Post on 01-Oct-2020
TV Everywhere & OTT
Preserving the Pay TV Model
March 2013
2
Executive Summary
• Cable/pay TV remains one of the great cash cows of the modern media and communications industries, but in a maturing market that faces a growing threat of disruption, real service innovation is needed
• Innovation is coming as content is being repurposed to support a growing array of digital services and parallel wireless and broadband networks are being synchronized to move content freely among all devices
− Over-the-top (OTT) and TV Everywhere (TVE) services are now mainstream, and
− The seamless movement of video between devices and turning the “second screen” into a useful adjunct of the television is becoming more real as consumers demand control of their media experiences
• Software is fast becoming as important as content in determining the user experience, and there is no shortage of tech companies working to unbundle the content that sits at the core of the cable/pay TV business
• While Cable/pay TV have ample time to work on these issues, as evidenced by early advances, it is apparent that real and meaningful innovation must take a higher priority than it has previously
• For SPT, a clear case can be made to support investment in our ‘digital’ infrastructure to ensure that we remain competitive, can adapt multiscreen solutions and support pay TV operation initiatives, thereby sustaining subscriber fees, keeping our brands cutting edge and offering what consumers want
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Pay TV still Strong
• Pay TV satisfaction remains high among consumers− Reported 86% of U.S. pay TV consumers are satisfied with service(1)
• Despite rapid growth in OTT, pay TV still holds commanding revenue advantage− OTT revenues are just 3% compared to pay TV
• Cord cutting has not yet impacted the pay TV subscriber base
Global Pay TV Subscribers(2)
(1) “2nd Annual Online Video Survey,” Morgan Stanley Research February, 2012(2) SNL Screen Digest
'08 '09 '10 '11 '12 '13 '14 '15 '16 '170
100200300400500600700800900
1000
0%1%2%3%4%5%6%7%8%9%10%
Global Pay TV Subs Growth
Subs (MM) Annual Growth
• OTT: Services that ride on top of your Internet connection but have no relationship with an MVPD or the ISP that provides the connection
• Variations of OTT services:
− Standalone aggregators
• TV Everywhere: MVPD-controlled VOD on TV service
− MVPD-hosted through website or mobile/tablet application
4
Over-the-top (OTT) and TV Everywhere (TVE) Defined
5
• The U.S. OTT market continues to expand rapidly, with total revenues forecast to grow at a 24% CAGR through 2017
‒ Global OTT market expecting a 29% CAGR over the same period‒ Despite rapid growth, OTT represents low near-term risk to pay TV
− Total OTT revenues are just 3% of pay TV, expected to remain below 10% through 2016
• Subscriber levels are approaching Pay TV, but the majority are non-paying− Of Hulu’s total 31MM estimated U.S. subs, 28MM-29MM subscribe to the free service
− Over the long-term, with an appropriate mix of programming and pricing, OTT could pose a significant threat to traditional pay TV model
• Pay TV operators could avoid / lessen potential impact of OTT through improvements to and better marketing of TV Everywhere
− Higher adoption rates of TVE would increase value to consumers and support the pay TV pricing
OTT Market Continues to Expand
Global OTT Revenues 2012 to 2017(figures in $ millions)
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2012:$7,929
2017:$23,414
2012:$86
2017:$807
2012:$1,614
2017:$7,174
2012:$0
2017:$110
2012:$842
2017:$4,561
2012:$95
2017:$1,174
Source: Informa Telecoms & Media
$11BN Growing to $37BN by 2017
Global OTT Forecast
• Revenue is forecast to grow at a 29% CAGR through 2017• Advertising is expected to remain the largest revenue category for the
foreseeable future
Global OTT Revenue
7
2011 2012 2013 2014 2015 2016 20170
5
10
15
20
25
30
35
40
3.5 5.1 7.0 9.2 12.5
16.0 18.5
2.5 3.5
4.5 6.0
8.0
9.5
14.0
2.0 2.0
2.5
3.1
3.3
4.3
4.7
$8 $11
$14
$18
$24
$30
$37
Advertising Subscriptions Transactions Total
Source: Informa Telecoms & Media
($BN)
• Expected growth in the number of connected devices will continue to provide opportunities for multiscreen services
2011 2012 2013 2014 2015 2016
36 62 85 101 114 121
122
157
190209
226 238
16
36
65
93
119149
9
14
19
22
24
26
57
65
67
69
77
83
240
334
426
494
560
617
8
Connected device growth
Source: SNL Kagan, September 2012.(1) Western European Smartphone forecast assumes ‘U.S. ‘10 – ‘11 growth rate of 35% applied to 2010 installed base and ‘12 – ’16 growth rates per Saffron Digital.(2) Includes the subset of TVs and Blu-ray players that are connected to the Internet.(3) Includes installed base of Internet-connected standalone set-tops designed for online video viewing such as AppleTV, Roku, Google TV, Boxee, standalone TiVo and
other devices. (4) Includes the subset of game consoles that are connected to the Internet such as Sony PlayStation, Microsoft Xbox and Nintendo Wii.
U.S. (MM)
(2) (3) (4)Tablets Smartphone Owners TV’s/Blu-ray Players Standalone SetTops Game Consoles
Western Europe (MM)(1)
2011 – 2016 CAGR:
21%
2011 2012 2013 2014 2015 2016
9 22 4369
9913298
129
158
181
197
209
9
21
42
71
100
128
9
14
19
22
24
26
9
15
25
35
45
53
134
201
287
378
465
548
2011
– 2
016
CAGR:
33%
TV Everywhere Use in the U.S.
• All six major U.S. MSOs offer some form of TVE services as an extension of their existing linear pay TV service
• Current usage remains low, as less than half of U.S. pay TV subscribers have tried the service
• Despite low usage to date, analysts expect TVE revenues to catch up and pass OTT in the near future as operators improve the consumer experience and implement more comprehensive marketing campaigns
– In the next 2-4 years, U.S. TVE is expected to contribute an additional $12BN in annual revenue to U.S. TV ecosystem.(1) The majority (85%) of this amount is expected to result from additional advertising opportunities, while 15% will be from incremental pricing of new digital offerings
• To realize these new revenue streams, operators and programmers must work together to:
– Innovate their ecosystems and focus on the consumer experience
– Reward teamwork and preserve the symbiotic nature of the business model
– Consolidate nationally and internationally to effectively compete with the challenge of OTT(2)
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(1) “TV Everywhere Could Create $12BN in Annual Revenue for TV Industry,” The Hollywood Reporter, Jan 20, 2012
(2) “TV Delivery Evolution: Hybrid TV, OTT and TVE,” September 2012
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TVE is also Evolving
• 5MM+ mobile app downloads(1) (28MM subs)
• Defensive tactic against standalone svcs
• Testing web-only HBO GO svc in Nordics
• ~5MM active users (21MM subs)
• Aggressively securing rights from ntwks
• Offers Streampix up-sell / bundle(2)
• 36 operators in 20 int’l markets instituted TV Everywhere strategies by 2012
• Operators considering moving niche linear channels to captive SVOD platforms (e.g., Streampix) to combat pure-play OTT providers
• Debate surrounding financial contribution of various TV Everywhere initiatives and whether it will be incremental or cannibalistic
(1) Time Warner Q2 earnings call as of 8/11.(2) Streampix free to Comcast triple play and other select packages and includes +800 films and +1,500 TV episodes.(3) Source: Needham Research, January 2012.
Network hosted Multichannel Operator Controlled
Financial Contribution
International Roll-out
Next Generation Strategies
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U.S. TVE Players
Source: Morgan Stanley Media and Cable/Satellite December 11th, 2012
Any Play, Streampix, Xfinity.com, HBO GO, Watch ESPN
TXC TV app, HBO Go, Watch ESPN
HBO GO, Turner App, epixhd.com
Optimum TV to GO, Turner App, HBO Go, Watch ESPN
Nomad, DirecTV Everywhere, HBO GO, Max GO
Dish remote Access, HBO GO, Max GO, Starz Play
Provider TVE Application / Website
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UK TVE Players
Sky Go
Virgin TV Anywhere
SVOD and TVOD through BT Vision+
STB available; apps currently in development
Provider TVE Application / Website
53%
6%
13%
2%
0%
2%
11%
10%2%
ESPN Play Moviecity Play Muu HBO Go HotGo Telecine Play Fox Play DirecTV Sports
Premiere FC
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Latin America TVE Players and Penetration
Source: “TV Everywhere in Latin America,” Dataxis, 2012
Subscribers Moviecity Telecine DirecTVCountry (in '000s) ESPN Play Play Muu HBO Go HotGo Play Fox Play Sports Premiere FC
Argentina 7,850 74.3% 12.3% --% --% 0.2% --% 28.4% 22.1% --%
Brazil 14,640 36.0% --% 35.6% 4.6% --% 6.1% --% --% 6.2%
Chile 2,130 55.3% 11.2% --% --% 0.2% --% 12.0% 12.0% --%
Colombia 4,110 39.6% 6.9% --% 2.1% 0.1% --% 13.8% 13.8% --%
Mexico 12,320 35.4% 5.3% --% --% 0.2% --% --% --% --%
Peru 1,250 78.5% 1.5% --% --% --% --% 10.1% 10.1% --%
Venezuela 2,950 72.9% 10.4% --% --% 0.1% --% 45.7% 45.7% --%
Total 45,250 47.3% 5.4% 11.5% 1.7% 0.1% 2.0% 10.0% 8.9% 2.0%
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Case Study: HBO GO Nordic (OTT vs. TVE)
HBO Nordic launching in Denmark, Sweden, Norway and Finland this month
• First stand-alone HBO GO service that does not require MVPD subscription
• €10 per month for streaming only or as an add-on to standard pay TV subscriptions
• Will compete with Netflix's planned service
• Launch delayed, originally planned to go live in late 2012
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Virtual MSOSky has launched a TVE service offering to non-pay TV subscribers
• Service does not require concurrent linear pay TV subscription first voluntary decoupling of TVE from traditional pay TV model
• Sky Go offers four TVE packages ranging from $23-$60 per month, with additional amounts for ESPN
• Content viewable on Android, iOS and PCs
Sky Entertainment5 live channelsAdditional channels on-demand£15 per month(additional £13 per month for ESPN)
Sky Movies & Entertainment11 movie channelsHundreds of movies on demand20 live channels£32 per month(additional £13 per month for ESPN)
Sky Sports & EntertainmentAll 6 Sky sports channels5 on-demand entertainment channels20 live channels£35 per month(additional £10 per month for ESPN)
Sky Movies, Sports & EntertainmentAll 6 Sky sports channels11 Sky movie channels5 on-demand entertainment channels20 live channels£40 per month(additional £10 per month for ESPN)
Sky Go Package Details
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Second Screen Market Trends
• Second-screen activity is mainstream and here to stay
‒ More than 40% of U.S. viewers use a tablet / smartphone while watching TV
• Companion devices hold key to new revenue sources
U.S. Frequency of Use While Watching TV
Source: Informa Telecoms & Media & Nielsen data
Frequency Device
Tablet Smartphone
Daily 42% 40%
Several times a week 24% 28%
Several times a month 14% 11%
Once a month or less 10% 7%
Never 13% 12%
Most Common 2nd Screen Activities
Social Networking
Remote Control
Content Discovery / TV Guide
Video Playback
Content Push to Main Screen
E-commerce
Play-along Games
DVR Management
Second-Screen Initiatives - U.S. and UK
AT&T
Partnered with four app developers in Oct 2011 to make apps available on its U-verse IPTV platform. Additional 3rd party apps have since been added, with AT&T encouraging developers to design new companion experiences for U-verse TV customers. Also offers its own-branded apps for mobile devices and tablets
Comcast
The largest U.S. pay-TV operator is poised to introduce new services in a major second-screen play, after moving to patent new social-TV technology in Jan 2012. Already offers Xfinity-branded multiscreen services for tablets and smartphones and launched social-TV app Tunerfish in 2010
DirecTVPartnered with app providers Miso and GetGlue to make their second-screen and social-TV services available on its platform. Also offers its own basic social-TV app that provides access to Facebook and Twitter
Dish Network
Is preparing a new second-screen service, which will aim to provide the full companion experience, including advanced content-discovery, remote-control and social-TV features. Dish already has a strong presence on tablets and smartphones with its current app and multiscreen services
BSkyBWill implement new social and complementary-content functionality into existing apps following partnership with social-TV startup Zeebox in Jan 2012 (acquired 10% stake in the company)
Virgin MediaCable operator is readying a new Tivo app to provide content discovery, remote-control and social-TV functionality, among other features, for customers of its "next-generation" Tivo service
U.S.
UK
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International TVE
• Pacing behind the U.S. but select companies are taking the lead
SPT ChannelCarrier
SPT Channel Carrier
SPT ChannelCarrier
SPT ChannelCarrier
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North America90%
ROW18%
Western Europe66%
Asia /Pacific9%
Source: “TV Everywhere: Growth, Solutions and Strategies (2nd edition) – Europe and APAC,” Parks Associates, 2012
Current TV Everywhere Availability
Eastern Europe21%
• The availability of TVE in Western Europe is second only to that of North America
U.S.23%
Latin America11%
EMEA13%
India35%
Asia Excl India12%
FY14 Budget data as of February 2013
Does not include new launches/new opportunities
SPT Networks Revenue
• A Western Europe TVE initiative complements SPT Networks’ international revenue distribution
‒ India would be the logical choice based on revenue alone, but the higher level of technical
infrastructure and TVE players makes Western Europe a more attractive market for a TVE
initiative
19
20
UK India UK India0
10
20
30
40
50
60
70
32.7
1
62.3
1.9
Fixed Broadband
Mobile Broadband
Broadband Subscribers
• The amount of infrastructure in place and broadband subscriber base makes the UK a more attractive market for a multiscreen initiative
Source: “The State of Broadband in 2012: Achieving Digital Inclusion for All,” United Nations Broadband Commission, 2012
Broadband Subscriptions per 100 People
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Source: “TV Everywhere: Growth, Solutions and Strategies (2nd edition) – Europe and APAC,” Parks Associates, 2012
TV Everywhere Forecast
2011 2012 2013 2014 2015 20160
50
100
150
200
250
64 78 89 95 99 101
1119
2428 30 32
23
52
6475
8594
2011 2012 2013 2014 2015 20160
20
40
60
80
100
120
140
160
180
200
2850
6882 88 90
15
27
36
4248 52
14
23
28
34
4050
Western Europe Eastern Europe Asia Pacific
Pay TV Subscribers with TVE Access Operators offering TVE Services
• By 2016, more than 100MM pay TV subscribers in Western Europe will have access to TVE / multiscreen services offered by almost 100 MVPDs
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Conclusion
• Multiscreen services, including TVE and OTT, have become mainstream and are here to stay
• Thus far OTT growth has outpaced TVE, as MVPDs have not felt sufficient pressure from cord-cutting
consumers to aggressively develop and market TVE ecosystems
• However, increased consumer demand for control over content will continue to drive higher growth for
both multiscreen solutions
• The ability of TVE to integrate concurrent and independent use of platforms with traditional viewing and
offer advertisers cross-platform campaign capabilities adds an amount of value that OTT cannot
replicate, and gives TVE a significant competitive advantage
• After North America, Western Europe is by far the most attractive region for a TVE initiative, with
advanced infrastructure, high broadband utilization, more than 60% TVE penetration and a strong
forecast for TVE availability
• Programmers will need to be participatory in MVPD TVE campaigns and leverage the existing
relationships to avoid deterioration of subscribers, fees and ad revenue. A strong, well-marketed TVE
presence is the best way for programmers and operators to provide consumers with a multiscreen
solution, while also:
‒ Adding value for both consumers and advertisers
‒ Supporting the pay TV pricing model
‒ Preserving the relationship between programmers and MVPDs
‒ Slowing the growth of OTT and still securing a place for SVOD
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Appendix
• Major Competitor TV Everywhere Presence
• TVE initiatives by country – Western Europe
• TVE initiatives by country – Asia Pacific
• CDN Platforms
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Major Competitor TV Everywhere Presence
• SPT’s major competitors have made significant progress with their multiscreen initiatives and have launched TVE offerings in Latin America, Western Europe, and Asia-Pacific region
25
TV Everywhere Initiatives – Western Europe (1/6)
26
TV Everywhere Initiatives – Western Europe (2/6)
27
TV Everywhere Initiatives – Western Europe (3/6)
28
TV Everywhere Initiatives – Western Europe (4/6)
29
TV Everywhere Initiatives – Western Europe (5/6)
30
TV Everywhere Initiatives – Western Europe (6/6)
31
TV Everywhere Initiatives – Asia Pacific (1/4)
32
TV Everywhere Initiatives – Asia Pacific (2/4)
33
TV Everywhere Initiatives – Asia Pacific (3/4)
34
TV Everywhere Initiatives – Asia Pacific (4/4)
35
CDN Platforms (1/2)
Company CDT/OTT Platform DevicesNotable Customers
• CloudTV is a cloud-based solution that includes a dynamic authoring platform (CASS™) and stitchable MPEG streaming technology
• Offers a customizable portal that combines broadcast and online video streams• Content is rendered as an MPEG video stream
Internet connected devices such as PCs, game consoles, and smart TVs
Cablevision, Time Warner Cable, Grande Comm., HBO, Showtime, CNN, Fox
• ARRIS Advanced Video Processing Solutions provide transcoding capabilities enabling multi-profile video encoding for mobile, PC and TV
• Acquired BigBand Networks in 2011 ;Company has over 200 clients around the world
Mobile, PC, TV Comcast, Time Warner
• Offers a TVE Solution Pack in partnership with Ping Identity, including authentication, content management, delivery, advertising, UI, and client player software
• Includes support for transcoding, multi-bitrate streaming, DVR features, HTML 5, and social media
• Provides a range of analytics tools
PC, Smart TVs, Apple iOS, Google Android, Symbian S60, Palm webOS, Windows Mobile, and BBRY
BSkyB, Sky Deutschland, Sky Italia, Rogers
• Content delivery solution supports mobile devices for both Live TV as well as VOD
• The company offers a wholesale CDN solution for carriers• Software-based solution that uses off-the-shelf hardware (IBM is hardware
partner)
Internet connected devices and mobile devices
Telecom Argentina, Bouygues Telecom, Iceland Telecom
• Cloud-based solution that handles content ingest, management, transcoding, and publishing for multiscreen delivery via VOD or linear TV
• Includes advertising and social networking support
Smart TVs, Roku players, gaming consoles, STBs, mobile devices, tablets and laptops
Verizon, Mediacom, and Bresnan
• CDN hardware and software solution• The D-VDN framework provides a full range of multiscreen capabilities, including
on-demand TV and video functions such as nPVR, timeshift TV and VOD• Focus on QoE (Quality of Experience)
STBs, smart TVs, PCs, game consoles and mobile devices
Caiway, Comstar, Maxisat, Iskon, KPN, Telekom Slovenije, Telia Sonera
• Irdeto MediaManager ingests content from any source, manages associated metadata and usage rules, and delivers it to any screen connected to the Internet
• Irdeto ActiveCloak for Media handles DRM for multiscreen
PC, tablets, smartphones, smart TVs
Al Jazeera, BSkyB, Netflix, Telia, Telecom Italia 35
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CDN Platforms (2/2)
Company CDT/OTT Platform DevicesNotable Customers
• The Kit Platform provides end-to-end video management capabilities• KIT Connected Device Framework enables the creation of a broad range of
experiences that run natively across multiple devices
Smart TVs, STBs, game consoles, tablets, and smartphones
ABC, AP, AT&T, CNN, Microsoft, MTV, NBC, Sky, Vodafone, TWC
• The Limelight Video Platform automatically detects the right device format and delivers transcoded video based on its specific player requirements
• Integrates with existing publishing, content management, and advertising systems
Smartphones,tablets
Dreamworks, IFILM, MSNBC
• Massivision Suite™ tools enable build-out of multi-device video entertainment services, manage and schedule content and get User Interfaces in place quickly as new consumer devices become available
PCs, STBs, Xbox, smartphones, tablets, in-flight video
BBC, Foxtel, Ch 5, Emirates & Virgin Air
• Ooyala Everywhere offers a modular approach with capabilities that include content ingestion, management, transcoding, adaptive streaming
• With Personal Playback™, viewers can start watching a video on a TV and then switch to a laptop or mobile on the go
Smart TVs, PCs, mobile devices, Roku, Boxee, Google TV and PlayStation3
ESPN, MovieTicketscom, TVGuide, Yahoo Japan, Virgin Media
• Provides authentication and design of web portals for TV Everywhere offerings• Provides design services, servers, and technologies to deliver video to multiple
screens• Offers single sign-on/integration to allow subs with access to multiple content
providers
PCs and mobile devices
Charter, Verizon
• SyncTV cloud-based service can stream video over the Internet to a variety of platformsHTC recently acquired 20% of SyncTV
iOS, Android, Windows Phone, Xbox, and smart TVs
NBC Universal
• Includes content collection, managing partner relationships, managing subscribers, and enabling the business model
Any connected device
Comcast, Time Warner Cable, Rogers Cable, Cox, Cablevision
• Tvinci MediaHub capabilities include ingestion, setup of management and business rules, analysis of content consumption, and end-user management
Smart TVs, mobile devices, game consoles
Orange36