1. The New Digital Reality
Presentation to Team Colorado
Leadership
Greg Maffei
11.30.2011

2. Digital Godzilla „Eats‟ All King Kongs…
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3. Digital Explosion
• YouTube YouTube Videos Uploaded per Minute
• 3b views/day = 92b views/month 60
(hours)
• Avg user spends 25 minutes/visit 50
• 48 hrs. of video uploaded/minute 40
• Largest TV station in world 30
• Broad demographic: 18 - 54 years 20
old 10
• Facebook 0
1/08 9/08 5/09 1/10 9/10 5/11
• 800m users
• Avg user has 130 friends (m) Number of Facebook Users
• Avg user spends ~1 hour on FB /day
900
• 50% of users log on daily
800
• 250m photos uploaded/day 700
• >7m apps/websites integrated 600
500
• >$4m revenue in 2011 400
• Worth > $100b 300
200
100
0
2/09 8/09 2/10 8/10 2/11 8/11
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4. Facebook Phenomenon
Years to reach 50 million users
Added
over 200m
38 13 4 3 users in
Years Years Years Years less than 1
year
Radio Television Internet iPod Facebook
1. China 1,336,450,000 6. Brazil 193,099,000
2. India 1,182,330,000 7. Pakistan 169,835,000
3. Facebook 800,000,000 8. Bangladesh 162,221,000
4. United States 309,573,000 9. Nigeria 154,729,000
5. Indonesia 231,369,500 10. Russia 141,927,297
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5. Social Media Changing Behaviors
• Changes habits and actions
• Fastest growing segment is 50+; >40% of those online use social media
• 1 in 5 couples married in US met via social media
• Also 1 in 5 divorces are blamed on Facebook
• Overtakes porn as #1 activity on web
• Some universities have stopped issuing email accounts
• And business… The Top 10 Games on Facebook
• Social gamers will buy $6b in CityVille
virtual goods by 2013 The Sims Social
Adventure World
• Movie goers only buy $2.5b
FarmVille
in real goods Texas HoldEm Poker
• Zynga Empires & Allies
• 232m monthly active Gardens of Time
users, 60m daily active users Words With Friends
• ~$1b annual revenue run-rate Diamond Dash
INDICATES A ZYNGA
Bubble Island GAME
• >90% of revenue from
purchasing virtual currency 5m 20m 35m 50m 65m
• $15 market value?
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6. Digital Media Global Reach
• Media is local; technology is global
• Wikipedia: over 15m articles; 78% non-English
• 70% of YouTube's traffic comes from outside of US
• Microsoft, Google, Oracle have >50% of revenue
from outside US…no media company
• Twitter - integral force in “Arab Spring”
• China‟s closed Internet exception?
• China has #1 and #2 largest broadband providers
in world
• QZone among world‟s largest social networks with
500m users
• Chinese prefer IM over email
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7. Destruction of Traditional Music
• Album was an artificial marketing concept
• Priced too high?
• Economics destroyed through piracy, Apple‟s unbundling
• Consumers get what they want…
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8. Destruction of Traditional Media
• Newspapers - Internet
premium content for
free
• 24 out of 25 largest
lost circulation
• Cost-cutting
• More effective revenue
models:
eBay, Craigslist, Zillow
• Negative cycle…
• Decline of TV stations
• 2011 local advertising down 10%
• Once you train them on free…
• More market value destroyed than created?
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9. Moore‟s Law Goes to Movies
Downloading Spiderman
1.27 Gigabytes
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10. 1978
Cost to store 1.27GB
Storage ~2.23 IBM 3370 units @ $114,000
each
$254,000
Download time 300kb/second – 9,407 hours
$48.70/hour
and Cost $458,120
Cost to 82 Computers x $3,572
playback $292,904
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11. 2011
Storage
Cost to store 1.27GB
$199 for 500GB
$.51
Download time 5 minutes @ $.10 per GB
X1.27GB
and Cost $.13
Cost to $199?
playback $99?
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12. Storage 2038
1978 ~$254,000
2011 ~$.51
2038 Free
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13. Download Time & Costs 2038
1978 $458,120
9,407 hours @ 300bps
2011 $.13
15 minutes @ 30Mbps
2038
2 sec @5Gbps
$.01
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14. Cost to Playback 2038
1978 $292,904
2011 $199
2038 <$1.00
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15. Decline of TV?
• Internet up, TV down? Median Age of Nightly News Viewers
2004 - 2009
• 4 hours/HH in ‟75, 6 hours in ‟85, 8.5
hours in „10
• Viewership fragmenting and aging
• Networks declining
• Online viewing up 7x in a year
• Netflix has 23m customers
• Will cable companies get
disintermediated?
• Will the cable bundle survive?
• The Longhorn Network
• DIRECTV‟s $90 ARPU v. Netflix‟s $7.99 Median Age of Morning News Viewers
2004 - 2009
• Mediocre content will get swamped
• Free/user-generated beats mediocre
• Compelling content will do fine
• 9 min YouTube video can‟t compete with
The Sopranos
• Online aggregators will create video
portals and build powerful new
businesses…
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16. Internet Rules
• If it can be free, it
will be
• If it can be
known, it will be
• If it can be rated, it
will be
• It‟s who you
know, not just
what you know
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17. eCommerce History
• Web 1.0 – Information
• Internet provides transparency and information, but limited capacity to
absorb the data
• Web 2.0 – Evaluation
• Look to “knowledgeable influencers” when making decisions
• Web 3.0 – Recommendations
• Facebook: volume of recommendations, one friend recommends
something we consider it, three friends recommend certain to consider
it
• Web 3.1 – Not just any friend
• Google+ circles - look to quality of relations/closeness
• Lockerz Decalz / FWB - advocacy
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18. 18

19. Recommendations & Referrals
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20. Recommendations and Referrals
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21. Social Graph

22. Discover => Evaluate => Buy
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23. Group Buying
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24. See who’s
sitting where
Tag your seat
Consumers who connect through
Facebook spend $5 more onyour
Tag
average than those who just buy
friends
tickets
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25. Forums and Communities
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26. 26

27. Field Tests
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28. Online Education
• Online education is $34b industry
• Currently >3m online-only students in US
• ~50% of college students take at least one class
online
• Nearly half of online students are 26+
• Phoenix University largest US university
• Enrolls >500k students = >10x University of Colorado
• Spends $200m/year improving it’s teaching…what can
CU spend?
• By 2019, estimated that 50% of all classes
taught will be delivered online
• Many of these will be available for free
• Encyclopedia Britannica => Microsoft Encarta
=> Wikipedia

29. Education Ready To Be Disrupted
• Education, like housing, overpriced bubble
• Consumers/students not getting their money‟s worth
• Ineffectiveness of college degree
• Need for technical/continuous education
• Rise of part-time students
• Personalization - different rate at which students learn
• Students perform better learning online than with face-to-face instruction*
• Khan Academy – 2,100 free educational videos
• From 1+1=2 to college-level physics, finance
• Linking to Facebook to track progress
• Raised $5m from Bill Gates and others
• Open Culture, Academic Earth, P2PU, Skillshare, Scitable, Skype
(connections to professors and tutors)
• 350k lectures on iTunes from Stanford, Yale and Oxford
• Stanford University online high school
• Students perform better learning online than with face-to-face instruction(1)
*Evaluation of Evidence-Based Practices in Online Learning: A Meta-Analysis and Review of Online Learning
Studies, U.S. Department of Education Office of Planning, Evaluation, and Policy Development Policy and
Program Studies Service, 2010

30. Disrupting Government
• If it can be known, it will be known:
• Wikileaks
• Viral videos and photos force greater accountability from public officials - exposing inconsistent policy
positions in US to We Are All Khaled Saeed - Egypt
• Increased voter demands for effectiveness and transparency
• If it can be rated, it will be rated:
• Increased consumer participation in forums and comment procedures
• “Yelping” the DMV
• Healthcare – rating doctors, insurance rates, procedure costs
• Government 2.0
• Open data movement that combines city data with smartphone apps to improve services
• SeeClickFix lets residents file public requests for city services from their mobile phones
• Other apps include street sweeper alarms, neighborhood crime notifiers, alerts when people enter
restaurants that recently got low marks on inspections
• If it can be free, it will be:
• Post Office “killed” by email
• Privatizing/unbundling/forum shopping for “government” services: Fed Ex
• Education
• It‟s not just what you know, but who you know:
• More direct interaction between electeds and citizens (ie, Allen‟s Macaaca video, Brownback v.
Tweeting Teen, Huntsman's daughters)
• Six years after Katrina, social media totally changed emergency response
• Citizens turn to Facebook and Twitter
• Gov encouraging this behavior (i.e. Lifeline Facebook App Challenge)
• Facebook connections and ratings
• Occupy Denver…
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31. Questions
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