Transcript Emerging business models for distribution of

February, 2012
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Consumer
Behavior
Video = 91% of consumer
IP traffic by 2014
Broadcasters
and Media
New distribution platform &
interactive content –
Sky Sport TV on iPad /
RTL on iPhone & iPad
CE/Over The Top
Brand power
Service Provider
Multi-screen offering
becoming table stakes
20%
Netflix = 20% of US
downstream internet
traffic in peak times
Online Video Snacking
11.4 Hour /month
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New business models –
Hulu 2009 revenue: $100M
1st half 2010 revenue: $100M
Building application &
content eco-systems
Hybrid Broadcast Broadband TV:
HbbTV
New Streaming
subscription services
Rising churn and
Subscriber acquisition cost
Partnerships &
Vertical Integration
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Consumer Experience
Business Models
Content Fragmentation
Subscription Fragmentation
Broadcast, Premium, UGC
Broadband, TV, Mobile, Movie rentals, OTT
Device & Screen Fragmentation
Free vs. Paid
TV, PC, Mobile, Gaming, PDA
Interactivity Fragmentation
Ad Dollars Fragmentation
Lean back, Lean forward, Social
Transition from linear TV to online
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3
Age 2+
30.2%
Age 12-17
39.5%
Age 18-34
32.7%
Age 35-54
30.8%
Age 55-64
33.8%
Age 65+
24.8%
Source : Nielsen Convergence Summit
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What Kind of TV Programs do you Stream or Download
and Watch on a PC?
Total
18-34 Age
35-54 Age
55+ Age
Missed episodes of shows I watch on TV
88%
89%
88%
86%
Episodes of TV shows I do NOT watch on TV
27%
36%
26%
20%
Episodes of TV shows I have ALREADY watched on TV
16%
21%
16%
11%
Episodes of past shows that are not on TV now
39%
44%
40%
31%
None of these
4%
2%
4%
7%
Source : CBS Entertainment Panel Survey, July 2009
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Device
Shifting
 75% of respondents watch
video on computers
 Each week, they watch about 1
hour, 45 minutes of video on
computer
 They watch at home 63% of time
 93% of 18- to 24-year-olds
watch video on a computer,
averaging 2 hours, 45 minutes
per session
 40% of respondents watch
video using portable devices
 Each week, they watch about 54
minutes of video on portable
devices
 39% of this time, they are at
home
© 2012 Cisco and/or its affiliates. All rights reserved.
Source: Cisco IBSG Connected Life Market Watch, 2012
Reasons for Watching Computer Video
When at Home
More control over WHEN I watch
41%
Better for multi-tasking
38%
Better content choice
26%
Device is available
Portability
24%
18%
Other
13%
More interactive
12%
Better video experience
10%
Base: Watch Video on the Computer at Home
Consumers Watch Video on Their Computers
To Time-Shift and Multi-Task
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But SP’s Struggle to Deliver
Online Content
on TV /STB
Intuitive Unified Navigation
for All Content
Multi-screen
TV experience
Web 2.0 Experiences on
TV/STB
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• About half of the Netflix users watch it on a console (XBOX 360, Wii or
Playstation 3)
• 89% of the HULU users watch it directly from their PCs (compared to
42% of the Netflix users)
• About 20% of the Netflix users watch it on SmartTV
• 37% of the iPhone users watch video on their phone (6x as likely as the
typical subscriber)
• Vital question: is your content and distribution network ready to be
delivered to all these devices – consoles, PC, mobile devices,
SmartTVs?
Source: GamePolitics.com, Market Watch, Nielsen.com
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John
More Social
Visual
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More
More Mobile
Visual
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Cloud
Network
Client
1
On the content quality and quantity – more and better
2
On the delivery network: delivery on managed and unmanaged networks
3
On the consumer device: delivery to any device
Σ
The weakest (technology) point will ruin the experience
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Network
Reduce Costs
Manage “over the top” video traffic
CapEx: Make better use of resources
OpEx: Manage video bandwidth during
peak usage
Coming
Profitability
Gap
Data Traffic
(Cost)
Cloud
Increase Revenue
Multiple options for monetizing services
enabled by Videoscape
Enable partnerships
Ad revenue
ARPU per Bit
(Revenue)
Partnered content
Client
Improve Experience
Three-screen experience and session
shifting
Quality of video experience
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Model 1 – Subscription / Transaction



Monthly fee or per transaction purchases (Download
to own, Rental)
Could also be a combination of both.
More appropriate for data SP’s who want to expand
service offering into video space. (Good first step)
Model 2 – Bundle Uplift / Reduce Churn



TV Everywhere offered to higher end service tiers at
no additional fee
Revenue is indirect through encouraging greater
stickiness in higher service tiers.
Further revenue lifts via pull through business.
“You’d like video – you might want to move up to the
higher data service tier”
Model 3 – Advertising Based


This is typically an OTT solution, which don’t have to
be affiliated with Consumer SP’s
Revenue is via advertising, typically as “price per
mili”, “price per click”, and inserted ads in
programming
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Limited Revenue Growth and Increasing Costs
B2C
Broadcasters
Business to Consumer
Network
Termination
$
$
Peering
Points
Service
Providers
Rising Costs:
Increased SAC and Churn
Increased bandwidth usage
Bigger bundle of products
Flattening Revenues:
• Saturated markets – few new subscribers
• Increased use of flat-rate tariffs
• Regulatory & Competitive price pressure
$
Time
Today
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Differentiated User Experience, Service Velocity and Monetization
Broadcasters
B2B2C
Government
Business to Business to Consumer
Advertisers
OTT/Content
Aggregator
Application
Developer
$ $
$$$
Service
Providers
$ $ $$$
$ $$
Utilities
SP Platform
Leverage Network and Data Assets
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Tomorrow
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• Streaming was limited to the
customers of Verizon only, for
PC and mobile platforms, based
on Silverlight
• Time lag was between 15 sec
and 45 sec.
• 2.1m users watched the game
online (from total 111.3m),
average 39 min/view.
• Vital question: is your distribution network ready to take a load of 2% of
your viewers, going on-line? Would you compromise the quality of your
top content because of lack of preparation?
Source: Streamingmedia.com, nfl.com
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