OTT Video: US Market Perspectives & Next Gen Services

2013 NAB Info Session

Monday, April 8

10:00 am - 12:00 pm

[ moderator: ryan petty // evio.com @eviogroup ]

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Stefan Jenzowsky – head of multimedia business unit at siemens cvc

Brook Longdon – director of systems integration at ARRIS

Steve Oetegenn – chief sales and marketing officer at verimatrix

Jeremy Toeman – founder and ceo of dijit

Les Wilson – director of global media sales at oracle

Keith Wymbs – Vice president of marketing at elemental technologies

Panelists

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Proliferation of Choices is Blurring Value Proposition

That was then… This is now

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Durable Trends

• 1B+ users• 600M on mobile (access FB 2X PC)• Avg user has 305+ friends• 20M installed apps per day• 17B location tagged posts

• Netflix 60,000 titles (estimate)• Amazon Prime 33,000 titles• iTunes has 190,000 TV episodes• Most US studios license content

for OTT• YouTube 72 hours uploaded / min

BANDWIDTH

MOBILITY / DEVICES

SOCIAL

CONTENT

• US mobile networks at 80% capacity* US family averages 30GB/month

• M2M Communication

• Fastest product ever to 1M units• iPad & iPhone drove AT&T’s

wireless data traffic up 8,008% since their launches

• Mobile payments $617bn market opportunity

• Mobile advertising $2.61bn in the US. Dominated by Google

OTT*Credit Suisse

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Mobile Demographics

Of Note

» Renters (43%) are more likely to cut cord than homeowners (14%) [CDC/NCHS]

» 55% of mobile video audience is aged 25-49 [Nielsen]

Questions

» How does growing up wireless-only (and now smartphone only) influence home entertainment behavior?

» What is the affinity of wireless-only, twenty-somethings to cable?

» What do we have/can create that they want?

About 50% of adults aged 25-29 are wireless-only [CDC/NCHS]. The population with a fixed phone has conversely grown older, with adults aged 50+ making up 66% of landline poll samples in 2010 vs. 49% in 2005 and 36% in 1995 [Pew].

Though adults classified “poor” and “near poor” have greater propensity to be wireless-only than those “not poor,” the percentage of wireless-only HH more than doubled for each status between 2006 and 2009 [CDC/NCHS]

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Cord-Cutting

Questions

» What drives cord-cutting: macroeconomic, one number, one device?

» Does cord-cutting affect all CSPs equally: ILECs, MSOs, OTT content?

» Does consumer perception of a fixed triple-play change over time?

Cisco projects ~20% of population mobile-only data by 2014. (Concurrent with rise to 50% of HH wireless-only; and 50% of age 25-29 adults are wireless-only voice today.)

~30% of all HH are now wireless-only [Citi, CDC/NCHS, Centris]

~1% of HH are disconnecting landline service every quarter [Citi]

“Wireless-mostly” HH are another 15%; of HH with wired phone, 26% take most calls on wireless phones [CDC/NCHS]

Of Note

» LTE covers 75% of US. 410+ cities

» (Verizon) 35% of data over LTE, 50% soon

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OTT Content is Growing

Of Note

» Netflix $1B deal with Epix for 5-year period

» Ubiquitous stream-capable devices: TiVo, Wii, Xbox, Roku, Sony, Samsung, LG, more

» Streaming: Netflix 60,000+ titles, Amazon VOD 50,000+ titles

Questions

» How durable are content models as the user base scales?

» Will or when can MediaCos be motivated to reduce or replace linear PayTV distribution?

Variety of free, paid, and freemium OTT models available: Hulu/Hulu Plus, iTunes/Apple TV, Google TV, Amazon Instant Streaming, Netflix others

Netflix subscriber base 33m in 40 countries as of Jan ‘13. Estimates as high as 70M+ by 2017 (35-40% penetration)

Growing media company belief in OTT as a viable platform

Source: company reports

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Web Video Continues to Grow Rapidly

• YouTube video limit increased 50% (10 to 15 minutes) in July 2010; In 2011 increased to 10 hours! (with mobile auth)

• Over 800 million unique users visit YouTube each month

• Over 4 billion hours of video are watched each month

• 72 hours of video are uploaded to YouTube every minute

• 70% of YouTube traffic comes from outside the US

• YouTube is localized in 43 countries and across 60 languages

• In 2011, YouTube had more than 1 trillion views or around 140 views for every person on Earth

The launch of YouTube in early 2005 sparked a revolution in web video, pushing Internet traffic to massive levels

Source: YouTube

Traffic from mobile devices tripled in 2011More than 20% of global YouTube views come from mobile devices

3 hours of video is uploaded per minute to YouTube from mobile devicesYouTube is available on 350 million devices

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Video Is the Majority of Internet Traffic

Of Note

» YouTube viewer: ~4.5 hours/month vs. TV consumer: ~158 hours/month [ComScore, Nielsen]

Questions

» Does web video squeeze or supplement legacy video entertainment?

» How does our broadband business change when video is 75% of Internet traffic? 95%?

» Embrace, resist, co-exist, opt out?

» Is the network a platform?

News and entertainment sites now feature embedded video (Flash, HTML5, etc)

Video advertisements launch upon reaching other sites; a company’s own brands, cross-promotion of partners, third-party ads

~50% of current web traffic is now video, growing to 80%+ by 2014. YouTube alone grew from 4% of online video traffic in 2006 to 20% in 2007, and 40% in 2009 [Cisco]

Source: Wired magazine

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Connected Devices are Growing

Of Note

» 5 devices per home average

» Total network usage per consumer:36 hours per day now, 48 by 2013 [Cisco]

Questions

» Devices: accelerate, grow, slow?

Internet-connected devices have steadily made their way into homes, beginning with gaming consoles. The iPhone, iPad and competitors, including various Android implementations, have popularized untethered in-home connectivity.

iPad sales exceeded many analysts’ expectations in both of its first two quarters. Copycat devices now in market (Samsung Galaxy Tab, Amazon Kindle, etc).

» Apple sold 35MM+ iPads from launch in 2010

Source: RCBG analysis of NPD, Canalys, Piper Jaffray estimates, company reports.

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Access Speeds Increase

Of Note

» Access speed ~20% CAGR from 1997-2009 [FCC]

» At faster speeds, users’ time online and average data consumption increase

» Comcast recently doubled the speed of its two top tiers to 50Mbps & 105Mbps

DOCSIS 3 and VDSL2 are bringing ultra-fast broadband to the mass market; speeds of 50 Mbps and even 305 Mbps can now be deployed

Comcast will substantially complete D3 upgrades throughout its footprints by EOY; Verizon FiOS buildout will reach 18MM HH target by EOY [company statements]

Google FTTH project at Kansas City is first of announced effort to build 1-Gbps access to 50−500,000 people. Company continues pushing FCC to boost US broadband speeds.

Source: FCC

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My Family

Thank You