TRENDS  AND  OPPORTUNITIES  BASED  ON    U.S.  VIDEO  CONSUMPTION  

Brian  Fuhrer  SVP,  Product  Leadership  

WHAT’S  ON  THE  MENU?  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

2  2  

WHAT’S  ON  THE  MENU?  Trends  and  opportuniOes  in  the  U.S.  video  market..  

A  brief  review  of  some  key  trends  •  The  past  5  years  in  the  next  5  minutes  

Recent  landscape  changes  driving  opportuni:es    The  increasing  popularity  of  Video  On  Demand    

Key  enablers  to  sa:sfying  the  VOD  appe:te…      

YEARS  5THE  LAST  

MINUTES  5IN  THE  NEXT  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

5  

SMARTPHONES  

Source:  Nielsen’s  Q3  2008  3  Screen  Report  and  Q2  2013  Cross  PlaXorm  Report,  StaOsOc:  Average  number  of  persons  watching  video  on  a  mobile  phone  during  a  month.  

U.S.  smartphone  video  consumers  have  quintupled  

from  10  to                              50  Million    

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

6  

MOBILE  VIDEO  

Source:  Nielsen’s  Q3  2008  3  Screen  Report  and  Q2  2013  Cross  PlaXorm  Report,  StaOsOc:  Average  number  of  persons  watching  video  on  a  mobile  phone  during  a  month.  

Mobile  video  users  are  spending  59%  more  Ome  watching  

video  on  their  phones.      

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

7  

TABLETS  

Source:    NPower,  NPM    Panel,  StaOsOc:  Number  of  households  with  at  least  1  tablet,  Interval:  11/02/2013  

Introduced  just  3  years  ago,  over    35  million  U.S.  

homes  have  at  least  one  tablet  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

8  

COMPUTER  STREAMING  

Source:  Nielsen’s  Q3  2008  3  Screen  Report  and  Q2  2013  Cross  PlaXorm  Report,  StaOsOc:  Average  minutes  per  user  per  day  streaming  video  on  a  computer  

Video  consumpOon  on  a  computer  is  up  157%  among  users  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

9  

MULTI-­‐MEDIA  DEVICES  

Over-­‐The-­‐Top  enabling  devices  are  steadily  gaining  

tracOon  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

10  

OVER-­‐THE-­‐TOP  

Source:  Nielsen’s  NPM  Panel,  StaOsOc:  Unweighted  count  of  homes  with  a  television  that  is  enabled  to  access  the  internet  either  directly  or  through  an  adached  device,  Interval:  10/25/2013  

25%  of  U.S.  TV  homes  can  now  access  internet  video  directly  on  their  television    

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

11  

VIDEO  GAME  CONSOLE  

Source:  NPower,  StaOsOc:  Percent  of  total  screen  Ome  that  is  adributed  to  video  game  console  usage,  Interval:  Q3  2013  (7/1/2013  -­‐  9/29/2013)  

12%  of  total  TV  screen  Ome  for  18-­‐24  year  olds  is  now  spent  with  a  game  console  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

12  

DVD  USAGE  

Source:  NPower,  StaOsOc:  Average  minutes  per  person  per  day  using  a  DVD  player,  Interval:  Q3  2008  (6/30/2008  -­‐  9/28/2008)  and  Q3  2013  (7/1/2013  -­‐  9/29/2013)  

18-­‐24  year  olds  have  cut  their  DVD  player  

usage  by  50%    

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

13  

VCR  

The  VCR  has  virtually  

disappeared  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

14  

DVR  PLAYBACK  

Source:  NPower,  StaOsOc:  Average  minutes  per  person  per  day  watching  Ome  shijed  television,  Interval:  Q3  2008  (6/30/2008  -­‐  9/28/2008)  and  Q3  2013  (7/1/2013  -­‐  9/29/2013)  

35-­‐54  year  olds  have  doubled  their  

Omeshijed  viewing  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

15  

LIVE  TELEVISION  

Source:  NPower,  StaOsOc:  Average  minutes  per  person  per  day  watching  live  television,  Interval:  Q3  2008  (6/30/2008  -­‐  9/28/2008)  and  Q3  2013  (7/1/2013  -­‐  9/29/2013)  

12-­‐17  year  old  Americans    

are  watching  26  minutes  less  live  TV  per  day  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

16  

TOTAL  TELEVISION  SCREEN  TIME  

Source:  NPower,  StaOsOc:  Average  minutes  per  person  per  day  using  the  television,  Interval:  Q3  2008  (6/30/2008  -­‐  9/28/2008)  and  Q3  2013  (7/1/2013  -­‐  9/29/2013)  

The  total  Ome  spent  using  a  television  has  increased  by  5%  

SOME  MORE  RECENT  DEVELOPMENTS:    

TWITTER,  SMART  TV’S,  AND  CABLE  MIGRATION  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

18  

WE  ALL  KNOW  THAT  PEOPLE  TWEET  ABOUT  TV  Viewers  interacOng  with  television  programming  through  social  media  is  an  important  consumer  phenomenon  

Source: Nielsen Social, Unique Audience Data from 9/1/13-11/30/13, Nielsen Qtr 3 2013 Connected Devices Report

of  smartphone/tablet  owners    use  devices  as  second-­‐screens    

while  watching  TV  

Tweets about U.S. TV in 2013, sent by 36 million people

Average Daily Unique Audience seeing Tweets

about U.S. TV

11    990    84  percent   million   million  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

19  

SMART  TV  GROWS  FROM  13%  TO  18%  YOY  Smart  TVs  are  more  likely  to  be  located  in  the  Living  Room  

Source: Nielsen Custom Data HHLD, February 2014

February  2014  

No  Smart  TV,  82%  

Smart  TV  and  

enabled,  10%  

Smart  TV  and  not  enabled,  

9%  

18%  

Smart  TV  PenetraOon  

71%  

20%  

5%  4%  

Living  Room   Bedrooms  

Basement   Other  

Smart  TV  by  LocaOon  

52%  enabled  

51%  enabled  

53%  enabled  49%  enabled  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

20  

DISTRIBUTION  CONTINUES  TO  SHIFT  FROM  WIRED  CABLE  

9.3   9.4   9.5   9.5   10.2  

55.7   53.6   51.8   49.5   47.1  

5.3   6.6   7.9   9.4   10.9  

29.6   30.4   30.8   31.5   31.8  

Feb  '10   Feb  '11   Feb  '12   Feb  '13   Feb  '14  

Broadcast  Only   Wired  Cable  (No  Telco)   Telco   ADS  

Percent  of  Total  US  

Source: Nielsen NPM, data from the 15th of each month, based on scaled installed counts, Broadband Only Households fall into the ADS bucket Percent of Total US is based on a sum of the four breaks listed and is slightly higher than total Composite households

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

21  

Homes  with  alternaOve  means  to  receive  content  

BROADBAND  ONLY  SKEWS  YOUNGER  

Source: Nielsen NPOWER, Based on Scaled Installed Households, Feb ‘14

Total  U.S.  African  American  

Asian  American   Hispanic  

White  Non-­‐Hispanic  

HH 1.6%   1.0%   4.1%   1.2%   1.6%  

P2-­‐11 2.5%   0.8%   2.8%   0.6%   3.5%  

P12-­‐17 1.6%   1.0%   2.3%   1.6%   1.7%  

P18-­‐34 3.3%   2.3%   7.2%   1.2%   4.0%  

P35-­‐49 1.6%   1.0%   1.6%   1.1%   1.9%  

P50+   0.3%   0.0%   0.4%   0.0%   0.4%  

Broadband  Only  PenetraOon%  

AN  OPTION  GROWING  IN  POPULARITY:    

VIDEO  ON  DEMAND  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

23  

THERE  WILL  ALWAYS  BE  LIVE  TELEVISION  Live  events  and  top  programs  conOnue  to  adract  a  live  audience  

Source:  NPower,  StaOsOc:  Percentage  of  prime  Ome  program  viewing  that  was  live  versus  playback  within  7  days  (p2+),  Interval:  September  2013  (8/26/2013  –  9/29/2013)  

94%   94%   88%   88%   86%  77%   77%  

6%   6%  12%   12%   14%  

23%   23%  

News   Sports  Event   Awards  Ceremonies  

Comedy  Variety   SituaOonal  Comedy  

General  Drama   General  Variety  

Live   Timeshijed  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

24  

TV  Viewing  OpOons  

Mobile  Devices  

TradiOonal  Linear  

On  Demand  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

25  

A  THIRD  OF  PEOPLE  ACCOUNT  FOR  HALF  THE  VIEWING  (HINT:  AND  THEY’RE  NOT  THE  YOUNGEST  HALF)  

13.4%   9.6%  

8.4%  5.1%  

9.8%  6.7%  

13.2%  

10.9%  

20.1%  

20.0%  

7.4%  

8.9%  

27.8%  39.0%  

Universe  EsOmate   PUT  

P55+  

P50-­‐54  

P35-­‐49  

P25-­‐34  

P18-­‐24  

P12-­‐17  

P2-­‐11  

35%  of  pop  account  for  almost    half  of  all  Ome  spent  using  television  

Source: NPOWER, Share of UE vs. Share of PUT – Total Day, 9/23/13 – 02/23/14

Universe  Es:mate  (000)  

PUT  (000)    

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

26  

VIDEO  ON  DEMAND  ENABLERS  

CONTENT   ACCESSIBILITY   INTERFACE  

THE  NEW  ENTRANT:  SUBSCRIPTION  VIDEO  ON  

DEMAND  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

28  

SUBSCRIPTION  VIDEO  ON  DEMAND  DEFINED  

Subscrip:on  Video  On  Demand,  [SVOD],  On  demand  video  content  made  available  to  consumers  via  internet  connected  devices  on  a  subscripOon  basis  (separate  from  MVPD  subscripOon).  Examples  include:  Ne1lix,  Hulu  Plus,  and  Amazon  Prime.  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

29  

5%  

Hulu  Plus  

Amazon  Prime  

8%  

SUBSCRIPTION  VIDEO  ON  DEMAND  PENETRATION  1/3  of  U.S.  television  households  report  they  have  access  to  an  SVOD  service  

Source:  NPower,  StaOsOc:  Percent  of  homes  with  SubscripOon  Video  On  Demand  access,  Interval:  10/13/2013  

29%  

Neclix  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

30  

Broadband  only  TV  homes  

88%  

Broadcast  only  TV  homes  

with  internet  

49%  

Cable  Plus  homes  

with  internet  

36%  

WHICH  HOMES  HAVE  NETFLIX?  33.5  million  U.S.  homes  have  access  to  NeXlix  

Source:  NPower,  StaOsOc:  Percent  of  homes  with  NeXlix  access,  Interval:  10/13/2013  

TV  homes  

29%  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

31  

NETFLIX  COVERAGE  COMPARED  TO  NETWORKS  NeXlix’s  coverage  closely  aligns  with  that  of  U.S.  premium  pay  networks    

Source:  NPower,  StaOsOc:  Percent  of  US  Televisions  households  that  receive  content,  Interval:  10/13/2013  

0%  

10%  

20%  

30%  

40%  

50%  

60%  

70%  

80%  

90%  

100%  

TWC  

USA

 NICK  

CNN  

HIST  

AMC  

CMDY

 ESPN

 SYFY  

VH1  

TVL  

CNBC

 BE

T  Fox  Sports  1  

InvesOgaOo

n  Discovery  

OWN  

MTV

2  NBC

 Spo

rts  N

etwork  

FOX  Bu

siness  N

etwork  

INSP  

WGN

A  FU

SE  

FXX   H2  

NKTNS  

UP  

MIL  

DesOnaOo

n  Am

erica  

TV1  

SPRT

 G4

 FX  M

ovie  Chann

el  

Encore  

Encore  Prim

ary  

Fox  Sports  2  

HBO  Prim

e  Starz  P

rimary  

FOXD

 Discovery  En  Espanol  

NeXlix  29.0%  

“RECENTLY  TELECAST”  VIDEO  ON  DEMAND  –  

A  NEW  WAY  TO  DELIVER  PREMIUM  

CONTENT  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

33  

RECENTLY  TELECAST  VIDEO  ON  DEMAND  DEFINED  

Recently  Telecast  Video  On  Demand,  [RTVOD],  On  demand  content  provided  by  MVPDs  that  is  taken  directly  from  the  live/linear  airing  (including  same  commercials)  within  7  days  of  broadcast.  Viewing  credits  back  to  TV  raOngs  as  Omeshijed  viewing.  All  major  U.S.  broadcast  networks  and  most  cable  networks  now  make  their  content  available  via  RT  VOD  via  all  major  MVPDs.  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

34  

VIEWERS  TEND  TO  BE  YOUNG  AND  UPSCALE  A  look  at  “Recently  Telecast  On  Demand”  viewers  

Source:  NPower,  StaOsOc:  Percent  of  persons  p2+  that  watched  a  recent  program  either  live  or  on  VOD  and  reside  in  homes  with  the  corresponding  characterisOcs,  Interval:  October  2013  

HOH  Age   W/CHILDREN   INCOME  

8%  

25%  18%  18%  

38%  

29%  

HOH  Age  <  35   Presence  of  Chidren   HH  Income  >  $100K  

Live   VOD  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

35  

THE  PAYOFF:  ON  DEMAND  DELIVERS  THE  MESSAGE  ProporOon  of  the  commercial  raOng  to  program  raOng  for  a  U.S.  broadcast  network    

Source:  NPower,  StaOsOc:  The  raOo  of  the  commercial  average  audience  against  the  program  average  audience,  Interval:  September  2013  (08/26/2013  -­‐  09/29/2013)  

Live  95.1%  

DVR  49.9%  

VOD  96.8%  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

36  

A  TIPPING  POINT?:  VOD  VS.  DVR  

Source:  NPower,  StaOsOc:    Percent  of  total  program  and    total  commercial  playback  minutes  that  were  adributed  to  VOD  (p18-­‐24),  Interval:  October  2013  

 VOD  %  of  Non-­‐Live  Viewing  

Viewing  of  commercial  minutes,  persons  18-­‐24  for  a  popular  new  acOon  show  

VOD  %  of    Total  Viewing    

22%   55%  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

37  

POPULAR  NEW  ACTION  SHOW  COMMERCIAL  MINUTES  

Source:  NPower  -­‐  NPM  Panel,  Interval:  Week  of  10/07/2013  

P18-­‐24  

66%  

Homes  Capable  of  Viewing  NeXlix  

 VOD  %  of  Non-­‐Live  Viewing  

KEY  ENABLERS  TO  SATISFYING  THE  VIDEO  APPETITE…  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

39  

KEYS  TO  SUCCESS  FOR  VIDEO  ON  DEMAND  

CONTENT   ACCESSIBILITY   INTERFACE   SUCCESS  

Copyrig

ht  ©

2012  The

 Nielse

n  Co

mpany.  Con

fiden

Oal  and

 proprietary.  

40  

KEYS  TO  SUCCESS  FOR  VIDEO  ON  DEMAND  

INTERFACE