SW Digital media pack

StrategyEye South West SIC Digital Media Review Trend Analysis and Discussion

Overview Introduction Social Networks & User Generated Content Virtual Worlds E-learning & distance learning Audiovisual Production for New Distribution Channels Broadband Media Distribution RFID & NFC Avatars & Online Personas Green ISPs Pervasive Media Conclusion

Introduction: Methodology We have reviewed 530 South West region organisations in the analysis, 416 of which were relevant Sources: South West team, Digital Markets ; StrategyEye’s online intelligence platform (with company information from thousands of news and expert blog sources) Our assessment of regional strengths and weaknesses combines several factors Strengths and weaknesses benchmarked against other regions around the world Regional strengths identified based on: Number of relevant companies in industry categories Size of relevant companies in industry categories Innovation created by relevant companies in industry class / Reputation of relevant companies in industry categories We have created a longlist of opportunities taking into account further industry factors Global market size and growth (Low / Medium / High) South West Ticket to Play (Disadvantaged / Neutral / Advantaged) Takes into account South West strength in relevant industry classes .. .. reputation (of region and individual companies) in relevant industry classes .. and “stickiness” (sustainability) of regional strength longlist (trend spider) trend presentation Regional strength: strong combination of companies in region Regional weakness: no significant companies in region

Introduction: Key Findings from the Digital Media SIM Key findings from Strategic Industry Map Interactive Agencies Strong presence of creative agencies New media development supported by interactive advertising agencies Distribution Services Weak presence of content distributors B2B Internet and content management services have potential, with ecosystems made up of many small operators Infrastructure Strong support from academic community Experimental projects push development of new media Content Production Representation in all areas Strength in Film & TV production

Social Networks & User Generated Content

Opportunity Description Online Social Networks are built around websites and tools which aggregate users, based on their relationships with each other and on communities. Users form groups around similar content interests, and use their profiles to tag and find other users with common interests. On most networks, users can share self-generated content, especially multimedia such as video clips, music and/or film. According to Jupiter Research , the size of the online video market will be of USD 15.6bn by 2012; anectodal evidence and several projections suggest that the relative majority of this matket will be related to user-generated content. According to ComScore , YouTube currently claims about a quarter of the audience with 60.6m visitors, while the Europe-based Dailymotion video sharing network has 14.5m users. The larger UGC networks, such as YouTube and DailyMotion, generate large revenues from advertising. Site revenue can also be generated through partnerships with holders of strong brands and with licensed content providers. This area is an opportunity for the South West of England, as the cost of entry for developers of social network add-ons is quite low (e.g. a sizeable cottage industry has sprung up to design software extensions to the popular Facebook network over the last year), and the region is rich in creative individuals and institutions. Some social networks are already based in the area. Key Player Profiles Market Size SW Ticket To Play D . N . A Why Many interactive advertising agencies present in the region Abundance of content creators in SW UGC is transferable to traditional distribution channels such as TV Why Not The viability of in-video advertising has yet to be proven, but is a central part of the revenue model of this opportunity (as opposed to banner ads). There are strong risks and concerns related to copyright infringement and inappropriate content L M H Social Networks & User Generated Content YouTube User-generated video site The most popular video sharing site, with 163m unique visitors worldwide in April 2007 ( Source: ComScore ). The company was b ought by Google for USD1.65bn, and is battling several copyright lawsuits, including a USD1bn suit from Viacom Webbliworld Social network for children Webbliworld is a “child” of Bristol-based Aardman. Users are known as “Webblis” and communicate via lists of pre-written phrases as a moderation feature. The site is policed and has a parents page, as well as an application for reporting inappropriate content Artist Log Specialist music artist network A Music focused blog platform that enables artists to chat, communicate and post videos of their own work. The website is centred around the upload of videos, which other members and visitors to the site can view Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category

Opportunity Description Virtual Worlds are persistent, graphical 2D or 3Denvironments where multiple users simultaneously navigate and interact with the world using virtual personas (avatars). Several worlds allow users to own “property” and to create buildings and businesses. Brands and companies can build a presence in virtual worlds, interacting with users with purposes such as brand awareness increase, customer relations, and recruiting. Massive Multiplayer Online games (MMOGs) are subcategory of Virtual Worlds. Virtual Worlds are expected to overtake social networks as a way of socialising on the web. The market for MMOGs in the US and European market is now worth more than USD1bn (Source: Screen Digest) . One emerging trend is the establishment of niche MMOGs, in particular teenage-specific environments, which grew by 68% in 2006 (Source: Hitwise) and are notable for their long user sessions. South West advertising, recruitment and interactive agencies can benefit from this trend. Some companies in the region have already begun to move towards the creation of virtual worlds, such as Futurelab (which has a prototype project “Ecolibrium” which is seeking funding for further development). Key Player Profiles Market Size SW Ticket To Play D . N . A Why 4 out of 5 Fortune 500 companies will have a Virtual World presence in 2011 ( source: Gartner ) Large portion of users spend long periods of time on-line on Virtual Worlds SW interactive agency cluster is a potential local accelerator Why Not Experimental market with complex user interfaces. While the media buzz on the subject is high, the value is still unproven No virtual worlds currently in SWRDA, although there are social networks L M H 2) Virtual Worlds Lindenlab Virtual World provider Developer Second Life, a collaborative, immersive and open-ended virtual world that enables its users to act in a parallel, “realistic” space governed by virtual economies and social relationships. Linden Lab has forged several partnerships with content owners and advertisers to deliver content to the inhabitants of Second Life Habbo Hotel Virtual World provider Low-end graphics, “room”-based Virtual World that enables its users to communicate via Instant Messaging. Aimed at teenagers but also used by organisations hosting virtual parties and conferences Doppelganger Virtual World Provider Developer of avatar based virtual world vSide that specialises in music enabling users to interact with live acts represented by real artists. The virtual world features virtual concerts and interviews with favourite artists. Music labels are ever more turning to virtual worlds as diversification in digital cross promotional strategies. Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category

3) E-Learning & Distance Learning

Opportunity Description E-learning and distance learning is the provision of online / downloadable education resources via the web for consumer and corporate use. Especially in higher education, there is an increasing trend to create virtual learning environments in which all aspects of a course are handled through a consistent user interface, standard throughout the institution. The UK e-learning market is growing at a rate of 18% per annum (Source: Epic). According to the same research report, topline revenue per employee increased by 24% over a period of 3 years. Public funding is also available – the EC has announced that it will commit 10% of all funds available in its education and training programs (around EUR 300m) to e-learning. E-learning is a strength in the South West, and as such the recent tendency towards collaborative online learning platforms (such as Massive Multi-User Online Learning, or MMOL environments) is relevant. Online learning startup, Grockit, recently raised USD2.7m in first round funding, demonstrating investor interest in the area. Key Player Profiles Market Size L M H SW Ticket To Play D . N . A Why MMOLs fits well with the collaborative, interactive approach generally considered to optimise learning SW is already strong in e-Learning Established academic community could further diversify by increasing e-learning activities, and there are opportunities to establish industry-academia exchange programs Why Not Virtual classrooms are still in early stage and may not appeal to all students (especially older, lifelong learners) Lack of interoperability standards could slow e-learning growth 3) E-Learning & Distance Learning Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category Grockit Online learning Grockit is a web learning environment for MBA entrants. Online sessions are taught via collaboration software such as WebEx and MMOL “games”, and currently cater to GMAT preparation. The company is able to exploit the learning benefits of user-collaboration whilst undercutting competitors Available Light Productions Interactive agency The Bristol-based company creates web and E-learning products. They are specialists in Flash based E-learning sites for major broadcasters and educational websites. Clients include BBC, Channel 4 Learning, Teachers TV and Grid Learning Futurelab Learning & Training Solutions Future labs is a not for profit specialist in educational ICT. Recent projects include Newtoon, a mobile phone and web activity which aims to embed physics learning in mobile gaming. Also, prototype virtual world “Ecolibrium” aimed at ecological learning seeking funding for further development

4) Audiovisual Production for New Distribution Channels

Opportunity Description Content that has been produced for screen media such as theatres or TV in the past needs to be re-mastered to be effective on other distribution channels, such as mobile TV and IPTV (Internet Protocol TV). Moreover, the amount of content produced specifically for these alternative channels is on the increase. Both mobile TV and IPTV are set for rapid growth. According to ABI Research , the mobile video market will generate revenues of USD 17bn by 2012, up from USD 1bn in 2007. Over a comparable period, iSuppli estimates a 33x increase of global IPTV revenues. Although service pick-up by consumers has been slow, mobile TV is seen as one of the main potential sources of alternative operator revenue, needed to offset the erosion in core voice and messaging margins. Mobile TV and IPTV both also have the potential to provide highly targeted advertising opportunities to young audiences who are deserting conventional broadcast channels, with more personalised advertising clips compared to terrestrial broadcasting’s one-size-fits-all, reach-emphasizing advertising. Key Player Profiles Market Size SW Ticket To Play D . N . A Why The Number of global mobile TV users is expected to rise to 488m by 2010, up from the current 60m ( Source: Gartner ) SW strengths in content production such as animation and CGI, as well as natural history, lend themselves well for made-for-mobile products Nokia, Orange and broadband TV provider ChewTV already have a presence in the SW Why Not The market is still embryonic: M:Metrics data suggests that the audience is very small (only 0.7% of the UK population watches mobile TV at least once a month) , and that most users watch free user-generated videos High costs and unclear pricing. Even if content is offered for free, network operator data charges are still high 4) Audiovisual Production for New Distribution Channels L M H Veoh Media player provider A Startup company that provides internet TV using peercasting. VeohTV is a downloadable video player, that isn’t restricted to licensed content (although it has secured content partnerships with content providers such as Time Warner, Paramount Pictures and CBS). A 6 mo. 223% growth in users is attributed to the launch of Veoh player (Source: Newswire) Joost Internet TV platform Joost is a broadband TV platform which only offers content endorsed by copyright owners that is produced according to professional standards. Advertising is its main revenue source, and to date it has signed trials with brands such as Coca Cola and Nike Nokia on Demand Music download company In October 2006 Loudeye Corp. was purchased by Nokia and rebranded to Nokia On Demand. As part of this transaction, Nokia acquired OD2 previously owned by Loudeye. Nokia has extended its offering portfolio to include open distribution of content through the launch of Ovi, a mobile and online music portal. Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category

5) Broadband Media Distribution

Opportunity Description Broadband internet connections allow for scheduled broadcast of TV channels or on demand TV and movies delivered across the open Internet, using standard hardware and protocols. Methods of delivery can range from intermediaries such as P2P networks, RSS feeds, and content delivery networks to straight data streams from the providers. According to the Office of National Statistics the UK distribution channel for broadband TV is quite developed, with just 13.9% of UK internet connections being dial up; the rest are broadband. iSuppli estimates that the global IPTV market will generate revenues of USD 26.3bn in 2011, up from USD 779.2m in 2006. There is scope for existing companies with SW interest, such as BBC.co.uk, to exploit associated interactive advertising, where users are given incentives to watch streamed advertisements and provide their feedback on them. Cornwall is receiving another 5 years of funding to converge with the rest of the UK. Possible allocation of capital could go to the depoloyment of fibre optic cabling in Cornwall, possibly resulting in a testbed for new broadband media distribution technologies and services Key Player Profiles Market Size L M H SW Ticket To Play D . N . A Why IPTV can be a cost-effective alternative to traditional distribution methods Innovative content formats can be launched, thanks to the possibility for programs to be interactive and/or blended into other internet-delivered media Substantial strength in research Why Not Consumer concerns about image quality, download speed and bandwidth requirements For traditional programming, there is no real differentiator that makes IPTV stand out from broadcasting methods 5) Broadband Media Distribution Tiscali Internet-telephony-IPTV company Tiscali provides “Triple Play” services (voice, broadband and IPTV) to consumers, ass well as hosting services for companies. According to Ofcom , Tiscali’s IPTV services reached 62,000 households in June 2007 BBC UK public broadcaster The BBC’s TV streaming site in the UK was the most popular until being overtaken by YouTube. It recently launched the BBC iPlayer, which allows for the free viewing of BBC archive programs for 7 days Chew TV IPTV-exclusive TV channel A Truro-based broadband TV channel “run by young people for people”. The channel has been involved in community initiatives such as the Chew Music Tour project, in which young people organised and carried out a music band tour of UK schools and venues Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category

Opportunity Description A Radio Frequency Identification (RFID) tag is a chip that can be incorporated into a device for the purpose of identification using radio transmission. While it is mostly used in manufacturing supply chain optimisation, it also has applications in automatic payment and repeat ticketing. Together with Near Field Communication (NFC) transmission technology, the standard has the potential to turn the cellphone into a cash and identification device. NFC-enabled phones are forecast to account for 30% of global handset sales in 2011 ( Source: ResearchandMarkets ), which according to ContactlessNews will be equivalent to about 500 million cellular handsets incorporating NFC capabilities for payments at points of sale and to access information from smart objects. NFC enables wireless communication between devices over a short distance (up to 20cm), and is compatible with the existing contactless infrastructure already in use for some public transportation payment systems. There are also applications in interactive Outdoor advertising, where the mobile phone is used to read RFID tags on billboards in order to get information and promotions on the move. Key Player Profiles Market Size L M H SW Ticket To Play D . N . A Why NFC enabled phones are becoming increasingly available Nokia’s investment and development in the NFC area, and its presence in the SW Consumers keen to use mobile handsets for payment and ticketing purposes SW hosts many music events at which the technology would be advantageous Why Not Potential consumers and third party application providers have expressed concerns around the security of using mobile handsets for monetary transactions Numerous competing standards NFC still being tested 6) RFID & NFC Transport For London Public transport authority TFL uses RFID technology for its Oyster Card payment system. Future trials include smart billboards that contain embedded NFC chips which enable users to obtain travel information, and a partnership with Barclays to use Oyster cards for third party micro-payments O2 Mobile network operator O2 has been experimenting with the use of NFC technology for ticketing and VIP admission at its events, e.g. at the Wireless Festival in London Nokia Mobile phone manufacturer In June 2007 Nokia entered into a j oint venture with Giesecke & Devrient GmbH to create and operate a platform for over-the-air transactions with NFC enabled devices Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category

Opportunity Description Companies that specialise in providing consumers with personalised images (avatars) to represent themselves in social networks and virtual worlds such as Second Life. These images can be edited by the consumer to suit their tastes and the way in which they want to present themselves. While virtual worlds have in-built avatar creation functions, some companies specialise in providing consumers with avatars that can be used to represent themselves across third party instant messaging, blogs, and social networks, projecting a consistent virtual persona across all Internet activities that can better handle communication nuances. This area is an opportunity for SwRDA as an extension / complement of the trends towards virtual worlds for socialising and learning. Research suggests that younger users of virtual communities put great emphasis on the fun and entertainment aspects of avatars, including added avatar functionalities (e.g. whispering). Avatars are also used by organisations as a way of interacting with consumers and conducting market research. A famous example is Ikea's Anna, an avatar designed to guide customers around the Ikea website Some of these avatars are commonly known as "bots". Key Player Profiles Market Size L M H SW Ticket To Play D . N . A Why Projection of an emoting, identifiable, anonymous online persona appealing to consumers Allows users to project their presence across the Internet in a consistent and novel way Strong representation of creative animation producers in SW Why Not The revenue model for Avatars, which relies mainly on advertising and upgrades, is still unproved The mass market appeal of the technology is also not certain 7) Avatars & Online Personas Saw You Avatar provider Saw You is the parent company behind the WeeMee avatar firm, which recently signed a partnership with Microsoft to provide animated characters for Windows Live Messenger's users in the US, the UK, Spain, Belgium, Holland, France, Germany, Norway, Sweden, Australia and Canada Zweitgeist Avatar provider Produces persistent avatars, or Weblins, which provide a visible presence on the internet . Users develop an avatar that appears to, and allows to interact with, other Weblin users on websites they view 3D Works Design company Dorset based company offering computer generated three dimensional visualisation. Provides interactive multimedia solutions for property developers, manufacturers and industrial designers. Interactive design capabilities could provide scope to move into avatar design Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category

Opportunity Description Green ISPs are internet service providers which either power their service provision with green technologies, or offset all their energy requirements with green compensations in order to become carbon neutral. According to M&C Saatchi , the market for environmental products and services is expected to be worth GBP30bn by 2010. A separate study by Mori-Mintel shows that the current core market of 10% “hard core” ethical consumers is projected to increase between 30 and 50% of the population by 2010. Additionally, according to studies conducted by the AEA Energy & Environment , the South West of England has had the highest level of renewable energy generation up till 2006 with approximately 1,700GWh. The South East crossed this threshold in 2006 however the South West is still one of the largest generators of clean energy. The segment is supported by environmentally conscious consumers in the developed world, as well as in developing countries. This is an opportunity for the SW in that UK consumers are increasingly conscious of the green implications of their actions, and also because of the link to environmental technologies, which is an emerging sector in the South West. Key Player Profiles Market Size L M H SW Ticket To Play D . N . A Why Topic of increasing consumer interest Links with SWRDA Cleantech sector development Presence of Green Grid (HP), an industry-wide consortium dedicated to curbing datacentre power consumption Why Not Despite the environmental benefits, green ISP solutions must remain competitive in respect to price and service quality to be viable 4/40 gap: several surveys conclude that 40% of consumers say they are willing to buy greener, however only 4% actually does 8) Green ISPs Green WiFi Wireless service provider The company works closely with the MIT “one laptop per child” initiative, and offers solar-powered WiFi solutions built with low-cost components and open source software, which are meant to be used in poor urban areas with lacking infrastructure. Eclipse Internet Carbon neutral ISP UK broadband internet service provider with carbon neutral status . The company accounts for carbon usage offset with programmes including wind farms in India, a methane capture project in Pennsylvania and a Ugandan forestry project Bristol Wireless Communications Technology Provider Engages in projects that are committed to social improvement by building wireless computer networks that are both economically and environmentally sustainable Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category

Opportunity Description Only a generation ago the use of media was confined to three differentiated channels – TV, radio, and print – that had dissimilar use conditions, a clear one-to-many “broadcasting” distribution model, and few points in common. The development of broadband Internet and third generation mobile networks, as well as the price drop and increase in availability of multimedia recording devices and mass storage disks, is blurring the lines between the different media, and radically modifying the way that consumers access content. One result of the changes in use is that media is becoming more and more ubiquitous and continuous – content can now be accessed on different platforms, in different environments, as a totally immersive experience. It now is possible to start watching a movie on a PC after work, to continue watching it seamlessly on one’s mobile while commuting home, and to finish watching it on one’s living room TV. Besides continuity, pervasive media is also concerned with embedding digital information in the everyday world around us to create ubiquitous immersive experiences. Recent innovations in mobile computing and real time content video streaming will have a large impact on the creative industries. Pervasive media has profound long-term implications, as it will ultimately mean that consumers and businesses are fully connected and immersed in media at all times. Key Player Profiles Market Size SW Ticket To Play D . N . A Why Increased consumer content creation and feedback to businesses drive better client relationships Opportunities to advertise where consumers are more receptive e.g. on bus journeys Mobile operators well positioned to deliver premium content direct to subscribers' handsets Why Not “ Generation gap” means that there is a lot of resistance to constantly pervasive media amongst older age groups High cost of new technologies necessary for delivery through multiple new channels L M H 9) Pervasive Media Key : Company with SW HQ Multinational company with significant presence in SWE Leading Company in Category MoMedia Interactive outdoor advertising Agency focuses on urban community campaigns, offering an effective advertising platform that integrates on-screen content with text and web interactivity, increasing advertisers’ public exposure through interactive messages, promotions, and info-tainment programmes. HP Labs – Mobile Bristol Pervasive Mobile Media HP Labs have developed Mobile Bristol, a project that explores and develops experimental test-beds for technology and research on pervasive mobile media. The aim of the project is to recreate a “digital” canvas over Bristol featuring digital experiences. University of the West of England Higher Education Leading creative University, UWE’s School of Creative Arts includes the Bristol School of Animation, which is renowned for animation production, set design, sound design, interactive multimedia and CGI animation. Training is supported by studios including Aardman Animations, Fictitious Egg, Bolex Brothers and the BBC Animation unit

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