20 September 2010

Online Video LandscapePrepared by: Fuor Digital

Agenda

Overview – State of Online VideoDeep Dive – Digital Video LandscapeOnline Video Streaming for AdvertisersOnline Video Streaming PlayersWhat’s Next in Online Video

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TV is not dead

The average American watches 153 hours of TV per month

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Source: A2/M2 Three Screen Report, Q1 2009

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But viewing behavior IS changing

Fragmentation continues to escalate6

With DVR penetration inline with predictions

• As of March 2009, 30.6% of households in Nielsen’s People Meter Panel have a DVR, up from just 12.3% in Jan 2007

• A growing number are becoming multi-DVR households - 25% of homes had two, while 5% had three or more

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20141,695

5,068

10,811

17,100

25,635

34,844

43,432

54,772

63,600

69,50673,949

76,824

79,17181,568

84,019 86,522Internet Access – Broadband

Households Subscribers (000s)

93.3% of Internet Users access the Web

via a broadband connection

And Broadband access reaching over 60% of all US households

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Source: MAGNA, US Census, April 2009; Nielsen 2010 Media Industry Fact Sheet

More time watching across ALL screens

• Timeshifting usage with DVR is up 40%, with Americans playing back 8 hrs, 13 minutes per month.

• With broadband levels increasing, online video audiences will continue to grow as consumers begin to upgrade their PCs to support increased video consumption

• Mobile video viewing grew a significant 52% in Q1 09 from the previous year, up to over 13MM Americans. – The most watched categories are comedy and weather

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56 Million U.S. adults are “Off The Grid”

Results Show That 56 Million “Off The Grid” Consumers Are Slipping Past Advertisers Because They Are Removing Themselves From Live Broadcasting Ad Experiences

This Off the Grid group represents nearly one third of the adult, online population in the United States – according to comScore, nearly 56 million people and growing.

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SAY Media/ComScore New Research Study Oct. 2010

30%

18% 17%

10%

3% 2%

DVR on their home television system The show’s Internet siteA free online video service (Hulu, TV.com) Video-sharing site (like YouTube)Portable MP3 video player Mobile/Smart Phone

Source: Deloitte’s State of the Media Democracy Survey, Fourth Edition December 2009

U.S. consumers have watched their favorite TV programs on the following platforms:

From “Primetime” to “Mytime”11

Video Where, When and How I want it

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Online Video Landscape

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Internet networking traffic is predicted to quadruple between 2009 and 2014 with online video as the primary driver of that growth.

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Cisco Systems Annual Visual Networking Index Forecast, 2010

Jul 2009 Jul 2010

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36

Online Video Views (Billion)

71%

Jul 2009 Jul 2010

158

181

Unique Viewers (Million)

15%

Online video viewing soars15

Source: comScore VideoMetrix, July 2010

And will continue to grow16

Approximately one-quarter of US consumers watch Internet TV weekly.

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Source: In-Stat, *The US Market for Web-Based TV Widgets and Applications* as cited in press release, April 20, 2010

Who’s watching?

M46%

W 54%

Television Audience

Comp

W 53%

M47%

Internet Video

Audience Comp

• The highest penetration of online video is among A18-24, followed closely by A25-34 year olds.– 29% of under-25s get “most” of their TV online,

compared to 8% of all online adults.

• From a sheer reach standpoint, the fastest growing demographic is among A45+ - while A35-49 are the fastest growing in time spent.

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Source: *Retrevo, « Gadgetology Report, » April 9,2010 * A2/M2 Three Screen Report Q1 2009 *Nielson Online VideoCensus, 2009

Who’s Watching?

Source: comScore, “Great Expectations”, August 2010.

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When an impression means more than 1

Source: The Nielson Wire Blog - February 2010

18%+

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What are they watching?

Entertainment is by far the category leader in terms of reach, streams per streamer and minutes per stream

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The rise of long-form

Attributed to the success of online properties such as Hulu and the increase in Internet- enabled TV sets and other viewing devices.

In-Stat expects US shipments of web-enabled devices that support TV applications to increase from 14.6 million this year to 83.4 million by 2014

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Content options

User Generated Content

TV

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Professional

Where are they watching

Google Sites; 14,628.1

Hulu; 1,174.8

Microsoft Sites; 642.0

Vevo; 430.3

Viacom Digital; 346.8

Yahoo! Sites; 336.3

CBS Interactive; 333.2

Turner Network; 331.9

Fox Interactive Media; 328.5

Facebook.com; 245.1 Videos (000)

May 2010

YouTube is by far the category leader, accounting for 43.1% of all videos viewed online.

Source: comScore Video Metrix May 2010

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Beyond the top 1025

Because size isn’t everything

VS.

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Why are they watching?

What are some of the reasons you watch TV shows on the Internet?

I forgot to watch a specific episode when it aired on TV 54%

I am catching up on the current season of programming because I missed a large number of episodes 47%

I am catching up on a past season of a program 33%

I forgot to DVR/TiVo a specific episode when it aired 32%

Another member of my household watches another program at the same time as the show I want to watch 18%

I watch TV programming online when I am at work 12%

I watch TV programming online when I travel 12%

Source: The Nielson Wire Blog - February 2010

Online video is

for catching up, not

replacing

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Online’s convenience appeals to viewers

17%

7%

12%

24%

21%

33%

36%

25%

81%

16%

9%

11%

24%

19%

33%

30%

31%

20%

8%

9%

14%

16%

21%

28%

30%

30%

74%78%

Other

I don’t have a TV

Allows me to watch a show when other TVsare being used

It’s portable

Available places where I don’t have TVaccess

Allows me to watch shows more than once

Less commercials than TV

Takes less time to watch than on TV

Allows me to watch a show that conflictswith show on TV

Available at my convenience

Q1 2010

Q4 2009

Q3 2009

Q162: What are the top three reasons you watch TV shows on NBC.com?

Common Others:Can watch shows they

missedCan watch shows that are

no longer aired

Convenience remains the key driver for online video use

More males than females watch for convenience, while more females than males watch for portability

Younger visitors (age 18-49) are more likely to cite convenience and/or portability as a reason for use

nQ1 =286 (Rotation Group)

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When are they watching?

0

20,000

40,000

60,000

80,000

100,000

120,000

12:0

0 AM

1:00

AM

2:00

AM

3:00

AM

4:00

AM

5:00

AM

6:00

AM

7:00

AM

8:00

AM

9:00

AM

10:0

0 AM

11:0

0 AM

12:0

0 PM

1:00

PM

2:00

PM

3:00

PM

4:00

PM

5:00

PM

6:00

PM

7:00

PM

8:00

PM

9:00

PM

10:0

0 PM

11:0

0 PM

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000PUTs (000) Hourly Visits

Lunchtime Bump: Likely a result of

access to computers at work

Primetime hours dominate online views

Note: Rewind usage scales are higher than TV scalesSource: Nielsen and Omniture data, March 2010; Nielsen P2+ PUTs by hour for March broadcast month weekday viewing Live; Omniture visits by hour for March weekday only

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Why Online Video?30

The best of both worlds

Traditional TV: sound, sight,

motion, reach

Traditional Digital: targetability,

accountability, interactivity

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Video ads account for nearly 10% of all videos viewed online

Source: eMarketer, “U.S. Internet Users”, April 2010; comScore, June, July and August 2010.

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• Majority of audiences (~55%) find the presence of ads in online videos just as or more acceptable than ads in TV shows.

Source: Frank N. Magid Associates, Inc., “Magid Media Futures 2010: Online Video”.

Ads in Online Videos More Acceptable

Ads in Online Videos Just as Acceptable as Ads in TV Shows

Ads in Online Videos Less Acceptable

Not Sure

0% 10% 20% 30% 40% 50%

7%

48%

24%

22%

Audiences have grown to accept online video ads33

Brand Recall Message Recall

Premium Online Video Non TV Content Sites Ad Networks

48%

12%

19% 20%

37%

13%

Premium Online Video vs. Non-Content Sites/Ad Networks

Source: Nielsen IAG, P13+ July 2010

Digital video delivers measurable impact34

Digital video delivers measurable impact

Memorability Brand Recall Message Recall Appeal

Premium Online Video TV

50%

28%

39%

21%

26%

14%

65%

46%

Source: Nielsen IAG, A18-49, July 2010

Premium Online Video vs. TV Ad Performance

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In an uncluttered...36

Actionable37

Targetable

Day Part

Behavioral

Demographic

Channel/Sub Channel

Geographic

Show

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And fully measurable environment

Standard Metrics• Impressions• Unique

impressions• Clicks• Click through

rate• Interaction rate• Interactions• Avg. time spent

Video MetricsVideo startVideo endVideo replay

startVideo replay endVideo pause/un-

pauseVideo stopVideo rewindAudio on/off

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“It appears that leveraging the large reach of TV in combination with the standalone impact and amplifying effect of online video makes for a successful marketing strategy”

Dave Kaplan, Senior Vice President, Product Leadership at Nielsen IAG

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Memorability Brand Recall Message Recall Appeal

TV + Premium Online Video TV OnlySource: Nielsen IAG, A18-49, July 2010

52%

44%

35%

26%29%

19% 17%13%

31%

53%35%

18%

TV + online delivers superior results41

43% of cross-platform viewers have momentarily stopped watching a TV program online to go to an advertiser’s website

Source: comScore, “Great Expectations”, August 2010.

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A billion dollar industry and growing43

2010 2011 2012 2013 2014

48%

43% 43%

35%33%

16%

9% 10%

6%7%8% 7%

12%

8%

5%6%

7% 8%7% 7%

5% 4% 5% 3% 3%

Video Search Banner Ads Lead Generation Rich Media

Set to outpace growth of every other ad format 44

Source: Growth stats derived from published study of projected spend growth by ad format , eMarketer, May 2010

By 2014 over 15% of advertiser’s online dollars are predicted to go towards video and 8.5% of their TV budgets

eMarketer.com 2010

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46

Top streaming networks

HuluCBS.COM

ABC.COMNBC.COM

FOX.COM

30

15

10

43

Monthly Uniques (MM)

Hulu

FOX.COM ABC.COM

CBS.COM

NBC.COM

1,185

404

201 162

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Total Monthly Streams (MM)

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Source: comScore VideoMetrix, July 2010

Streaming – a few things to remember

• It’s TV online• CPM pricing model• $30-$45 CPM• Investment minimums vary by network• Similar number of commercial breaks as on-air• 1-3 commercials per pod• Brand engagement vs. immediate conversion• Re-purposed TV ads generate the best results• On-air + online delivers the most impact

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TV will embrace the connectivity

By 2015, 60% of all new TVs will have built-in network connectivity, and 70% of the connected sets ship with an embedded app platform and app store.

Source:GigaOM Pro 2010

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And get smarter

Lead Gen/RFI Voting & Polling T-Commerce

Set-Top Boxes GetSmarter through EBIF

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Online Video Summary

• MORE– Content– Options– Watching– Screens– Connectivity– Interactivity– Change

– More Opportunity to reach your consumer

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Thank You!!!