DISCLAIMER

THIS PRESENTATION IS ALREADY OUT OF DATE

DISCLAIMER

WHAT SHAPES MEDIA LANDSCAPE…AND WILL CONTINUE TO

CONTENT IS KING

CONTENT IS KINGBUT EASE OF USE IS QUEEN

Apple is worth over $500BOr more than: - Walt Disney - News Corp - Time Warner - CBS - ViacomCombined

Source: Bloomberg

Source: Nielsen Digital Consumer Report Q4 ‘11

Source: TUAW.com Sept 24, ‘10 “What 10 Years Apple Did to its Main Product”

Wireless

Cheaper Data Storage

Fiber Optics

Broadband

Satellite

Linux

Open Source

Processor Speed

GPS

TECHNOLOGICAL ADVANCES

Touchscreen

HDTV

WIFI

Flash Memory

Cloud Computing

WHAT’S KILLING ‘MUST SEE TV’?

Broadcasters:Transmitted free to the viewer over the airPredominately advertising driven for revenue

KEY TERMINOLOGY:

Premium Cable:Delivered as above, 100% driven by

subscription fees to the viewer.

ex :

ex :

Ad Supported Cable:Delivered through an in-home connection via a subscription model for the viewer.Also advertising driven, however also receive retransmission fees from the subscription model.

KEY TERMINOLOGY:

Cable MSO Satellite Telecom

These are the different in-home delivery methods for subscription television.

As of the end of 2011, 90% of US Households subscribe to one of these: - 56% Cable - 36% Satellite - 8% Telecom

KEY TERMINOLOGY:

ex : ex : ex :

Source: Parks Associates Whitepaper 2011 “Digitalsmiths”

THE EVOLUTION OF VIEWING

SHARE OF PRIMETIME VIEWING

Source: Nielsen data

#1 show on TV, 35MM viewers / 22.0 HH rtg1 in 3 TV’s tuned in at that time were watching SeinfeldLast season on air

#2 - 30MM viewers / 20.7 HH rtg

#3 - 24MM viewers / 16.8 HH rtgOff air w/in 2 years

#4 - 24MM viewers / 16.4.0 HH rtg

#12 - 35MM viewers / 11.7 HH rtg

NBC ‘MUST SEE THURSDAY’ LINEUP ‘97-’98

8

8:30

9

9:30

10

Debuts Jan ’99 3.5MM viewers and averages that for 1st season

Season 1 finale draws 5.2MM viewers

Season 2 opens Jan ‘00 to 7.6MM viewers

Source: Nielsen

By the time the Sopranos goes off air:

Averaging 9-11MM viewers

At its height popularity, ‘02 drew 13.4MM for the season premiere and is almost outdrawing NBC on Sunday nights

Series finale was watched by 11.9MMSource: Nielsen

By the time the Sopranos goes off air:

21 Emmy wins including : - 2 Best Drama - 6 for Best Lead Actor/Actress

111 Nominations Overall

2 Peabody Awards

2007 PRIMETIME EMMYS

CABLE POST SOPRANOS

Source: Paidcontent.org Apr 26, ’12

Debuts Jan 10, 1999 on HBO

Debuts at the Consumer Electronics Show in ‘99

Releases June ‘99

Source: Parks Associates Whitepaper 2011 “Digitalsmiths”

THE EVOLUTION OF VIEWING

Since Nielsen started measuring DVR use in 2007, usage has doubled.

And for those under 55 years old spend 9 hours a month watching time shifted / recorded TV

DVR USE

DVR PLAYBACK BY HOUR

Source: Nielsen DVR State of Media Jan ’11 for P1849, % of total DVR playback

Source: Nielsen DVR State of Media Jan ’11

ONLINE TRAFFIC BY HOUR

Source: Sandvine Over the Top Video From a Cable Perspective 2012 report

XBOX USE BY HOUR

Source: Nielsen “Who, When and How? A Closer Look at Video Game Measurement” Apr 21, ’10

Live A18-49 Rating

2.6

Live + & 7 dayA18-49 Rating

3.9

% Increase

50%

2.7 3.8 41%

1.2 2.3 92%

THE DVR EFFECT

Source: TV By the Numbers Apr 16, 2012 using Nielsen data

3.88

3.323.41

2.61

3.26

1.551.311.29

1.071.37

2.302.422.62

3.262.98

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

2005 / 06 2006 / 07 2007/ 08 2008 / 09 2009 / 10

Year

Average P2+ Rating

Network Sports Cable Sports Broadcast Prime

LIVE SPORTS DVR PROOF

LEGACY OF NAPSTER

Launches June ’99

’00, sued by Metallica

Feb ‘01 hits peak 26.4MM users

July ‘01 loses appeal in lawsuit by RIAA

Declares bankruptcy 2002

File sharing peer-to-peer network that specialized in music

Source: Salon.com Apr 29, ‘03

Est Feb ‘05

Est Feb ‘05

Mar ‘08

‘06-’07

Jan ‘08‘07

Nov ‘08

Feb ‘11

Oct ‘05

Feb ‘10

Network Controlled

Content Agreements

‘06-’07

July ’07

Avg video view length 2.7 minutes

9 billion online video views by 134MM viewers

January ‘12

Avg video view length 6.1 minutes

40 billion online video views by 181MM viewers

ONLINE VIEWERSHIP TRENDING UP

Source: Comscore

Source: PaidContent.org “Amazon: Bring us your kids’ and comedy shows, get $55,000” May 2, ‘12

"Change is coming. I think we are at the dawn of a strong new presence of web-based programming.”

"It is in 2012 what premium cable was in 1984, in terms of moving in the way of Emmy recognition and prominence.“

-- John Leverence, senior vice president of awards for the Academy of Television Arts & Sciences

Source: TheWrap.com “The Emmys Grapple With a New Question: TV or Not TV” April ’12

Web 2.0

Term used to define the current internet we live in now, 2nd generation from static HTML pages to more dynamic web that is better organized and based on serving web applications to users. Other improved functionality includes open communication with an emphasis on Web-based communities of users

Google Versus FacebookThe Fight Over the Shift to a More Social Web

Source: Fortune “Facebook vs. Google: The battle for the future of the Web” Nov 29, ‘11

Share of Revenue:

41%

10%

5%

ONLINE ADVERTISING REVENUE

Source: 1.2012 IAB Internet Revenue Report2. Emarketer “Google Edges Closer to Facebook as US Display Advertising Becomes Two-Horse Race” Feb 22, ‘12

A more organized world centered around search with Google in

the middle

“Keyword advertising has been so successful because it's useful to users, advertisers and publishers — everyone's interests are aligned.”

“At Google, we believe that ads are a valuable source of information — one that can connect people to the advertisers offering products, services and ideas that interest them. By making ads more relevant, and improving the connection between advertisers and our users, we can create more value for everyone. Users get more useful ads, and these more relevant ads generate higher returns for advertisers and publishers.”

GOOGLE’S MISSION - ADVERTISING

Source: Google blog “Making ads more interesting” Mar 11, ‘09

A more open and connected world,

centered around the social graph with

Facebook in the middle

Source: “User Insights” by Paul Adams

Source: “User Insights” by Paul Adams

Source: Mashable “Why 2011 Will Be Defined by Social Media Democracy” Dec 1, ‘11

“Google had a built in disadvantage in social networking sweepstakes. It was happy to gather information about the intricate web of personal and professional connections known as the ‘social graph’ and integrate that data as signals in its search engine. But the basic premise of social networking –that personal recommendation from a friend was more valuable than all of human wisdom, as represented by Google search – was viewed with horror at Google. Page and Brin had started Google on the premise that the algorithm would provide the only answer”

Source: “In the Plex” by Steve Levy

Source: The Guardian “Web Freedom Faces Greatest Threat Ever, warns Google’s Sergey Brin” April 15, ‘12

OTHER OPPORTUNITIES OF THE SOCIAL WEB

48% of online brand mentions involve media or marketing materials

33% of these from TV

HEIGHTEN IMPACT OF OTHER MEDIA

Source: WARC “Brand Mentioned 3Bn times a Day in US” June ‘11

CO-VIEWING MOMENTS MORE IMPORTANT

Source: Forbes “Super Bowl XLVI Social Media Audience Delivers 64 Million Impressions” Feb 21, ‘12

CO-VIEWING MOMENTS MORE IMPORTANT

Source: Twitter

EXPAND STORYTELLING

ANOTHER PLACE TO EXPERIENCE A BRAND

DRAW INSIGHTS FROM JUST ‘LISTENING’

FEEL MORE CONNECTED TO BRANDS / STARS

425MM monthly visitors un-monetized by

ad revenue

Source: Mashable Apr 9, ’12

1st Iphone release 2007

1st phone to feature multi-touch interface

#2 in marketshare behind RIM (Blackberry) by 2008

#2 in smartphone marketshare behind Android with 1/3 market

#1 in tablet marketshare

59% of smartphone sales Q1 ‘12

Ipod debuts Nov ‘01 Source: Canalys Report “Smart mobile device shipments hit 118 million in 2007, up 53% on 2006” Feb 5, ’08Source: Techcrunch “The Decline Of Android Foretells The Rise Of A Total Apple Monopoly” Apr 26, ’12

U.S. SMARTPHONE PENETRATION

Source: Nielsen blog “Smartphones Account for Half of all Mobile Phones, Dominate New Phone Purchases in the US” Mar 29, ’12

App [ap] Definition: application, typically a small specialized program downloaded to a mobile phone

Source: Information Week Oct 19, ‘11

Source: Nielsen State of Mobile report Q3 ’11

80% of branded apps have been downloaded less than 1K times

Less than 1% have hit 1MM or more downloads

Source: The Guardian “Most branded apps are a flop says Deloitte. But why?” July 11, ’11

MOBILE PAYMENTS

BRANDED UTILITY

PHYGITAL

104SEARCH PUBLISHERS MOBILE NETWORKS DSPS + EXCHANGES SOCIAL SMS & BEYONDPHYGITAL

SECOND SCREEN

GEO-FENCING

Millenials switch their attention between media platforms 27x per hour

In a survey, 70% were willing to give up alcohol for a week versus their smartphone; 33% were willing to give up sex

HOW WE LOVE OUR PHONES

Source: Inmobi “5 Ways Mobile Devices Have Changed the Way Americans Consume Media”Source: Time Inc 2012 study “A Biometric Day in the Life” Source: Telenav survey Aug, ’11

Average mobile user consumes 9 hours of media daily, their mobile device = 26% of this time

HOW WE LOVE OUR PHONES

Source: Comscore 2012 US Digital FutureSource: Nielsen state of mobile Q3 ‘11 report

Source: Sandivine report “Global Internet Phenomena” 2012

Source: Nielsen Q4 ‘11 Report

More than 1/3 of mobile (Google) searches have local intent

“I get really geeked out when I think what would it mean if someone is moving faster than 3MPH relative to someone moving slower…”—Jason Spero, Google Head of Mobile Sales and Strategy

Source: Adweek Feb 13, ‘12 “The Mobile Issue: Jason Spiro: Mobile Evangelist interview”

HIGHLY LOCALIZED

Can the App transform Television The Way it Has Mobile?

http://youtu.be/aGqzyviV4eg

Source: Leichtman Research Group Apr, ’12

"I’d like to create an integrated television set that is completely easy to use," Jobs told his biographer, Walter Isaacson. "It would be seamlessly synced with all of your devices and with iCloud ... It will have the simplest user interface you could imagine. I finally cracked it.”

Source: “Steve Jobs’ By Walter Isaacson

CUTTING THE CORD

THE GATEKEEPERS

40% Revenue from Advertising

60% Revenue from Re-transmission fees

$86 on average versus $45 for broadband*

*Averages

MSOs / NETWORKS

BANDWIDTH THROTTLING

BANDWIDTH THROTTLING

Source: PC World “AT&T Wireless Bandwidth Throttling: The Backlash Has Begun” Feb 14, ‘12

Half Hour of Reality TV$100-$500K

One hour of scripted drama$1MM-2MM

ORIGINAL CONTENT IS EXPENSIVE

Source: http://www.eonline.com/news/ask_the_answer_bitch/which_costs_more_reality_tv_scripted/70141

CORD CUTTING EFFECT – SMALL BUT GROWING

OUR TV ADDICTION

Source: Nielsen Digital Consumer Q4 ’11 report

CONTENT IS KINGBUT EASE OF USE IS QUEEN

EPILOGUE

IN US 65% OF TRAFFIC FROM REAL-TIME

US RANKS #16 – AVG CONNECTION SPEED

Source: Akami State of the Internet Q2 ‘11 report

DEBATE NET NEUTRALITY

INNOVATIVE STORYTELLING

INNOVATIVE STORYTELLING

MOVE FROM PC TO MOBILE ERA

Source: BusinessInsider “The Future of Mobile” Mar 22, ‘12

EVOLUTION FROM APPS

PRIVACY

EVOLUTION OF AD SPEND

DAN WIEDEN: THE FUTURE OF TV