Status – draft Beyond traditional STB for HF/Metronic.

Status draft Beyond traditional STB for HF/Metronic

But further growth is about being connected Traditional digital TV, fine

Analog switch-off in Western Europe @ 2012 Still huge volumes for SD-Mpeg2 zappers Still a good business for traditional DVB-T decoders A majority of households having multiple TV sets 2 nd /3rd set still being today with analog reception Need to replace old tape-based VCR and need for recording function for end-users 2 nd and 3rd DVB-T equipment in Western Europe 2 nd and 3rd DVB-T equipment in Western Europe Number of HH HD equipped and penetration rate Western Europe Number of HH HD equipped and penetration rate Western Europe Number of HH PVR equipped and penetration rate Western Europe Number of HH PVR equipped and penetration rate Western Europe Millions of TV sets with HD display Introduction of HD broadcast for FTA

But beyond traditional STB The Digital Home by HF TELEPHONE COMFORT INTERNET SECURITY TELEVISION

TELEPHONE COMFORT INTERNET SECURITY TELEVISION But beyond traditional STB The Digital Home by HF in UK as well

Beyond STB One application: On Demand & On TV TELEPHONE COMFORT INTERNET SECURITY TELEVISION On demand server

The online consumption of video is getting broader Evolution of Internet use

Increase of TV shows downloaded from Internet Consumption of TV shows downloaded from Internet increase Mostly in the USA But the trend is true in major western countries This will happen more and more with new laucnh such as BBC iPlayer in the UK

Use of Internet for Video consumption Internet is being more and more used for consuming video This can be explained with the number of catch-up TV services that have been installed by most of the traditional TV broadcasters (TF1, M6, RTL.de, Spiegel TV, ZDF Mediathek This is also consequence of several free services of online video (Hulu for instance)

Increase of the download video services Large increase of video download in Western countries and Japan Two modes have to be defined Download to One (DTO): end user keeps a permanent copy of the video this is the most favoured in the USA Video on demand (VOD): end user rents a temporary download

Increase of the online TV/Video revenues per head Large increase online TV/Video revenue par head in Western countries and Japan And the increase is even larger in 2007 than in 2006 Largest is in the USA, but followed by UK and Canada

Online video to be compared with IPTV growth The largest country in IPTV is France Nearly any IPTV provider also provides VOD service as well

Nearly everybody has access today to broadband internet Large deployment of broadband connections Almost 1 broadband subscription for 4 people Means nearly everybody is able to have access to broadband Internet This will have an impact on the way people consume video

More and more time spent online In 4 years, the time spent online has nearly doubled This should mean a decrease of time watching TV Amongst activities online: social networking, photo sharing and video consuming

Half of TV viewers have concern about TV programmes Most of the concerns are about poor content quality, then about offensive content This could be a major motivation for on demand Video programmes

Mostly vertical today, more open tomorrow IP-TV/VOD: different models

17 Broadcast feed Media database IP Streamer Content Management Server EPG metadata Encoder Encryption Server VOD Server Application Servers Cable Modem Termination System Optical Line Terminatio n DSLAM ADSL Modem/Router Optical Network Termination Cable Modem/Router Core & Aggregation Networks STB DSL (Copper) Optical Fiber HFC (Coax) Content ProviderService Provider Network Provider CPE Remote Management Server Subscriber Management and Billing Server Licence Server RT Encoder IPTV/VOD : System Overview

18 Broadcast feed Media database IP Streamer Content Management Server EPG metadata Encoder Encryption Server VOD Server Application Servers Cable Modem Termination System Optical Line Terminatio n DSLAM ADSL Modem/Router Optical Network Termination Cable Modem/Router Core & Aggregation Networks STB DSL (Copper) Optical Fiber HFC (Coax) Content ProviderService Provider Network Provider CPE Remote Management Server Subscriber Management and Billing Server Licence Server RT Encoder IPTV/VOD : Full Operator model

19 Broadcast feed Media database IP Streamer Content Management Server EPG metadata Encoder Encryption Server VOD Server Application Servers Cable Modem Termination System Optical Line Terminatio n DSLAM ADSL Modem/Router Optical Network Termination Cable Modem/Router Core & Aggregation Networks STB DSL (Copper) Optical Fiber HFC (Coax) Content ProviderService Provider Network Provider CPE Remote Management Server Subscriber Management and Billing Server Licence Server RT Encoder IPTV/VOD : Service provider model

20 Broadcast feed Media database IP Streamer Content Management Server EPG metadata Encoder Encryption Server VOD Server Application Servers Cable Modem Termination System Optical Line Terminatio n DSLAM ADSL Modem/Router Optical Network Termination Cable Modem/Router Core & Aggregation Networks STB DSL (Copper) Optical Fiber HFC (Coax) Content ProviderService Provider Network Provider CPE Remote Management Server Subscriber Management and Billing Server Licence Server RT Encoder IPTV/VOD : Semi-Open model

4 different models from Today to Tomorrow Full Operator modelex: BT, Orange Proprietary offer Managed networks Service provider modelex: CanalSat Proprietary offer / proprietary terminal Non-managed networks Semi-open modelex: FNAC Retail terminal / unique broadband service Non-managed networks Open IP-TV modelex: trial Philips East Harbor Portal with multiple services Non-managed networks Many existing offers, but on PC only All these offers can be pure IP or Hybrid offers

IPTV/VOD model evolution Non-managed Networks Managed Networks Rental CPE Retail CPE Helped by DVB-T transition Helped by large DSL installed base ?

23 This is in line with customer wish and behavior, but not yet at his level of expectation Give me what I want, no limitation When I want Where I want Content Time Location Reconcile complete freedomwith simplicity Easy to use Relevant to me Follows me in my activities Truly enjoyable viewing experience Catch-upOn-demand Consumer insights

24 Our entertainment options is growing with the emergence of alternative ecosystems Orchestrated ecosystemOpen access to internet services Consumer perspective Condition for success Reasons to believe Managed GardenJungle Focused choice of high-quality, relevant services Easy navigation in an open world of heterogeneous services Requires consistent efforts to create and maintain an attractive ecosystem Requires an intuitive way to navigate through content and get recommendations Research shows that usage is concentrated on only a few services Expanding the garden will give consumers a sense of freedom Tech-savvy consumers do not want to be patronized selecting the services they want User appreciate to be guided in their choice in a relevant, non-intrusive way We expect both approaches to converge over time TV Operator vertical modelOpen IPTV

This is a challenge for traditional operators, an opportunity for newcomers Predefined / Pre-selected Consumer defined / selected Long tail Mass appeal Broadcast Broadband Vertical operators/linear TV

And advertising is a key element Ad Server Selects & Provides ads for insertion in content pages based on: Available ad slot(s) on content page Ad revenue potential Context of the content page Consumer profile/behavior (targeting) Allows advertisers to upload ads, target info Generate statistics (payment) Consumer Profiling Aggregate Knowledge, Mobile, TV, on-line

A feedback from experiment in the Netherlands First trial of Open IPTV

28 Recent research indicates interactive services have high consumer appeal on IP enabled TV 102030405060 Average time spent in min. 1 2 3 4 Average # of visit per visitor and per week Ex: EPG = 222 visits / 69 visitors per week Games Open Internet EPG Catch-up TV Video store Volkskrant Nu Kodak Gallery Player Other services * Philips consumer study, n =240, NL respondents only * Source: Philips consumer study, n =240, NL respondents only

29 One time renting / viewing has most business potential, this may differ though per type (example: children films) * Source: Philips consumer study, n =240, NL respondents only renting 52% buying 18% no preference 31% Preference renting or buying - beforehand

30 Catch-up TV can still be improved People miss a pause button or a forward option in the current format. Need to expand the service, both by increasing: The date range: the ability to go back further than the one week The content: regular update of catch-up TV program The scope: to include programming from the commercial stations as well Appreciation for search options (by name, channel, date) Minimum download capacity needed, otherwise no sound * Source: Philips consumer study, n =240, NL respondents only

31 Pay per use is the most accepted model by consumers. Sponsored by advertising possible * Source: Philips consumer study, n =240, NL respondents only Preference payment packages 74% 10% 3% 1% 67% 14% 13% 4% 1% 78% 10% 2% 85% 15% 13% payment per use monthly subscription - package given no. of movies monthly subscription - unlimited no. of downloads weekend pass I don't expect to rent/ buy from online video store total (n=149)front runner (n=70) selectives (n=59)classics (n=20) maybe 43% no 13% yes 44% Accept advertisements if in return movies for free

32 STBs and IP TVs bridge gap between traditional entertainment and online services Electronic entertainment solutions are very present in the living room* *Source: Philips consumer study, n =240, NL respondents only TV related = DVD player, video recorder, home audio, home theatre system, DVD recorder with and without harddisk, digital video recorder PC related = laptop pc, desktop pc, PDA TV competitive set = set-top-box, digital media adapter, media center pc TV competitive set 98% 82% 42% 36% 97% TV TV related PC related Gaming console Selectives 40% Classics 13% Frontrunners 47% Consumer Segments

33 STBs and IP TVs bridge gap between traditional entertainment and online services High usage of online content* * Source: Philips consumer study, n =240, NL respondents only 98% 92% 82% 80% 72% 98% email search for information internet banking/ administrative tasks surfing downloading and/ or uploading files reading newspapers, news sites buying and selling watch clips or short videos booking trips 62% 57% 54% 45% 36% 22% 9% 58% gaming chatting watch television listen to Internet radio stations pictures, photos websites making phone calls other recreation other

34 Interactive features and revenue-generating services enhance entertainment options EPG VOD Games Photo sharing E-mailing Traffic Weather Horoscope News E-voting Sudoku is normally something you do by yourself. By playing it on the TV, it becomes a family activity. I like that, were really brainstorming together, to see where the number goes. E-banking Open Internet If the television is turned on and the PC isnt then I look for the Traffic page just before I go out. Its much quicker to turn on the TV than starting up the PC. * Source: Philips consumer study, n =240, NL respondents only Both the STB and CE devices are well placed to enable these type of services

35 Interactive features and revenue-generating services enhance consumer entertainment options * Philips consumer study, n =240, NL respondents only Definitely / probably would buy might or might not buy Probably / definitely would not buy don't know Purchase intention of interactive TV (TV with Internet) 40%45%5%10% Video services are key ingredients to create consumer / subscriber value.

Some services are being launched, others will come Whats happening today?

Today: real cases launched: FNAC/Netgem BT Vision Netflix/Samsung 1&1 Other business cases to look at True broadcasters installing Catch-up Tv mode BBC M6 Arte TF1 (check Bouygues strategy) Mezzo VOD providers Carrefour Business cases

One example

Metronic view for the CPEs And at the end-user place

Back to the application: COD/VOD TELEPHONE COMFORT INTERNET SECURITY TELEVISION On demand server

The end-user set-up: two possibilities PC-centric solution PC as storage/server DLNA world Possibly multi-portal/multi-service solution PC-free solution Proprietary STB with HDD / proprietary portal Security mechanism HDD for buffer/storage

The PC centric solution PC-centric solution Allow full search and select on different services (in line with true Open IPTV) Mix online/download content with stored content Allow the STB under the TV set to have access to multiple devices Two vendors have been identified by HF/Metronic Awox Wyplay Both companies have developed UPnP/DLNA stacks, running on ST SoCs (STi710x) Awox being used as reference for DLNA certifications, Wyplay having integrated Flash codec with YouTube interface Good high-level SW stacks, will require solid low-level SW and drivers

The STB centric solution STB centric solution : PC-free solution Simpler for the end user: a box identified with a service. Too early for true Open IPTV Upgrade of services can be done later HDD for buffer/storage : whatever, people will have to buy PVR to replace VCR HF/Metronic has identified a partner for first launch Hyperpanel Hyperpanel has a proven trackrecord of interactive digital TV SW (more than 27 million STBs deployed with their SW Has a solution for download, including content protection Metronic is investigating thier use for complete STB range Compatibility for porting DLNA stack later (e.g. Wyplay)

Advanced STB roadmap - draft Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 200920102011 DTT HD PVR Hybrid DLNA mediacenter multi-services DTT HD Hybrid DLNA mediacenter multi-services DTT HD PVR Hybrid PC free solution one service DTT HD Mpeg4 250 to 500 GB HDD Ethernet port On Demand services DLNA home network gateway Open IPTV starts

Back-up slides

BT Vision offer NAGRAVISION Microsoft DRM Configuration Sigma Design 8634 chipset, 460Mips 2 DVB-T Front End RF output with remodulator DDRAM Memory = 128MB Memory Flash = 16MB 2 SCARTs for TV & VCR 1 S-Video 1 HDMI Optical SPDIF output and stereo HiFi Left & Right 2 USB Host port (back) and 1 USB (front) 1 Ethernet 10/100Mbit port 1 PSTN modem 2 Smart card readers P-ATA HDD 160GB

47 IPTV Set-Top Box Broadcast TV DVRMovies On Demand On Demand Dual Tuner DTT 160 GB HDD MPEG 2 + H.264 SD /HD Secure Content Delivery

48 Establishing Partnerships is key to create differentiators & control points True IPTV : Complex Network of Relations VOD System Subscriber Mngt Syst Content Protection Video Encoder Network Equipment IP Gateway Silicon Middleware OS Content Protection Content Provider Legislator Regulations Application System Integrator STB Telco Or ISP

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Status – draft Beyond traditional STB for HF/Metronic.

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