“ Session 1: 2015 OTT Industry Scan- Assessment of Latest Deals, Strategies, and New - PowerPoint Presentation

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“ Session 1: 2015 OTT Industry Scan- Assessment of Latest Deals, Strategies, and New - PPT Presentation

Brian Mahony CEO and Principal Analyst Trender Research wwwTrenderResearchcom Founder OTT Executive Summit amp Magazine wwwOTTexeccommagazine bmahonytrenderresearchcom ID: 816648

research ott pay 2015 ott research 2015 pay video services trender broadband reserved rights subs 000 content amp cable

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Slide2

“

Session 1: 2015 OTT Industry Scan- Assessment of Latest Deals, Strategies, and New OTT Services

”

Brian

Mahony

CEO and Principal Analyst, Trender Research, www.TrenderResearch.com Founder, OTT Executive Summit & Magazine, www.OTTexec.com/magazinebmahony@trenderresearch.com * 508-479-7254

6/17/20152

Slide3

Background

Following the IPTV & OTT markets for 10 yearsManage a 25,000 OTT community including:Trender ResearchOTT Video LinkedIn group

OTT Executive Magazine, web, email, socialOTT consulting clients including:OTT set-top boxPure-play OTT content networkLeading OTT integrator

OTT network video service provider

Various investors: VCs, Wall Street, angels

TRENDER

Research, Inc.

Slide4

OTT Background Data

The number of OTT subscribers is likely to increase globally from 92.1 million in 2014 to 332.2 million by 2019 - Juniper ResearchVideo traffic over smart-phones will increase 800%- Juniper Research

6/17/2015

TRENDER

Research, Inc.

Slide5

OTT Video Viewing Is Exploding

The number of OTT subscribers is likely to increase globally from 92.1 million in 2014 to 332.2 million by 2019 - Juniper Research

Video traffic over smart-phones will increase 800%- Juniper Research

Slide6

Netflix Has a Chance To

Become the Top “Channel” This Year

Slide7

Linear Pay TV Services Beginning to Crumble

In Q1, Pay TV providers saw first-ever Q1 subscriber losses (2013 was the first year of yearly losses)New and upcoming devices/services are hammering away:Sony PlayStation Vue

Dish’s Sling TVUpcoming services from Apple and VerizonSVoD services from Netflix, Amazon, Hulu

continue to grow

Google’s YouTube is always lurking as a threat

FreeCast’s $10 per year Rabbit TV has 4M subs and plans to add 5M Select TV subs (combines OTA/OTT)6/17/20157

Research, Inc.

Slide8

Linear Pay TV Services Beginning to Crumble

The subscription bundle is no longer sacred, with game theory strategies driving mutinies by HBO, CBS, Viacom, Showtime, etc.Consumers are happily paying an inverse amount for the value/time they spend on OTT services versus Pay TV“OTT video accounts for a disproportionate amount of content consumed when compared to expenditure — over one-third of video consumed per week is OTT, but it is only 9% of the household video budget. In terms of hours of consumption per dollar spent, consumers have every reason to shift spending to online video.” – Brett Sappington, director of research at Parks Associates

6/17/2015

TRENDER

Research, Inc.

Slide9

Pay TV Death Knells

Pay TV’s audiences are dropping by double digitsBernstein ResearchSome Pay TV segments are in full retreat– kids shows down 20%+Bernstein Research

In Q3, for example, traditional TV viewing was down 13 minutes per day while SVOD viewership was up about 12 minutes per day.Bernstein Research Video Advertising Bureau estimates 30%-40% of pay TV ratings decreases can be attributed to SVoD services

Estimates range from about 40% (Nielsen) to 60% (Parks Associates) of US homes accessing

SVoD

TRENDER

Research, Inc.

Slide10

However, Broadband Continues to Grow in Q1

Pay TV providers added 1.2m broadband subs in Q1 (about 3M adds in past year, + 15% from prior year, 88.5 million total)But only 10K TV SubsCable accounted for 90% of the broadband additionsTelcos

Verizon and AT&T together added 573,000 broadband subs, and lost 463,000 DSL Internet subscribers.Comcast increased the most broadband subs during Q1, with 407,000 additions; it lost 8,000 TV subs during that period.Time Warner Cable had 328,000 broadband additions and added 33,000 video subs; Charter added 136,000 broadband subs, and lost 5,000 video subs.

6/17/2015

TRENDER

Research, Inc.

* Leichtman Research Group (LRG) looking at the top 17 cable and

telco

broadband providers in the U.S.

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Cable/Telco Pay TV Response Strategies

Verizon offering “skinny bundle” channel packs (FiOS Custom TV) to address the (perceived?) high cost of Pay TV subscriptionsCan’t beat ‘em

, join ‘em by offering own or partner OTT servicesCablevision CEO James Dolan, speaking at INTX: “Every dollar of profit I make in video I make $7 in profit in broadband.”Cablevision offering

Hulu

and HBO Now

AT&T offering Hulu; promoting Amazon primeDirecTV does not have this optionWireless broadband is the OTT wild card4G LTE“Public WiFi” (e.g. CableWifi)6/17/201511

TRENDER

Research, Inc.

Slide12

Pay TV Can Leverage Core Strengths

Integrated billingContent aggregation (after consumers add up their new OTT services)Follow-me TV (home TV, tablet/mobile, browser)Packaging other services (e.g. home security, home networks, home IT support, e-commerce)

Big data personalization, search and discoveryCustomer installation/support?

6/17/2015

TRENDER

Research, Inc.

Slide13

M&A Chaos: Deals, Deals Everywhere

Comcast buying Time Warner CableCharter merging/buying Time Warner Cable and Bright HouseVerizon buying AOLAT&T buying DirecTV

Altice buying Suddenlink

6/17/2015

Research, Inc.

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Implications for Content Providers

Hedging bets with hybrid Pay TV/OTT bundles/showsA&E “Food Porn” and “Fall Into Me”Hulu as Pay TV/OTT content aggregator (e.g. “The Mindy Project”)

Experimenting with business modelsLive streaming, ad-supported, SVoD, Freemium, live PPV, VoD, combination

The launch of Vessel online video platform

No longer have to “ask for permission”- floodgates are open!

But, advertising brands can now go “direct to consumer” with their own channels (e.g. Red Bull) and apps (e.g. on Roku)6/17/201514

TRENDER

Research, Inc.

Slide15

What Will Happen?

Pay TV Bundle is now officially fragmented, if not dyingBroadband demand will grow insatiablyDriven by OTTDriven by Cable and

Telcos themselvesDriven by mellenialsPremium content will become even more of a trump cardContent discovery methods/portals still missing

Social media as recommendation engine

Content/service aggregators

Continued business model specialization across content, broadband, and bundled services (voice, video, broadband, even value-added services- home IT, home security, etc.)6/17/201515

Research, Inc.