
Coherent content strategy over
multiple platforms
Strong mobile apps/extensions
Significant ongoing investment & core
competency in new technologies

18. Operating model challenges
Digital media strategies 2014 18
Print
Digital
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newsstand
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copy
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offers
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Follow link
to website
Share on
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19. Multiplatform data
Digital media strategies 2014 19
Consumer retail model
• Single customer view model,
with multiple touch-points
• Older demographics are
multimedia
• Parallel trials
• Relevant customisation and
personalisation
Content structure
• Atomised consumption and
very complex distribution
• Content structured in packets
for the most flexible usage
Operating structure
• Control and dashboard
• Rapid decision-making
• Feedback loops

20. Brands are the key drivers
Digital media strategies 2014 20