Profitable Three-Screen Services:Creating Value for Three-Screen Customers

Presenter: Mead Alexander Eblan

Date: May 4, 2008

Assessing the Screenscape

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Objective

+ The purpose of this presentation is to provide a high-level overview of the ‘three-screen’ momentum behind the consumption of digital media across TV, PC and mobile devices.

+ By exploring the red shift in technologies, drivers and consumerbehaviors, we can better understand what opportunities and challenges are facing the mobile service provider to better unlock the keys to success for a profitable three-screen strategy.

Television -- a medium. So called because it is neither rare nor well-done.

- Ernie Kovacs

Introduction

What constitutes a Three-Screen Service?

Definitions

Background

Time to Get Serious…

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What is a Three Screen Service?

+ What ‘Three Screen’ means…▪ Any service, application, or bundle providing access to digital

media across the Television, Computer and Mobile handset landscape.

▪ Three Screen Service delivers on the ‘digital lifestyle’ by leveraging applications and content across TV, Internet, and wireless landscapes.

+ And what it is not…▪ A Three Screen Strategy is NOT:

– Merely a ‘Triple Play Strategy’ offering bundled billing across television, Internet access and landline or cellular services.

▪ A Three Screen Strategy is NOT:– A service focusing solely on repurposing content from television

and/or the Internet onto the ‘third screen’ of mobile/cellular devices.

+ What this means to the consumer.▪ Anywhere, anytime access to content across the screenscape

from a single subscription service.▪ An experience that binds and ties across any and all devices

offering access to or consumption of digital content.

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Background – Disconnected Forces Converge+ Telecom Act of 1996

▪ Prior to 1996 telecommunications carriers were restricted from providing content-related services.

▪ Since then operators have been slowly shifting away from the common carrier model with network infrastructure pricing to multi-tiered/premium-priced content discriminators.

+ The Success of Subscription Television▪ Deployment of regional basic-rate ‘advertiser-free’ cable offerings has mushroomed

to near-universal mode of television consumption.▪ Cable operators now intruding on telecom services (VoIP).

+ From Analog to Digital▪ Content is increasingly digital where codec is more important than playback device.▪ RF and Television signalling both porting over to digital.▪ The Emerging dominance of IP.

+ Cellular adoption▪ Over 85% of US now using cellular phones.▪ Cellular phone revenues now exceeding landline.

+ 3G Economics▪ As voice pricing deteriorates, carriers need to seek out new sources of revenue to

more effectively monetize 3G network and spectrum investments.

The Evolving Landscape

Video over Telephony is Not New

Why Today is Different

We Write. You Wrong.

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Yesterday…

+ Image over Telephony is not New▪ 1878 – Punch Magazine features cartoon with 1st imagining of picturephone.▪ 1914 – “Tom Swift and his Photo-Telephone” is published.▪ Late 1950s – Bell Labs develops 1st prototypes for Picturephone▪ 1964 – Western Electric introduces 1st PicturePhone at NY Worlds Fair.▪ 1970 – AT&T reintroduces improved PicturePhone predicting 3M subscribers by

mid-eighties. Key selling feature includes ability to ‘turn picture off’▪ 1973 – AT&T abandons PicturePhone▪ 1992 – AT&T reintroduces color VideoPhone, which flops▪ 2000 – Wireless version of VideoPhone is launched and meets same fate.

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… and Why Today is Different+ Our Environment is Changing

▪ Services: Broadband yet personalized▪ Convergence: Applications and Devices▪ Operators: Consolidation, New Players, and Overlapping▪ Equipment Ecosystem: CPU, Storage, Chipsets,

multimedia capabilities, LCD, Codec, Smarter UI▪ Networks: Converging around IP, paradigm shift from

dedicated network services to layered architecture using common network technologies

+ The Stars are Aligned▪ Would you like that video Switched, Streamed or Stored?▪ Demand and the new Video Opportunity▪ Business Models need Bandwidth, too▪ The Consumer’s Propensity to Purchase▪ Digital Democratization and IP

Voice, TV, Messaging, Internet – all orbiting the

same galaxy…

+ And the Paradigm is Shifting▪ Out with ‘Tele’ (‘at a distance’) and in with ‘Omni’ (in all ways and places)▪ Voice service is one more content application▪ From Network Services to Personalized Services▪ Behaviors seek Always on and Always Mobile▪ Value of Digital Content Delivery: Witness the Writers Strike

The Evolving Consumer

Mobility

Consumption

Personalization

Content + Community + Collaboration + Communication

More Gawk, Less Talk.

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The Evolving Consumer+ Mobility

▪ Not restricted to space, time or place▪ The Ubiquitous Self

+ Consumption▪ Devices may merge, yet tastes are diverging▪ The Long Tail effect▪ Balkanization of the commons▪ Regular meals give way to snacking

+ Personalization▪ You are what you watch▪ Navigation is key▪ Experience is tailored ▪ The MeMe Generation

+ The 4-Cs are Converging▪ Common platform for Content, Community, Content,

and Collaboration▪ Open networks lead to open networking▪ Agnostic technologies blur the demarcation between

content, community, collaboration and communication▪ Social Networking a fabric, not a fad

The Black Hole is in your palm…

Challenges & Opportunities

Looking Back: Amp’d

Looking Forward: Google

Implications for the Carrier

Case Study in Creating Consumer Value - AT&T

From Set-top to Hand-top.

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Challenges and Opportunities

+ Amp’d – What Happened?▪ MVNO with clear focus on target youth market▪ Strong alignment with MTV for content▪ Value proposition anchored on mobile content▪ Disconnect between marketing and market▪ Singular experience pivoted on mobile device

+ Google – Looking Forward▪ Recognized the ‘portal’ wasn’t the cul-de-sac▪ Keeping the user interface simple▪ Strong mobile play▪ Drawn into 700 Mhz auction▪ Open Handset Alliance and Android▪ Extending the advertizer’s reach▪ Concern over Internet’s ability to scale up for WebTV▪ Positioning as content aggregator for online / on-

demand video.▪ Is Content really King – or does creating a better way

to access it rule? Eyeing all Opportunities.

Not enough protection against creditors…

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Implications for the Carrier+ Telecom Carriers

▪ Legacy telephony business models evaporating.▪ Cheap bandwidth means that VOIP is more robust

– and VoIP gains are smoothing the way for Video over IP.

▪ Old per-minute billing model is dead.▪ Broadband is commoditized.▪ Competitive pricing is impacting network

investment infrastructure.▪ Carriers are developing video services to better

retain customers and bolster revenues.

+ Mobile Operators▪ Cellular services increasingly commoditized.▪ Marketplace is saturated. ▪ UMA and VoIP over Wireless surfacing as

additional threat to existing revenues.▪ Mobile operators forced to consider video and

mobile TV as a viable option to offset voice revenue decline.

▪ Hopes are pinned on mobile video to help monetize investments in 3G spectrum.

Source: “Future Video”, http://www.nativ.tv

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Creating Consumer Value – AT&T

+ A Carrier’s Approach: AT&T▪ Leveraging its local access, Internet access, and

AT&T Mobility services with AT&T Homezone and U-VerseTV

▪ Three-Screen focus: The TV, The PC, and the Wireless handset

▪ Positioning itself around the ‘digital lifestyle’▪ Touting the benefits of ‘anytime, anywhere’▪ Promoted through Masters Golf Tournament▪ Advertising deal with Chase Card Services▪ Partners include Vongo, MobiTV, TotalVid,

Akimbo▪ Platform for a ‘quad-play’ of services: voice, video,

broadband and wireless▪ Three-Screen strategy is motivated to differentiate

itself from cable service providers▪ Plans to spend about $4.6 billion on its Project

Lightspeed initiative to reach nearly 19 million homes in its legacy 13 state territory by EOY2008.

Source: AT&T Collateral, “Delivering the Digital Lifestyle”

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AT&T’s Three Screen Offering

+ The Breakdown▪ Content experience across the Screenscape▪ Creating pull and push between screens▪ Single universe for advertising across three galaxies

Source: AT&T Collateral, “Delivering the Digital Lifestyle”

+ AT&T Uverse TV

+ AT&T HomeZone

+ AT&T | Dish Network

+ AT&T Yahoo

+ Over 320 Channels

+ Over 26 HD Channels

+ VOD

+ DVR

+ Web and Remote Access

+ AT&T Yahoo High-Speed Internet Access

+ Downloadable film and television content

+ Content deals with TotalVid, Vongo, MobiTV

+ Entertainment and Sports portals (Blueroom.att.com)

+ Cingular (now AT&T Mobility)

+ MobiTV, offering live sports, news and entertainment

+ iPhone integration

+ Content deals with major broadcasters (NBC, CNBC, ABC, Fox, Discovery, etc.)

+ Home Monitoring Service

+ AT&T Unity calling plan

Conclusions & Recommendations

Defining the Semantic Screen

Assessing the Screenscape

Understanding its Implications

Finding Common Goals

Grasping the Future.

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Defining the Semantic Screen

+ The Semantic Screen is about common formats for integration and combination of digital content drawn from diverse sources, allowing the consumer to start off in one screen, and then move through an unending set of devices connected not by wires but by the experience. Uses include:

+ Interactive Gaming

+ Interactive Advertising▪ AT&T plans to make advertising a “key revenue stream” ▪ Per Yankee Group, advertising will be a key revenue source for

service providers, especially with the capability to target consumers more effectively through addressable advertising

+ HD On Demand

+ Caller ID on the TV

+ Mpeg4’s untapped promise of interactive sprites

+ Widgets driving activity across all three screens

+ Enhanced personalization with per user customization

+ True integration across telecommunications services

Eye on the Future

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So What does this All Mean?

+ Accessing the Screenscape▪ Understanding your customers

– Young Influentials, Business Makers, Mobile Moms, Urban trendsetters, Techno Sophisticates

▪ Tailoring their experience across all three screens▪ Understanding the content and production ecosystem▪ Value pricing replaced by price on value

+ Understanding its Implications▪ 3G Economics and the Imminent Chokepoint▪ Proprioception impacting applications▪ User Interface and Navigation – the greatest challenge▪ Matching the right content to the audience via the right

device▪ Networks and Cablecos hiring wireless experience▪ Lean Forward (LF) or Lean Back consumption (LB):

– Escape (LB)– Educate (LF / LB)– Absorb (LF / LB)– Enlighten (LF)– Interact (LF)– Experience (LF)

Connecting the Digits.

TV’s New Media Guns

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Summary – Sprint + GoogleWhat’s in it for the Content Partner?

+ Deeper wireless / mobile play

+ Additional venue for ad-insertion

+ Bandwidth capacity

+ Potential for 4G partnering (e.g. WiMAX)

+ Differentiate against competition

What’s in it for the Carrier?

+ Extend market reach

+ Access to advertiser model

+ Increase value and extend brand

+ Bring content to 3G/4G services

+ Increase data ARPU

Common Goal - Ubiquity, affordability, omnipresence, brand, value, profit.

Convergence of Goals

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Questions + Answers

Thank You

mead.eblan@verizon.net