1CONFIDENTIAL AND PROPRIETARY © 2018 by Frank N. Magid Associates, Inc. Any duplication, reproduction or usage of this document or any portion thereof without the written consent of the firm is prohibited.

COURAGEOUS THINKING

NextGen TV – Concept Testing Survey FindingsSeptember 2018

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OBJECTIVESFor broadcasters, help Pearl TV and its Phoenix partners identify the most compelling NextGen TV features and services of interest to consumers. For CE partners, establish the initial consumer value proposition for buying a new TV set that is next-generation ready.

Prior Years

Q3 2018

Survey

Q4 2018 Labs

Q1 2019 Message Survey

other consumer study TBD

Q2 2019 Product

Test

Consumer Research Timeline

CONTEXT• This nation-wide consumer survey research will provide the

foundation for the Phoenix consumer lab testing later this year• The labs in turn will provide insights a survey can’t capture – and

support the next round of more focused quantitative testing

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SURVEY METHODOLOGY

Concept Test for NextGen TV and its featuresRespondent shown written

description of concept, and different combinations of features to select

those they consider most/least valuable

N=1,501 Nationally(plus Oversample for additional Cord Nevers)

Ages 18-74, Watch any programming at least 1 hour in a typical day, Not employed in the TV

industry

Fielded September 7-16,

2018

Concept Evaluation and MaxDiff Analysis

See appendix for additional detail

WHAT WHO WHEN ANALYSIS

HOW (Survey design)

Screening Questions Concept Evaluation MaxDiff Exercise Demographics

Shown 14 different screens of different feature combinations and

asked most/least valuable

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EXECUTIVE SUMMARY

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§ Next-Gen TV has strong appeal to consumers, consistent with previous concept testing

§ Younger adults and Early Adopters find the Next-Gen TV concept especially appealing

§ The driving features of the Next-Gen TV concept relate primarily to the TV viewing experience. The top-valued features are common across subgroups

§ “Better picture” has top value, both itself and for exclusive programming with better picture quality§ Streaming integration is well received, to make it simpler for consumers to get to the TV content they prefer (whether SVOD or

broadcast networks)§ Similarly, the interactive on-screen guide is well received§ Sound features have notable value, as it relates to immersive audio, consistent loudness, and fixing hard-to-hear speech

§ The HDMI connector and the built-in new TV hardware have the strongest potential§ The set-top box option has notably lower receptivity§ Consumers express a willingness to spend at least something to have the hardware option they prefer

§ Next-Gen TV is seen as potentially adding value to high speed Internet service§ Overall, consumers are more likely to see Internet’s value increasing due to NextGen TV rather than decreasing§ Those most likely to use NextGen TV are even more likely to expect the value of Internet would increase

CONCLUSIONS: NEXT-GEN TV CONCEPT AND FEATURES

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NEXTGEN TV CONCEPT EVALUATION

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21% 27% 30% 10% 12%Likelihood to use

5/Very likely to use 4 3 2 1/Not at all likely to use

Most find the NextGen TV concept appealingNearly half would be very/somewhat likely to use the new TV service; rejection is rather low and receptivity is virtually identical to the 2017 findings

Base: Total N=1501Q: How appealing is this potential TV service?Q: How likely would you be to use this TV service, if it were available to you?

NextGen TV Concept Appeal & Likelihood to Use

25% 29% 28% 10% 9%Overall appeal

5/Very appealing 4 3 2 1/Not at all appealing

2017 24% 30% 28% 9% 9%

2017 21% 27% 26% 12% 14%

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Younger adults find the NextGen TV concept especially appealingTwo-thirds of Gen Z and Millennials give the service a top-2-box rating. Gender differences are less pronounced, although more Gen X men than women rate it “4”.

Base: Gen Z (18-21) N=75; Millennial (22-37) N=455; Gen X (38-54) N=458; Boomer (55-74) N=513; Male Millennial N=228; Male Gen X N=223; Male Boomer N=234; Female Millennial N=227; Female Gen X N=235; Female Boomer N=279Q: How appealing is this potential TV service?

NextGen TV Concept Appeal – By Generation and Gender

28%

36%

23%

16%

37%

35%

24%

23%

14%

18%

35%

31%

30%

24%

32%

30%

35%

26%

26%

23%

Gen Z

Millennial

Gen X

Boomer

Male Millennial

Female Millennial

Male Gen X

Female Gen X

Male Boomer

Female Boomer

5-Very appealing 4

63%

67%53%

40%

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CORE TARGET PROFILE(for those 5/very appealing AND 5/very likely to use NextGen TV)

49% female

51% male

29% 36% 33%

Under $35K $35K> / <$75K $75K+

54%

17%

20%

7%

3%

White or Caucasian

African American

Latin American or Hispanic

Asian or Pacific Islander

Other

EthnicityHousehold Composition32% Single, never married49% Married9% Divorced/Separated8% Living with Partner48% Kid in HH

Age Group13% 18-2432% 25-3420% 35-4416% 45-5414% 55-646% 65-74

Income

Employment Status66% Employed34% Not Employed

Education51% Less than Bachelor Degree48% Bachelor Degree or More

Region

20% West

20% Midwest

45% South

15% Northeast

Currently Live18% Apartment building6% Townhouse or attached home73% Single family home2% Apartment in someone's home

Rent vs. Own62% Own34% Rent4% Neither

Area Live38% Urban47% Suburban14% Rural

Pay TV38% Cable21% Satellite22% Other19% No Pay TV

GenerationGen Z 18-21

5%Millennial 22-37

47%Gen X 38-54

29%Boomer 55-74

20%

OTA 38%

Higher than TotalLower than Total

Research findings suggest that interest in this Next-Gen TV concept among younger consumers would broaden the appeal of and consumption of television content.

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Most are open to purchasing a new TV set to enable or better enjoy NextGen TV features

Base: Total N=1501; Core Target N=256Q: If this TV service becomes available, how likely would you be purchase a new TV set if needed to enable or better enjoy these features?

Likelihood of Purchasing New TV Set to Enable or Better Enjoy these Features

18%

78%

24%

18%

29%

4%

11% 19%Total

Core Target

5/Very likely 4 3 2 1/Not at all likely

All of the Core Target are open to a new TV purchase

Core Target: those 5/Very appealing AND 5/Very likely to use NextGen TV