February, 2012 Emerging business models for distribution of video content - PowerPoint Presentation

Slide1

February, 2012

Emerging business models for distribution of video content

Market Dynamics

CE/Over

The Top

Brand power

Building application & content

eco-systems

New Streaming

subscription services

Service Provider

Multi-screen offering becoming table stakes

Partnerships &

Vertical Integration

Rising churn and Subscriber acquisition cost

Broadcasters and Media

New distribution

platform & interactive content –

Sky Sport TV on

iPad

/

RTL

on

iPhone

&

iPad

Hybrid Broadcast Broadband TV

:

HbbTV

New business models –

Hulu

2009 revenue: $100M

1

st

half

2010

revenue: $100M

Consumer Behavior

Netflix = 20% of US downstream internet traffic in peak times

Online Video Snacking

11.4 Hour /month

Video = 91% of consumer

IP traffic by 2014

20%

3

Consumer Experience

Content Fragmentation

Broadcast, Premium,

UGC

Device &

Screen Fragmentation

TV, PC, Mobile, Gaming,

PDA

Interactivity Fragmentation

Lean back, Lean forward, Social

Business Models

Subscription Fragmentation

Broadband, TV, Mobile, Movie rentals, OTT

Free vs. Paid

Ad Dollars Fragmentation

Transition from linear TV to online

© 2012 Cisco Systems, Inc. All rights reserved.

A Fragmented Video Market

Age 2+

Age 12-17

Age 18-34

Age 35-54

Age 55-64

Age 65+

30.2%

39.5%

32.7%

30.8%

33.8%

24.8%

Source : Nielsen Convergence Summit

Simultaneous TV and Internet Use

20

Mostly Missed Episodes Online

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

Episodes of TV shows I do

NOT watch on TV

Episodes of TV shows I have

ALREADY watched on TV

Episodes of

past shows that are

not on TV now

None of these

Source : CBS Entertainment Panel Survey, July 2009

88%

27%

16%

39%

4%

89%

36%

21%

44%

2%

88%

26%

16%

40%

4%

86%

20%

11%

31%

7%

Reasons for Watching Computer Video

When

at

Home

Base: Watch Video on the Computer at Home

Consumers Watch Video on Their Computers

To Time-Shift

and Multi

-Task

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

Source: Cisco IBSG Connected Life Market Watch,

2012

Consumers Choose Alternative Devices, Even When TV Is Available

Device

Shifting

Experiences Consumers Want Now

But SP’s Struggle to Deliver

Multi-screen TV experience

Online Content on TV /STB

Intuitive Unified Navigation for All Content

Web 2.0 Experiences on TV/STB

Interesting facts: target devices

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

Living the

Videoscape

Experience

More Visual

More Social

John

Living the

Videoscape

Experience

More Visual

More Mobile

Pressure on the technology everywhere

O

n the content quality and quantity – more and better

Network

Cloud

Client

O

n the delivery network: delivery on managed and unmanaged networks

On the consumer device: delivery to any device

1

2

3

The weakest (technology) point will ruin the experience

Σ

ARPU

per Bit (Revenue)

Data Traffic (Cost)

Coming

Profitability

Gap

Increase Revenue

Multiple options for monetizing

services enabled by

Videoscape

Enable partnerships

Ad

revenue

Partnered content

Cloud

Client

Network

Reduce Costs

Manage “over the top” video traffic

CapEx

:

Make better use of

resources

OpEx

:

Manage video bandwidth during peak usage

Improve Experience

Three-screen experience and session

shifting

Quality of video experience

The Threefold Challenge

Primary TVE Business Models

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

$

Time

Securing Growth Opportunities Require

SPs

to

Transition from Existing One-Sided Market Model

Limited Revenue Growth and Increasing Costs

Network

Termination

B2C

Business to Consumer

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

Today

Broadcasters

Capitalizing on the Two-Sided Market

Differentiated User Experience, Service Velocity and Monetization

B2B2C

Business to Business to Consumer

$ $

$ $ $

Service

Providers

$ $ $$$

$ $ $

SP Platform

Leverage Network and Data Assets

Tomorrow

Broadcasters

Government

Advertisers

OTT/Content Aggregator

Application Developer

Utilities

Interesting facts: NFL and NBC Sports streamed Super Bowl in Feb.

Streaming was limited to the customers of Verizon only, for PC and mobile platforms, based on SilverlightTime lag was between 15 sec and 45 sec.

2.1m users watched the game online (from total 111.3m), average 39 min/view.

Source:

Streamingmedia.com

,

nfl.com

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?