television 2020 - english- idate

Television 2020The Web Migration

June 2009

IDATE ContactsFlorence Le Borgne Mob: 06 74 59 36 31 - [email protected] FontaineMob: 06 70 70 85 92 - [email protected]

Presentation

22

Source: IDATE © "Television 2020: The Web Migration"

A third phase in the evolution of the TV industry

AccessTerminal = TV

Network as technical providerThe TV channel is the

gatekeeper

Digital managed networksMultichannels providers as

gatekeepers betweenTV channels and viewers

Network gatekeepers bypassed by Internet

services and challenged by device managers

UsageAll Live

CollectiveOn the TV set

Theme channels introduce educated viewers to off-live

On multiple TV sets

Any time & AnywherePersonal TV

Shared in my networkOn any terminal

Services Broadcast television Multichannel televisionCatch-up & VOD

Enriched TVVideo social networking

Funding TV channel subscriptionTV package subscription

TV Channels Public fundingTV channels advertising

Program advertisingProgram purchase

Key players RightsholdersBroadcast TV channels

RightholdersPackagers/Network operators

RightholdersDevice manufacturers

Search engineSocial networks

Analog TV Digital TV Internet TV

33

TV 2020Key trends

44

Usage: More video time, less live TV, increased "off-TV" viewing time

1. Free and pirated content is widely available on the Web2. Social networks contribute to circulating content3. Online video quality of service is improving4. Catch-up TV offerings are becoming widespread5. New screens make nomadic use easier

Breakdown of time spent watching video online, France, 2008-2020(for people with Internet connections, in minutes per day)

0

50

100

150

200

250

300

350

2008 2020

catch-up TV fixed live TV channels - fixed networkslive TV channels - nomad & mobile on-demand video - fixed networkson-demand video - nomad & mobile

5 hours of video per day in 2020, 1/3 of which is

Off-TV


55

Access: The connected TV set disconnects households from traditional networks

1. The TV set connected to the Web and new peripherals remains central to the digital household

2. Services are increasingly managed at the household level instead of the network level

3. New portals are competing with traditional operators

Percentage of "Internet only" households

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

USA UK Germany Italy France Spain

Approximately 10% of households are

"Internet only"


66

Services: Catch-up TV, a key service

1. TV channels reap long-term benefits from on-demand consumption via catch-up TV

2. Combines the best aspects of the Web and broadcast TV3. 3D emerges, driven first by movies and games

Breakdown of on-demand video advertising sales figures in 2020

Live TV channels- fixed networks Catch-up TVLive TV channels - nomad & mobile On-demand Video - fixed networksOn-demand video - nomad & mobile


77

Advertising: Erosion then monetization of on-demand content

1. Multichannel TV has an impact on rates, Internet further boosts its advertising offering

2. Only premium content generates significant advertising revenue3. Catch-up TV can combine personalization with the strength of media

brands

Comparative profitability of video ads by service, UK, 2008-2020(base 100 = live TV, 2008)

0

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Live TV Catch-up TV On demand

Catch-up TV: Premium content

and personalization

are key


88

Pay-TV: Still more growth potential for ARPU

1. Premium offerings in a better position than basic offerings, which are threatened by catch-up TV and VOD

2. Bundle ARPU may augment in the short/medium term through digitization, PVRs, VOD and HDTV

Pay-TV ARPU by country, 2008-2020(EUR per month)

0

10

20

30

40

50

60

70

80

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

USA UK Germany Italy France Spain

ARPU increases then meets

competition from free online offerings


99

TV 20203 scenarios

1010

Scenario 2 "My Video Web"Our vision of the TV industry in 2020

Context

• The crisis accelerates the transformation of the Internet, the nervous system of social life• Widespread nomadism and online

storage• Free, universal Internet connections,

predominance of social networks• Users comfortable with ICT, constant

personal identification

Video consumption

• Drop in broadcast TV audience and widespread development of on-demand video• "Broadcast your life "& more robust UGC• Piracy disappears with the end of the

anonymous Internet

Operators

• End of the exclusive model for most programs

• Channels cut out the middle man and producers become more powerful

• Several large global channels/franchises, some free, some paid

• Public service broadcasting marginalized

• Integration of advertising / direct marketing / e-commerce, producers are paid based on product sales

• Telcos serve as enhanced connectivity platforms

New services

• Mobile TV is widespread• All content is accessible on-demand

online and for streaming from fixed or mobile networks• 3D (and immersion) enter the mass

market phase

Networks

• "Internet only" households

• Considering a second switch-off of broadcast TV

1111

Alternate scenario #1: "Broadcast as Usual"The broadcast model adapts

Context

• The economic crisis continues

• Limited roll-out of fixed and mobile ultra high-speed connectivity

• Internet has not become an entertainment tool

Video consumption

• TV audience increases, since TV is the least expensive form of entertainment

• TV remains predominantly live, with some catch-up TV

Operators

•Consolidation of private channels

•Reduced footprint of public broadcasting

•Predominance of live TV, events, heightened competition in sports, fewer TV dramas

•Crisis of theme channels

•Vertical integration of telcos and TV channels

New services

• The connected TV and the marriage of Web and TV fail to take off• 3D remains limited to movie theaters• Mobile TV remains a niche market• Web video services do not have access

to premium content

Networks

• Managed networks remain dominant• Fiber networks in urban centers• Terrestrial and satellite broadcasting

increasingly focus on nomadism

1212

Alternate scenario #2: "Community TV"Fragmentation

Context

• Social instability and governmental control over networks• Citizens are concerned about health risks

and privacy• Society increasingly clustering into

communities

Video consumption

• Audience fragmented into communities• Collective nomadism• Community, local, non-profit UGC• Significant piracy issues

Operators

• Decrease in premium content production

• Pay channels for upper classes

• Powerful public channels, serving to maintain social ties

• Advertising shifts towards location-based direct marketing

• Explosion of the "Internet titans"; eBay is the dominant player

• Regulation is on the local level

New services

•Multiplication of local Web-TV channels•Mobile TV for the upper classes•Community-based encrypted social networks•3D and the connected TV fail to take off

Networks• Terrestrial broadcasting under tight control

of the state• Most private broadcasters have abandoned

terrestrial broadcasting• Fiber networks reserved for major

metropolitan areas• Poor workers connect on nomad hubs• Fiber networks in urban centers• Terrestrial and satellite broadcasting

increasingly focus on nomadism

1313

TV 2020Impact on the market

1414

0

10 000

20 000

30 000

40 000

50 000

60 000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Advertising Pay

Pay-TV faring best

Growth revived by digitization and new

services

Rise of VOD Free online content impedes

growth

TV and video advertising market in Europe’s five main markets,2008-2020 (millions of EUR)

Recession Slightrebound

Pressure on prices from the

Web

Monetization of catch-up TV and

Internet video

Impact on the market

Zerogrowthfor the period

+3% a year for

the period


1515

80

90

100

110

120

130

140

150

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Reference Scenario 2: Web TVScenario 1: Adaptation of the broadcast modelScenario 3: Fragmentation

Total TV and video market according to the three scenarios, 2008-2020 (100=2008)

1. "Broadcast as usual" is more favorable – less value destroyed by the Internet

2. "Community TV" is less favorable – the market is fragmented and not terribly solvent


The central scenario, "My Video Web,"is not the most favorable to the TV market

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TV 2020Conclusion

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Some key points

All the conditions for a migration to the Internet are now in place• Consumption patterns have changed

• Terminals are connected

• Content available online

• Online video quality of service is improving

• Confluence of strategies among players

The migration will have a deep-seated impact on the TV industry• Video consumption up strongly

• Content is largely commoditized

• The end of the exclusive operating model

• Households are no longer locked in by managed networks

• Producers bypass channels and distributors

In the mid-term, monetizing new consumption patterns will revive growth

Unlike the music and print media industries, the video industry is investing in the Internet. But in the short term, the migration will destroy value• Drop in advertising rates

• Broader circulation of content without compensation

• Controlling costs will therefore be one of the dominant features of the decade from 2010 to 2020

The European industry is particularly threatened• North American producers will serve consumers directly

• Regulation of Web content and on-demand services will be difficult

• Only integrated pan-European conglomerates will withstand the challenge

• Regulations will have to change

1818

Thank you!

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