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LUMA's The State of Digital Video

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LUMA Partners presents “The State of Digital Video,” as presented at the VidCon conference on January 23, 2015. This presentation reviews some of the key topics discussed at the conference: the rise of digital video, the traditional TV model, and convergent video.

Published in: Internet, Technology
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LUMA's The State of Digital Video

  1. LUMApartners The State of DIGITAL VIDEO Terence Kawaja
  2. The Rise of Digital Video
  3. Hours 29% Source: eMarketer, comScore U.S.  Digital  Video  Proper6es   Ranked  by  Unique  Video  Viewers Average  Time  Spent  per  Day   with  Digital  Video  by  Device  in  U.S. YouTube Has Dominated the Rise of Digital Video 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2011 2012 2013 2014 2015 Tablet Smartphone Desktop Other
  4. But Now It’s Not the Only Game in Town
  5. Facebook Auto-Play Videos are Ubiquitous 75%From Mobile 4 Billion Daily Views
  6. Mobile Apps Bring Live Content to Your Fingertips
  7. Snapchat Has Built Mobile-First Advertising
  8. Publishers Are Making Video Too
  9. There Just Isn’t Enough Supply! Display  Ad  CPM $1.90 Video  Ad  CPM $24.60 Source: ZenithOptimedia, Note: Average CPM
  10. $2.9% $4.2% $6.0% $7.8% $9.5% $0.0% $1.0% $2.0% $3.0% $4.0% $5.0% $6.0% $7.0% $8.0% $9.0% $10.0% 2012% 2013% 2014% 2015% 2016% CAGR:&34%& CAGR:&172%& Source: eMarketer $  billions ProgrammaAc  Video Digital  Video Digital Video Spend Continues to Rise
  11. Source: eMarketer $  billions ProgrammaAc  Video Digital  Video TV $0.0$ $10.0$ $20.0$ $30.0$ $40.0$ $50.0$ $60.0$ $70.0$ $80.0$ 2012$ 2013$ 2014$ 2015$ 2016$ $64.5 $66.4 $68.5 $70.6 $73.8 But is Still Only a Fraction of the TV Market
  12. Traditional Digitalvs.
  13. Traditional Digitalvs.
  14. 100 : 1 19 Buckets 36 ~  100 Companies ~  400 $150  billion Total  Spend $6  billion $1.5  Billion $  /  Company $15  Million Traditional TV vs. Digital Video Players
  15. 100 : 1 Market Cap: $2 Trillion Cash: $530 Billion 5x Cash New Entrants Have Plenty of Money to Build or Buy
  16. Screens Delivery Content 2008 Was So Simple: Traditional & Digital Silos
  17. Delivery Screens Content Second Screen Chromecast /Airplay Partnerships “Netflix + Disney” Convergence Begins with Device Proliferation
  18. OTT/CTV Delivery Screens Content Partnerships “Netflix + Disney”
  19. TV Economics
  20. Content Channels Media MVPDs Device / UI 9,000+ Channels C O N S U M E R CTV Devices OTT UI Traditional TV Content Model
  21. Content Channels Media MVPDs Device / UI C O N S U M E R Programs NetworksChannel Bundles “Must Carry” & Broadcast Content Traditional TV Content Model
  22. Content Channels Media MVPDs Device / UI Tier 1 Cable and Broadcast Content M A R K E T E R CPG Upfronts$30BB $40BB Spot and Scatter TV ads $6.3BBComcast bundles in sports content C O N S U M E RAffiliate Fees $40BB Retrans Fees $80BB Subscriptions Traditional TV Content Model
  23. Bundling Enables Pre-Funding of Content 10%Support100%
  24. Bundling Enables Pre-Funding of Content
  25. Final Late Night Episode Evolution of Top Rated Show Most Viewed Episode 1993 1990 1992 80MM 52MM 38MM TraditionalTV ContentModel
  26. Final Late Night Episode Evolution of Top Rated Show Most Viewed Episode 1993 2007 1990 2013 1992 2009 80MM 30MM 52MM 8MM 4MM 38MM Crosschanneldevices killedthetelevisionstar!
  27. MediaChannels MVPDsContent Device / UI C O N S U M E R “Just broadband only, thanks!” Subscription content on license Discrete content “Made for web” content “I forget what channel it’s on I just stream it” “Artist to Consumer” Digital Opens Different Distribution & Content Strategies
  28. Big $$$ A18-49 Reach Incremental Budget A25-54 Reach Paying 30-50% more for .5-1% more reach?! TRP Source: Needham & Co. , Nielsen Incremental Cost Per Reach Point Incremental is Increasingly Expensive on TV!
  29. eMarketer Digital Video Spend Projection $0 $0 Source: eMarketer eMarketer TV Spend Projection Yet TV Dollars aren’t Slowing…
  30. TV is Definitely Not Hurting Yet Leslie Moonves, CEO 3 Year Compensation: $186 Million 2014 Revenue >
  31. Cracks In The Wall
  32. Slack in Demand for Upfront Buys
  33. OTT Options are Growing $50-­‐$70 $8 $9 $20 $99/year $15 $6 Average  Basic  Cable  Packages ~$120 Source: NPD Group $15 Stream
  34. Programmatic Platforms Targeting Technology Attribution / Analytics Low-Cost Production Integrated Workflow Premium Content Brand Relationships Convergence of Two Worlds
  35. Selling Points Reverse in 2015 Upfronts NewFronts Selling  Premium  Content Selling  Data-­‐Driven  Approach
  36. Selling Points Reverse in 2015 Selling  Data-­‐Driven  Approach Selling  Premium  Content Upfronts NewFronts
  37. Now TV is Being Aggressive with Data Credit  Card  Data Subscriber  Data Target  Audience Yogurt  Buyers Frozen  Snack  Buyers Wireless  Data  Users Inspired by WSJ
  38. Digital is Increasing Investment in Original Content Everyone  is  geVng  in  on  the  game ?
  39. New Tier 1 Shows Backed with Tier 1 Talent
  40. $0 $0 (1) Assumes 7.5% of TV Spend Shifts to Digital Source: eMarketer eMarketer Digital Video Spend ProjectioneMarketer TV Spend Projection Digital Dollars Could Double
  41. Perception vs. Reality in Addressable TV Linear  TV Programma6c  TV Percep6on Reality Linear  TV Addressable     Linear  TV Video  On     Demand (VOD) Over  The  Top (OTT) Digital     Video Programma6c  TV
  42. WARNING: LUMA Decks Usually Call for More M&A
  43. Convergent TV via M&A CONTENT DISTRIBUTION MONETIZATION Media
  44. 31 Video Deals in the Last 2 Years
  45. Digital Video Has a Very Bright Future 1.  Preferred Consumer Media 2.  Continued Device 3.  New Content Formats 4.  Ad Inventory Shortage 5.  TV Demand Shift 6.  Strategic Exit Opportunities
  46. New York | San Francisco | Palo Alto Access. Insights. Execution. LUMApartners Thank you! @tkawaja

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