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Digital Content Creation: Where will the funding come from?


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Discusses the business models needed in new media

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Digital Content Creation: Where will the funding come from?

  1. 1. Digital Content Creation – Where will the Funding Come From? The Telefónica Experience Angel Blasco. Head of Films. Corporate Content Unit June, 25th 2008 Telecommunications and Media Forum Madrid, Spain
  2. 2. <ul><li>Telefónica Overview </li></ul><ul><li>Content Creation – Content Adaptation - Services </li></ul><ul><li>Content in Telefónica </li></ul><ul><li>Funding: Looking for Business Models </li></ul><ul><li>Cross – Platform Content </li></ul><ul><li>Conclusions </li></ul>Summary
  3. 3. Telefonica Group: Market Size
  4. 4. What do we do in content? <ul><ul><li>Spain </li></ul></ul>LatAm Telefónica Europe Markets <ul><ul><li>Highlights of results </li></ul></ul>Cable & MMDS <ul><li>800 k customers </li></ul><ul><li>Bra </li></ul><ul><li>Per </li></ul><ul><li>One of the worldwide leaders; 550+ k homes </li></ul>IPTV <ul><li>Bra </li></ul><ul><li>Chi </li></ul><ul><li>Col </li></ul><ul><li>R Checa </li></ul><ul><li>53 MM UVs </li></ul><ul><li>More than 8 MM video users </li></ul><ul><li>20 MM users </li></ul><ul><li>Bigger than any off-deck player </li></ul>Satellite TV <ul><li>500+ k customers </li></ul><ul><li>Bra </li></ul><ul><li>Chi </li></ul><ul><li>Per </li></ul><ul><li>Col </li></ul><ul><li>Arg </li></ul><ul><li>Ven </li></ul>FTA TV leader in Argentina <ul><ul><li>Internet Portals </li></ul></ul>Mobile Portals FTA TV & other <ul><ul><li>Internet Portals </li></ul></ul><ul><ul><li>Pay TV </li></ul></ul>
  5. 5. <ul><li>Telefónica Overview </li></ul><ul><li>Content Creation – Content Adaptation - Services </li></ul><ul><li>Content in Telefónica </li></ul><ul><li>Funding: Looking for Business Models </li></ul><ul><li>Cross Platform Content </li></ul><ul><li>Conclusions </li></ul>Summary
  6. 6. Content Creation – Content Adaptation - Services <ul><li>From a Business Point of View, Digital Platforms are: </li></ul><ul><ul><li>Content Platforms </li></ul></ul><ul><ul><li>Service Platforms </li></ul></ul><ul><ul><li>Promotional Platforms </li></ul></ul><ul><li>Key Driver of Content is the “Interest” of our Customers </li></ul><ul><li>New Platforms have great potential for “Target segmentation” </li></ul><ul><li>Interactivity, Screen Size, Speed, Portability… shape Content of each platform </li></ul><ul><li>Content may be “Adapted” from other Platforms or “Created” </li></ul><ul><ul><li>From Newspapers to Music or Movies </li></ul></ul><ul><ul><li>From “Mobisodes” or “Mobigames” to “You Tube” or “Uniqlock” </li></ul></ul><ul><li>Content may be “Professionally Produced” or “User Generated” </li></ul><ul><li>… Or “User Moderated” </li></ul><ul><li>A Whole Universe of Services around the Customer </li></ul>
  7. 7. Interactivity: VoD, interactive services and other features Video on Demand <ul><li>Delivery platforms with full control over content </li></ul>Interactive Services <ul><li>Interactive content that can complement and enhance customer experience </li></ul><ul><li>Internet & e-mail </li></ul><ul><li>Maps </li></ul><ul><li>Information </li></ul>Camera Choice <ul><li>Other features that make content new experience customer </li></ul>
  8. 8. <ul><li>Telefónica Overview </li></ul><ul><li>Content Creation – Content Adaptation - Services </li></ul><ul><li>Content in Telefónica </li></ul><ul><li>Funding: Looking for Business Models </li></ul><ul><li>Cross Platform Content </li></ul><ul><li>Conclusions </li></ul>Summary
  9. 9. Pay TV <ul><ul><li>Active since 1997; pioneered IPTV in 2004 </li></ul></ul><ul><ul><li>IPTV as core technology choice </li></ul></ul><ul><ul><li>DTH and Cable to ensure Content offer in selected areas </li></ul></ul><ul><ul><li>Move towards personal TV </li></ul></ul><ul><ul><ul><li>Personalized line-up selection </li></ul></ul></ul><ul><ul><ul><li>PVR </li></ul></ul></ul><ul><ul><ul><li>VoD </li></ul></ul></ul><ul><ul><ul><li>Catch-up TV </li></ul></ul></ul>Telefónica TV activities
  10. 10. Internet <ul><ul><li>Active Portal since 1999 </li></ul></ul><ul><ul><li>Expanded by content download/streaming services </li></ul></ul><ul><ul><ul><li>Terra TV </li></ul></ul></ul><ul><ul><ul><li>Sonora/Pixbox </li></ul></ul></ul><ul><ul><li>More than 53 MM unique visitors per month </li></ul></ul><ul><ul><li>Top 3 or 4 in all markets. Usually sole non-GYM performer among market leaders </li></ul></ul>Telefónica Internet (PC) activities
  11. 11. Mobile <ul><ul><li>One of the mobile forerunners in content </li></ul></ul><ul><ul><li>Mobile portals in all markets </li></ul></ul><ul><ul><li>Strong non-SMS data revenues </li></ul></ul><ul><ul><li>Early mover in </li></ul></ul><ul><ul><ul><li>Full-track downloads </li></ul></ul></ul><ul><ul><ul><li>Video </li></ul></ul></ul><ul><ul><ul><li>Open mobile internet </li></ul></ul></ul>Telefónica Mobile Internet activities
  12. 12. Specific reasons to enter content 35% Description <ul><ul><li>Extend and improve associations </li></ul></ul><ul><ul><li>Brand spillovers </li></ul></ul><ul><ul><li>Access to new elements of discretional spending </li></ul></ul><ul><ul><li>Up to 100% more than existing base </li></ul></ul>GROWTH FOCUSED <ul><ul><li>New revenue sources </li></ul></ul><ul><ul><li>Support to differentiation </li></ul></ul><ul><ul><li>Content/service players extending its market position into telecoms services </li></ul></ul><ul><ul><li>Content distributors exploiting infrastructure to provide telecoms services </li></ul></ul><ul><ul><li>Avoid churn and pricing pressure </li></ul></ul><ul><ul><li>Competitive matching </li></ul></ul><ul><ul><li>Protection against </li></ul></ul><ul><ul><li>downstream moves </li></ul></ul>DEFENSIVE
  13. 13. Some experiences about availability of Content Sample Developments integrating creation, adaptation, and distribution of content on multiple platforms? DSL with music subscription included in the monthly price TV over 3G - Live F1 (Ad Funded) Terra TV FreeoD – Series & Movies Full tracks Download O2 UK and others Over 1 Million tracks on your mobile for only 6€ per month IPTV
  14. 14. Flexibility: “Time shifting” <ul><li>PVR on net </li></ul><ul><li>PVR on deck </li></ul>“ Te lo Perdiste” PVR New services give customer full control over the TV: forward, stop, rewind….
  15. 15. Flexibility: “Place shifting” <ul><li>Mobile TV offer’s already allows access to TV channels on simulcast </li></ul><ul><li>Spain: 40 channels, of those: </li></ul><ul><ul><li>20 channels in simulcast: MTV, Hollywood, Historia, Odisea, Intereconomia etc </li></ul></ul><ul><ul><li>20 channels with special version exclusive for mobile (“Loops”): Paramount Comedy, Nick, Boomerang etc. </li></ul></ul>
  16. 16. <ul><li>Telefónica Overview </li></ul><ul><li>Content Creation – Content Adaptation - Services </li></ul><ul><li>Content in Telefónica </li></ul><ul><li>Funding: Looking for Business Models </li></ul><ul><li>Cross Platform Content </li></ul><ul><li>Conclusions </li></ul>Summary
  17. 17. Where will the Funding come from? Dealing with the “Right to See” Producers Produce The Product Equity Investors Library value Soft Money Grants Subsidies Sponsoring Product Placement Sequels Prequels Spin-offs Advertising Pre – Sales MGs Sales Revenue Sharing Film – DVD - TV New Media Financing Producing Distributing Exhibiting Loans Prizes Deferrals
  18. 18. Allocation of Players in the value chain As online distribution increases, allocation of revenues will move down stream the chain Final Customer Distributors Aggregators Rights Holders Creators
  19. 19. Financing models in online distribution Transactional – Subscription – Free On Demand Upfront Fee Revenue Share (With or W/O MG) Ad Share (With or W/O MG) <ul><li>Integrated Music with ADSL </li></ul><ul><li>VoD – IPTV </li></ul><ul><li>Full Track download </li></ul><ul><ul><li>(Aggregator or content Provider) </li></ul></ul><ul><li>Mobile VoD over 3G </li></ul><ul><ul><li>(Aggregator or content Provider) </li></ul></ul><ul><li>Terra TV Spain </li></ul><ul><li>F1 </li></ul>
  20. 20. Adjustment of business models to digital convergence Bundles Live content and interactivity Aproaching to date to date window and longer Viewing Periode for customers Flat Rate and Dual Delivery Services Free Content on PC in the same window that uses Free to Air TV Operators Nature of content makes networks the natural distribution system Exclusivity Rights for Music Concerts
  21. 21. <ul><li>Telefónica Overview </li></ul><ul><li>Content Creation – Content Adaptation - Services </li></ul><ul><li>Content in Telefónica </li></ul><ul><li>Funding: Looking for Business Models </li></ul><ul><li>Cross Platform Content </li></ul><ul><li>Conclusions </li></ul>Summary
  22. 22. Evolution of cross-platform offers will push integration 12 6 3 9 1 2 4 5 7 8 10 11 While commuting, Maria watches the Best-of-the-Week of OT in her mobile Once at home, she downloads a more extended version of OT weekly summary to the PC Maria downloads the full-track of the last OT programme, and also receives the ringtone and wallpaper in her mobile Beep Beep!!! An alarm sounds it its mobile: OT is going to start in 5 minutes!!! She runs to the TV The program is over and Maria joins the OT forum from the PC and draws up a ranking of the best songs Maria chats through TV IM with Carlos about today’s singers’ performances Voting starts! Send an SMS with the name of your favourite singer to make him win 1 2 3 4 5 6 7
  23. 23. <ul><li>Telefónica Overview </li></ul><ul><li>Content Creation – Content Adaptation - Services </li></ul><ul><li>Content in Telefónica </li></ul><ul><li>Funding: Looking for Business Models </li></ul><ul><li>Cross Platform Content </li></ul><ul><li>Conclusions </li></ul>Summary
  24. 24. Summing up <ul><ul><li>Broadband explosion </li></ul></ul><ul><ul><li>Digitalization of content </li></ul></ul><ul><ul><li>New user needs and expectations </li></ul></ul><ul><ul><li>New competitors </li></ul></ul><ul><ul><li>All platforms </li></ul></ul><ul><ul><ul><li>Pay TV </li></ul></ul></ul><ul><ul><ul><li>Internet services </li></ul></ul></ul><ul><ul><ul><li>Mobile </li></ul></ul></ul><ul><ul><li>Rationale </li></ul></ul><ul><ul><ul><li>Defensive </li></ul></ul></ul><ul><ul><ul><li>Growth-driven </li></ul></ul></ul><ul><ul><li>Support of a strong marketing machine </li></ul></ul><ul><ul><li>Bundling </li></ul></ul><ul><ul><li>Effectiveness in content acquisition and economies of scale </li></ul></ul><ul><ul><li>Innovation: technology and beyond </li></ul></ul><ul><ul><li>Increasingly able to create 360º cross-platform offers </li></ul></ul><ul><ul><li>Content, broadband and digital services 14% of revenues </li></ul></ul><ul><ul><li>Growth well above (5x) overall company growth or telecom market </li></ul></ul>Telefónica: leading growth in digital entertainment Opportunity brought by industry changes Telefónica broad scope in content Strategic focus enabling effective entry Already a leading player and speeding up
  25. 25. Some Conclusions <ul><li>Content will “find its way” to the Consumer, depending the “interest” it may generate. </li></ul><ul><li>Cross plataform is a multiplier when something hits that interest </li></ul><ul><li>The Best ideas are still to come </li></ul><ul><li>We try to approach “Content” as a “Stand alone business”, not only as a “hook” for selling something else. </li></ul><ul><li>We’d like to monetize content, services and promotions in a way that doesn’t “burn” the customer. Therefore the importance of creating communities, transparency, and balance between “real value” and “perceived value” </li></ul>
  26. 26. Thank you [email_address]