The document analyzes the growing dominance of digital media consumption and advertising, highlighting a significant generational shift from traditional media like TV and print to digital platforms led by Google and Facebook. Traditional TV viewership is declining, while modern digital networks and content delivery methods are thriving, indicating a major transformation in media consumption habits. Future trends predict that while traditional TV will not disappear, it will undergo substantial consolidation and changes in audience engagement.

1. Providing in-depth insight, data, and analysis of everything digital.
BI Intelligence
The next big thing

2. DIGITAL IS INHERITING THE EARTH

3. DIGITAL MEDIA CONSUMPTION IS GROWING,
EVERYTHING ELSE IS SHRINKING
US Consumer Media Consumption Share
Source: eMarketer
43.2%
40.9%
14.0%
6.6% 5.8%
35.2%
12.0%
2.9% 3.3%
TV Radio Print Other
2011 2012 2013 2014 2015
Desktop/laptop
Digital
30.0%
Mobile

4. IT’S A GENERATIONAL SHIFT
Top 5 Media Mentions Among All Adults, 2016
Source: Ofcom
0 20 40 60 80 100
All adults
Aged 16-24
Aged 25-34
Aged 35-44
Aged 45-54
Aged 55-64
Aged 65-74
Aged 75+
Use a smartphone
Go online on a
computer/laptop/netbook
/tablet
Watch TV
Read
newspapers/magazines
Listen to the radio

5. $0
$20
$40
$60
$80
$100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
DIGITAL ADS GROWING, ALL ELSE FLAT
US Advertising Revenue
Source: ZenithOptimedia, BI Intelligence Estimates
Billions ($)
Digital
TV
Radio
Print
Outdoor

6. Google
Facebook
Yahoo
AOL Twitter
$0
$5
$10
$15
$20
$25
$30
$35
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
Millions ($)
IT’S GOOGLE, FACEBOOK, AND “OTHER”
Global Digital Ad Revenue
Source: Company Filings, BI Intelligence Estimates

7. IN 1H 2016, GOOGLE AND FACEBOOK GREW,
EVERYONE ELSE SHRANK
US Digital Ad Revenue, Billions ($)
$27.5
$14.2
$3.4
$9.9
$32.8
$17.4
$5.7
$9.7
US Digital Ad Revenue Google Facebook Everyone Else
1H 2015 1H 2016
+19%
+23%
+68%
-2%
Source: IAB, Facebook, Google, Digital Content Next

8. THE BELL TOLLS FOR LEGACY TV

9. For the last 20 years, digital has
disrupted print. For the next 20, it
will disrupt TV.

10. TRADITIONAL TV HAS PASSED ITS PEAK
Households With Pay TV Vs. Subscription OTT, % Of US Homes
Source: Nielsen, Leichtman Research Group
86%
82%
41%
53%
Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
Pay-TV Subscription OTT

11. TRADITIONAL TV VIEWERSHIP IS FALLING
Average Time Spent Per Day Watching Traditional TV, HH:MM
Source: Nielsen
4:43
4:19
4:11
4:09
Q2 2013 Q2 2014 Q2 2015 Q2 2016

12. YOUNGER TV VIEWERSHIP IS COLLAPSING
Source: Matthew Ball, REDEF, Nielsen

13. Meanwhile…

14. MODERN TV NETWORKS ARE EXPLODING
0
50
100
Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 2016
Domestic International
Amazon Prime Subscribers
0
20
40
60
80
2012 2013 2014 2015 2016 2017E
0
5
10
15
2011 2012 2013 2014 2015 2016
Netflix Subscribers
Apple TV Installed Base Hulu Subscribers
0
50
2012 2013 2014 2015 2016 2017
Millions
Global US
Millions
MillionsMillions

15. ITUNES, NETFLIX DWARF CABLE NETWORKS
Source: News Reports, Company Filings
$20
$7
$3
$-
$5
$10
$15
$20
$25
2007 2008 2009 2010 2011 2012 2013 2014 2015
Billions ($)
iTunes
AMC
Netflix
Cable Network Vs. Digital Content Revenue

16. YOUTUBE NOW BIGGER THAN CBS
Modern Digital Ad Revenue Vs. Traditional TV Revenue
Source: Company Reports, UBS
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Millions ($)
CBS Ad Revenue
YouTube Ad Revenue
AMC Networks

17. NETFLIX SAW MORE HOURS PER MONTH THAN
ANY OTHER TV NETWORK
Total Hours Of Viewing, Per Month, Per Network
Matthew Ball, MEDIA REDEF

18. We can watch what we want to,
when we want to —
anywhere, on any screen.
MODERN TV NETWORKS ARE JUST BETTER

19. So what’s going to happen?

20. First, TV won’t “die.”

21. Old media don’t die. They get niche-ified.
(See radio and print.)

22. There are three parts of “TV” — and
two are thriving.

23. 1. Modern digital TV networks
will continue to thrive.

24. 2. Access providers will
continue to thrive.

25. 3. Traditional TV networks will go through
~decades of consolidation and pain.

26. THERE ARE TOO MANY LEGACY NETWORKS
Channels Receivable And Watched, Per US TV Household
Source: Nielsen
151.4
168.5
179.1
189.1
197.4
208 205.9
17.8 17.5 17.8 17.5 20.9 19.9 19.8
2010 2011 2012 2013 2014 2015 2016
Avg. TV Channels Received Avg. TV Channels Watched

27. THERE AREN’T ENOUGH (GREAT) SHOWS
Average Original TV Series Each Year Vs. Survival Rate
Source: Matthew Ball, MEDIA REDEF

28. EVEN TRADITIONAL STRONGHOLDS LIKE SPORTS
ARE STARTING TO SEE DECLINES
Households With ESPN, Millions
Source: Nielsen, WSJ
NFL Football Ratings
Through first 4 weeks, 2015 vs. 2016
96.17
94.4
92.94
90.99
89.01 88.78
Jul'14 Feb'15 Jul'15 Feb'16 Jul'16 Aug'16
Lost 7.4M
households in 2
years
NBC Sunday Night Football: -13%
Fox Sunday: -3%
CBS Sunday: -3%
CBS Thursday Night: -15%
ESPN Monday Night: -17%

29. FORTUNATELY, TV IS AWASH IN MONEY
US Revenue, Billions ($)
Source: Media Partners Asia, 2016
Pay TV
Subscriptions,
145.6
TV Advertising,
72.3
2017E 217.9 B
Total

30. So TV networks will suffer in style.

31. THE NEXT BIG THING

32. NOT SMARTWATCHES OR GLASSES — THESE
AREN’T MEDIA CONSUMPTION DEVICES
Why Apple Watch Owners Wouldn’t Buy Another Apple Watch
Source: Fluent
34%
31%
16%
12%
4%
3%
Too expensive
Not useful
Ugly
Waiting for a better version
Features duplicated by smartphone
Requires smartphone

33. VR/AR HAS POTENTIAL, BUT IT’S STILL
TOO EARLY…
Global VR Headset Shipments Forecast, Millions
Source: BI Intelligence Estimates
0.7
8.2
12.0
17.3
24.4
33.0
42.6
55.1
2015 2016 2017 2018 2019 2020 2021 2022
We are here

34. THE NEXT BIG THING: SOCIAL VIDEO
4
5
6
8
10
Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
4
6
8
10
12
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
6.0 6.3 6.5
7.0
8.0
Q2'14 Q3'14 Q4'14 Q2'15 Q4'15
Daily Video Views, By Platform, Billions
+200%
+150%
+33%
Source: Facebook, Snapchat, KPCB, Bloomberg, Activate, BI Intelligence Estimates

35. THIS IS A NEW KIND OF STORY
• “Thumb stopper”
• Sound optional
• Intimate and conversational
• (Often) square or vertical
• Shareable

36. SOCIAL VIDEOS TRAVEL ACROSS PLATFORMS

37. THE OPPORTUNITY IS MASSIVE
0
500
1000
1500
2000
2500
3000
Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16
Business Insider Monthly Video Streams, Millions

38. Social videos can be evocative,
entertaining, and effective.

40. INSERT “BUCKET OF
WARM CHOCOLATE
CHIP COOKES”

41. Social videos can change behavior
and compel action.

42. THE RAINBOW BAGEL
“We got slammed like you
couldn’t believe. I haven’t
slept in weeks. It’s been crazy
since Christmas, but Business
Insider really put us over the
top.”
-Francine LaBarbara, Marketing
Coordinator, The Bagel Shop

43. TUBING IN THE HAWAIIAN WILDERNESS
• 30+ million views
• “I don’t know how it happened
but WOW”
• Phone’s ringing off the hook
and reservations booked

44. THE SPIDER CATCHER
• 110+ million views
• Sales skyrocketed 500% on Amazon

45. INSERT The queen
of bad robots