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A Research Service By Business Insider
The Future Of Digital: 2014
intelligence.businessinsider.com
Henry Blodget
CEO & Editor-in-Chief
Emily Adler
Senior Research Editor
Marcelo Ballvé
Editorial Director
Cale Weissman
Reporter
Hope King
Reporter
Nicholas Quah
Research Associate
John Greenough
Research Analyst
Jessica Smith
Research Associate
Tony Danova
Senior Research Analyst
Mark Hoelzel
Research Analyst
John Heggestuen
Research Analyst
Cooper Smith
Senior Research Analyst
BI Intelligence
There are now nearly 3 billion people online
Source: International Communication Union, Google
0
1
1
2
2
3
3
1990 1994 1998 2002 2006 2010 2014E
Billions
Global Internet Population
Four billion to go
Global Population
Internet Population
0
1
2
3
4
5
6
7
8
1990 1994 1998 2002 2006 2010 2014E
Billions
Global Internet Population
Source: International Communication Union, Google
Attention is shifting to digital, especially mobile
Source: eMarketer, April 2014
45%
25%
17%
9%
7%
4%
37%
18%
11%
4%
2%
23%
TV Online Radio Print Other Mobile
US Consumer Media Consumption Share
2009 2010 2011 2012 2013 2014
This is a generational shift
Source: Ofcom
0 10 20 30 40 50 60 70 80 90 100
Total
Aged 16-24
Aged 25-34
Aged 35-44
Aged 45-54
Aged 55-64
Aged 65-74
Aged 75+
Digital Is Reaching The New Generation
Top Five Media Mentions Among all Adults, 2013
Watch TV
Read Newspapers/Magazines
Listen To The Radio
One law of media…
Money follows eyeballs.
Ad spending is moving to digital (and mobile)
Source: IAB, U.S. Census Bureau, Strategy Analytics, BI Intelligence estimates
Offline
All Other Online
Mobile
$0
$60
$120
$180
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Billions
U.S. Advertising
Print ads have fallen off a cliff
Source: Newspaper Association Of America *Estimate
$-
$10,000
$20,000
$30,000
$40,000
$50,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
Millions
Newspaper Ad Revenue (Print vs. Online)
Print Online
Google is now bigger than all newspapers, magazines
Source: Google, NAA, PIB
$0
$10,000
$20,000
$30,000
$40,000
$50,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Millions
Google vs. Magazine vs. Newspaper Ad Revenue,
US Data, 2004-2013
Google (US)
US Magazines
US Newspapers
Google now dwarfs “big media”
Source: Company Filings, BI Intelligence estimates
$30
$18
$16
$14
$5 $5
$3 $2
$70
Time
Warner
Facebook CBS Viacom Gannett Yahoo AOL New York
Times
Google
Billions
Estimated 2014 Revenue
Select Media Companies
Google is almost half the size of all global TV advertising
$174
$70
Global TV Ad Revenue Google
Billions
Estimated 2014 Ad Revenue
Google vs. Global TV Ad Market
Source: Google, PWC
For many years TV folks have (rightly)
laughed off digital concerns
Time to stop laughing.
Ratings are falling…
Source: Nielsen
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
6
6.1
6.2
2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013
NielsenHouseholdRating
(%OfHouseholds
WithTVSetsWatching)
Primetime Household TV Ratings
Big 4 U.S. TV Networks Average
Pay TV subscriptions are dropping…
Source: Leichtman Research Group
Cable
Satellite
Telephone
Total
(800)
(600)
(400)
(200)
-
200
400
600
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
NetAdditionsInThousands
Pay-TV Net Additions (US)
Facebook reaches more young people than free TV
Source: Nielsen, January 2013
58%
73%
83%
89%
63%
68%
63%
42%
Age 18-24 Age 25-34 Age 35-54 Age 55+
PercentReach
Facebook vs. TV Daily Reach
(US)
Four TV Networks
Facebook
Netflix now has more US subscribers than HBO
Source: Netflix, SNL Kagan
HBO
Netflix
0
10
20
30
40
4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014
MillionsOfUSSubscribers
Paid Domestic Subscribers — Netlix v. HBO
YouTube reaches more 18-34s than any cable network
0
200
400
600
800
1000
1200
1400
2010 2011 2012 2013 2014E
Millions
YouTube “Ratings”
Digital video revenue is no longer a joke…
Source: BI Intelligence estimates, Company Filings
Netflix
YouTube
Hulu
$0
$2
$4
$6
$8
$10
$12
2006 2007 2008 2009 2010 2011 2012 2013
Billions
Estimated Digital Video Revenue
iTunes and Netflix already dwarf small cable networks
Source: News Reports, Company Filings
iTunes
Netflix
AMC Networks
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
2007 2008 2009 2010 2011 2012 2013
Billions
Cable Network vs. Digital Content Revenue
2007-2013
YouTube is closing in on broadcast-network revenue
Source: News Reports, BI Intelligence estimates, Company Filings
$-
$2
$4
$6
$8
$10
$12
2007 2008 2009 2010 2011 2012 2013
Billions
YouTube Ad Revenue vs.
CBS Ad Revenue And AMC Networks Revenue
CBS Ad Revenue
YouTube Ad Revenue
AMC Networks Revenue
(Some) live sports are now being streamed
Source: Ooyala 2014
34.5
7.1
3.5
42.8
11
17.1
10.5
16.9
2.6
4.1
2.8
5.1
Desktop Tablet Mobile Connected TV
TimeSpentPerPlay
InMinutes
Time Spent Watching Online Video By Content Type
Global
All Live Events
Sports
VOD
TV now has to share attention with digital
Source: Millward Brown, 2014
83
(55%) 65
(63%)
20
(45%)
68
(45%)
38
(37%)
24
(55%)
Smartphone Laptop Tablet
TimeSpentInMinutes
(PercentageOfTotalTime)
Daily Time Spent With Devices, While Watching TV Or Using The
Device Independently
Ages 16 - 44, United States Only
Without TV
With TV
So, eyeballs are leaving TV
But, so far, TV money is
hanging in there
TV still massive, digital video still a blip
Source: Nielsen, IAB
$0
$20
$40
$60
$80
2007 2008 2009 2010 2011 2012 2013
Total TV
Ad Spend
(Billions)
US Ad Spend, 2007-2013
TV Vs. Online Video
TV Ad Spend
Online Video Ad
So no worries in TV land?
Yes, worries.
It’s a generational shift — look what Millennials are doing
Source: Ofcom
TV
TV
TV
Print
Print
Radio
Radio
Radio
Computer
3
Computer
Smartphone
Smartphone
All Adults Aged 75+ Aged 16-24
“Media you would miss most”
Use A Smartphone
Go Online On A
Computer/Laptop/Netbook/Tablet
Listen To The Radio
Read Newspapers/Magazines
Watch TV
Money follows eyeballs…
Source: Mary Meeker, IAB, eMarketer
5%
38%
25%
12%
20%19%
43%
22%
10%
4%
Print TV Web Radio Mobile
2013 U.S. Ad Spending vs. Consumer Time Spent
By Media
So it’s only a matter of time.
What’s going on in digital?
Smartphone sales are still booming
Source: IDC, Strategy Analytics, BI Intelligence estimates
Samsung
Apple
Xiaomi
Lenovo
Huawei LG
ZTE
Coolpad
Nokia
Sony
Motorola
HTC
BlackBerry
Other
-
50
100
150
200
250
300
350
2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14
Millions
Global Smartphone Shipments By Vendor
PCs
Tablets
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
Thousands
Global Computer Shipments
Tablets have carved out a chunk of PC sales
Source: Gartner, IDC, Strategy Analytics, Company Releases
“Phablets” are replacing small smartphones
Source: BI Intelligence estimates
Phablets
Tablets
Smartphones
(Non-Phablet)
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2006 2008 2010 2012 2014E 2016E 2018E
Millions
Global Annual Shipments By Device
Nearly half of TVs are now connected
Source: Leichtman Research Group, BI Intelligence estimates
27.7
35.7
43.8
50.1
56.5
61.1
65.7
68.6
71.4 72.6
24%
31%
38%
44%
49%
53%
57%
60%
62% 63%
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E
U.S. Households With Connected TV
Percentage Of Households; Number Of Households In Millions
“Wearables” are overhyped but growing
Source: BI Intelligence estimates
Smartwatches
Fitness Bands And Other
Activity Trackers
Rest Of Wearables Market
0
20
40
60
80
100
120
140
160
2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E
MillionsOfUnitsShippedAnnually
Global Wearable Device Unit
Shipments Forecast
35% CAGR
We Are Here
Cars are increasingly connected
Source: SBD, GSMA
In-vehicle services
Hardware
Telematics service providers
Telecom service providers
€ 0
€ 5,000
€ 10,000
€ 15,000
€ 20,000
€ 25,000
€ 30,000
€ 35,000
€ 40,000
€ 45,000
2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E
Millions
Connected Car Revenue Forecast
300 million PCs are still sold each year
Source: Gartner, IDC, BI Intelligence estimates
Lenovo
HP
Dell
Acer
Other
0
20,000
40,000
60,000
80,000
100,000
1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
Thousands
Global PC Shipments By Manufacturer
iPad released Windows 8 released
Should you be “mobile only?”
No!
It’s a “multi-screen” world
Source: Gartner, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates
Personal Computers
Smartphones
Tablets
Smart TVs
Wearables
0
1
1
2
2
3
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
UnitsBillions
Global Internet Connected
Device Shipments
You should be “mobile, too.”
~60% of online devices are now smartphones or tablets
Source: BI Intelligence estimates
Personal Computers
(Desktop And Notebook)
Smartphones
Tablets
Smart TVs
Wearables
0
1
2
3
4
5
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
NumberOfDevicesInUse(InBillions)
Global Internet Device Installed Base
Other
8%
Visit Websites
14%
Games
8%
Social Networking
15%
Talk
26%
Text
20%
Email
9%Breakdown Of The Average
Smartphone Owner's Daily
Time-Spend
On Average, U.S. Smartphone Owners
Spend 58 Minutes Daily On Their Phones
We spend an hour a day on our smartphones
Source: Experian Marketing Services, May 2013
We spend ½ hour on tablet each time we use it
Source: Google, August 2012
43
39
30
17
TV PC/Laptop Tablet Smartphone
Average Minutes Spent Per Interaction By Device
More than ¼ of Internet traffic is mobile
Source: StatCounter, BI Intelligence estimates
0%
25%
50%
75%
100%
Dec-08 Jan-10 Feb-11 Mar-12 Apr-13 May-14
Global Internet Traffic Share
Desktop Vs. Mobile
Mobile has extended the digital day to 18/7
Source: Google Analytics, Business Insider
9/1/12 9/15/12 9/29/12 10/13/12 10/27/12 11/10/12 11/24/12 12/8/12 12/22/12 1/5/13
Mobile Visits Desktop Visits
Each device has a different “prime time”
Source: comScore, Telefonica, Macquarie Capital (USA), December 2011
Where are we in the
mobile device cycle?
Developed mobile markets are nearing maturity
Source: comScore
18%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Jan 10 Jun 10 Nov 10 Apr 11 Sep 11 Feb 12 Jul 12 Dec 12 May 13 Oct 13 Mar 14
(asapercentageofthemobilepopulation)
U.S. Smartphone Penetration
The action is now in China, India, and emerging markets
Source: Mediacells via The Guardian
0
50
100
150
200
250
300
MillionsOfSmartphones
Smartphone Sales In 2014 Will Be Driven
By New Users In Emerging Markets
Sales To New Smartphone Users
In 2014
Smartphone Upgrades In 2014
Top 11 Markets
Other Markets
China is already twice the size of the US market
Source: China Internet Network Information Center
Mobile Users
Total Users
US Users
0
100
200
300
400
500
600
700
June
06
Dec 06 June
07
Dec 07 June
08
Dec 08 June
09
Dec 09 June
10
Dec 10 June
11
Dec 11 June
12
Dec 12 June
13
Dec 13 June
14
MillionsOfInternetUsers
Chinese Internet Users
Prices are dropping fast
Source: BI Intelligence estimates
$100
$150
$200
$250
$300
$350
2010A 2011A 2012A 2013E 2014E 2015E 2016E
AverageSellingPrice
Global Smartphone Average Selling Price Forecast
iPhone sales growth has slowed (iPhone 6 will help)
Source: Company Filings
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
0
10,000
20,000
30,000
40,000
50,000
60,000
3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
YoYSalesGrowth
UnitSales(Thousands)
iPhone Sales
Unit Sales
YoY Growth
Chinese companies sell ~25% of smartphones in world
Source: Canalys, IDC, Strategy Analytics, BI Intelligence, Company Reports
0
10
20
30
40
50
60
70
80
90
1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
Millions
Selected Local Manufacturers From China
Global Quarterly Smartphone Shipments
Xiaomi
Huawei
Lenovo
ZTE
Coolpad
Global tablet growth has hit a wall
Source: IDC, Strategy Analytics, BI Intelligence estimates
Year-Over-Year
Growth
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
Global Tablet Shipments
Quarterly Year-Over-Year Growth
Sequential Growth
(iPad now experiencing “negative growth”)
Source: Apple
-50%
0%
50%
100%
150%
200%
0
5,000
10,000
15,000
20,000
25,000
30,000
2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14
YoYSalesGrowth
UnitSale(Thousands) iPad Sales
Unit Sales
YoY Growth
Why have tablet sales cratered?
1. Long upgrade cycle
2. Phablet cannibalization
3. Need keyboard for serious input
4. Price
What about the
platform war?
We have a winner!
Apple is strong in the US, where it’s a two-horse race
Source: comScore
Android
Apple
BlackBerry
Windows Phone
Other
0%
20%
40%
60%
80%
100%
Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14
US Smartphone Platform Market Share
But, globally, it’s an Android world
~85% of smartphones run Google’s Android
Source: IDC, Strategy Analytics, BI Intelligence estimates
Android
iOS
Microsoft
BlackBerry
Other
0%
25%
50%
75%
100%
1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
ShareofGlobalUnitShipments
Global Smartphone Market Share By Platform
~65% of tablets run Android
Source: BI Intelligence estimates
Android
Apple
Amazon
BlackBerry
Nook
Windows
0%
25%
50%
75%
100%
3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
Global Tablet Market Share By Platform
~70% of all new computing gadgets run Android
Source: Gartner, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates
Android
Windows
Apple
BlackBerry
Other
0%
20%
40%
60%
80%
100%
1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
Global Computing Platform Market Share
Android used to lag Apple
badly with app developers.
Not anymore.
Android “fragmentation” problem is improving
Source: Google
Other
Froyo
Gingerbread
Honeycomb
Ice Cream Sandwich
Jelly Bean
Kit Kat
0%
20%
40%
60%
80%
100%
9/15/12 11/15/12 1/15/13 3/15/13 5/15/13 7/15/13 9/15/13 11/15/13 1/15/14 3/15/14 5/15/14 7/15/14
Jelly Bean And Kit Kat Are Now ~80% Of Android
Android now more popular with developers than iOS
Source: Developer Economics, Q3 2014
Android
42%
iOS
32%
BlackBerry 10
3%
Windows Phone
10%
Other
13%
Mobile Developers' Main Platform
Android will soon overtake iOS in app revenue
Source: Jana, App Annie, BI Intelligence estimates
$0
$1
$2
$3
$4
4Q13 2Q14 4Q14E 2Q15E 4Q15E 2Q16E
Billions
Estimated App Revenue
Apple App Store Vs. Google Play
Android is catching up to iOS in developer payouts
Source: Jana, App Annie, BI Intelligence estimates
Apple App Store
Google Play
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
3Q13 4Q13 1Q14 2Q14
Billions
Estimated App Developer Payout
Apple App Store And Google Play
Android now generates more global ad traffic than iOS
Source: Opera Mediaworks
Android
iOS
BlackBerry
Symbian
Other
0%
20%
40%
60%
80%
100%
2Q12 4Q12 2Q13 4Q13 2Q14
ShareOfTraffic
Global Mobile Ad Traffic Share By Platform
The key digital media trends…
Mobile
Social
Native
Video
Programmatic
Most digital growth is now mobile
Source: comScore, April 2014
Smartphone
131
Smartphone
442Tablet
11
Tablet
124
0
200
400
600
800
1000
1200
Dec-10 Dec-13
BillionsOfMinutes
Time Spent By Digital Platform Per Month
U.S., December 2010 Vs. December 2013
1,040% Growth
237%
7%
Desktop
401
Desktop
429
Messaging apps are exploding
Source: Company Statements, News Reports, BI Intelligence estimates
0
100
200
300
400
500
600
Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14
Millions
The Messaging Wars — MAUs For Top Apps
(Monthly Active Users - Global)
Social networks and sharing are exploding
Source: BI Intelligence estimates based on data from company filings, comScore, Global Web Index, Totem and news reports
Facebook
Twitter
Tumblr
Instagram
Snapchat
Google Plus
LinkedIn
Pinterest
Vine 0
500
1,000
1,500
2010 2011 2012 2013 2014E
Millions
Social Network MAUs (Global)
Mobile video is booming…
Source: Cisco, 2013
0
1
2
3
4
5
6
7
8
2011 2012 2013 2014 2015 2016 2017
MillionsofTerabytesPerMonth
Global Mobile Video Traffic Will Continue To Surge
Mobile video has enabled the rise of the YouTube stars
Source: Company Filings
35 million viewers
8 million viewers
1 million viewers
Social and music are now mostly mobile
Source: Company Filings
Pandora
Facebook
Twitter
0%
25%
50%
75%
100%
2008 2009 2010 2011 2012 2013
Mobile Usage: Pandora, Twitter, Facebook
Mobile is driving all of Facebook’s growth
Source: Company Filings
Advertising (Non-Mobile)
Mobile Advertising
Payments And Fees
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14
Billions
Facebook Revenue By Segment (Global)
Mobile is now a third of eCommerce traffic
Source: Monetate
PC
Tablet
Smartphone
0%
25%
50%
75%
100%
2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14
Ecommerce Website Traffic By Device
PayPal powers $30 billion in mobile payments
*PayPal counted a small portion of Braintree’s transaction volume as its own in the last 12 days of Q4 2013.Source: PayPal
PayPal Mobile
Braintree Mobile*
$0
$5
$10
$15
$20
$25
$30
$35
2008 2009 2010 2011 2012 2013
U.S.DollarsInBillions
PayPal Mobile Transaction Volume
(Including Braintree 2013)
Venmo is (finally) replacing friend-to-friend payments
Source: PayPal, BI Intelligence
$81
$105
$141
$194
$314
$468
$700
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
MillionsOfDollars
Venmo Payment Volume
Ad growth is mobile, social, video, native, programmatic
Source: BI Intelligence estimates based on data from BIA/Kelsey, IAB, IDC, and Magna Global Note: Formats overlap. Mobile includes all ad formats that appear on mobile.
-0.4%
15.1%
2.3%
42.6%
18.0%
34.7% 35.7%
Desktop Display Desktop Video Desktop Search Mobile Social Native Programmatic
Advertising Revenue Growth (US)
CAGR 2013 - 2018
Mobile is a “green field”
Source: eMarketer
$1 $1 $1
$3
$10
$12
$1 $1 $1
$3
$15
$30
$1 $1 $1
$4
$19
$46
Latin America Middle East and
Africa
Eastern Europe Asia-Pacific Western Europe North America
Annual Mobile Ad Spend Per Mobile Internet User
By Region
2011 2012 2013
Social is booming
Source: BI Intelligence estimates, BIA/Kelsey
Non-Mobile
Mobile
$-
$2
$4
$6
$8
$10
$12
$14
$16
2013 2014E 2015E 2016E 2017E 2018E
Billions
FORECAST: Social Media Advertising Spend
(US)
“Display” ad spending is still respectable, but…
Source: Company Filings, BI Intelligence estimates
Google
Other
Yahoo
AOL
Microsoft
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14
Total
Display
Advertising
Revenue
(Millions)
US Display Advertising, 2006-2014 (Quarterly)
Growth is shifting to “native”…
Source: BI Intelligence estimates, IAB
$1.0 $1.3 $1.9 $2.7
$3.9
$5.7
$0.8 $1.0
$1.3
$2.0
$2.7
$3.4
$2.9
$5.6
$7.5
$9.2
$10.7
$11.9
$0
$5
$10
$15
$20
$25
2013 2014E 2015E 2016E 2017E 2018E
Billions
Native Advertising Revenue (US)
Desktop And Mobile
Native-Style Display Sponsorship Social
And “programmatic”
Source: BI Intelligence estimates, Magna Global, IDC
$6
$8
$12
$18
$23
$28
2013 2014E 2015E 2016E 2017E 2018E
AdSpendInBillions
FORECAST: Programmatic Ad Spend (U.S.)
Google is still the digital advertising king
Source: Company Filings Note: Based on GAAP revenue.
Google
Facebook
Yahoo
AOL
$0
$4
$8
$12
$16
$20
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Billions
Digital Advertising Revenues (Global)
Google’s YouTube dominates digital video and video ads
Source: Company Filings, BI Intelligence estimates
YouTube
Tremor
YuMe
TubeMogul
$0
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014
RevenueInMillions
Global Digital Video Advertising Revenue
(Select Companies)
Google’s Chrome browser is crushing Firefox and IE
Source: StatCounter
Other
Safari
Firefox
Internet Explorer
Chrome
Opera
0%
10%
20%
30%
40%
50%
60%
2010 2011 2012 2013 2014
Global Web Browser Usage Share
Google’s Android has peak-Windows-like market share
Source: IDC, Strategy Analytics, BI Intelligence estimates
Android
iOS
Microsoft
BlackBerry
Other
0%
20%
40%
60%
80%
100%
1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14
ShareofGlobalUnitShipments
Global Smartphone Market Share By Platform
Google
93%
Bing
3%
Yahoo
2%
Other
2% Europe Search Market Share
Oct. 2014
In Europe, Google has peak-Windows-like search share
Source: StatCounter
Basically, Google is swallowing the world…
Source: Google, 2014 Is An Estimate
$-
$10
$20
$30
$40
$50
$60
$70
2009 2010 2011 2012 2013 2014E
Billions
Google Global Annual Revenue
(And people are noticing!)
Source: StatCounter
(For Microsoft, DOJ attack was the beginning of the end)
Source: StatCounter
Have Google and Facebook won?
Not necessarily.
Money follows eyeballs.
Search click growth is finally decelerating
Source: Google
20%
23%
26%
31%
26%
25%
17%
Q1 13 Q3 13 Q1 14 Q3 14
Google Paid Clicks Growth
Global, Year-Over-Year
US desktop search queries are now shrinking
Source: comScore Note: Explicit user initiated search queries only.
10%
12%
14%
10%
7%
4%
0%
-3%
-5%
-7% -8% -7% -7%
Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14
Total Monthly Search Query Growth
U.S., Year-Over-Year; Desktop Only
“No one uses Facebook anymore” — Gen Z-er
Source: Piper Jaffray
42%
33%
27%
23%
27%
30%
31%
27%
12%
17%
27%
30%
Fall 2012 Spring 2013 Fall 2013 Spring 2014
The Most Important Social Networks To US Teens
Percent Of Respondents Who Say The Network Is Most Important
Facebook
Twitter
Instagram
Why do teens love Instagram?
0
50
100
150
200
250
300
2010 2011 2012 2013 2014E
Millions
Instagram
“Because parents see
that camera icon and
think it’s a photo app.
They don’t know it’s a
social network.”
What’s Tumblr for?
0
50
100
150
200
250
300
350
2010 2011 2012 2013 2014E
Millions
Tumblr
“Fandom. And
depressed and
creepy people.”
What about phone calls? Do people talk anymore?
0
200
400
600
800
2010 2011 2012 2013 2014E
Millions
WhatsApp
“No. Everyone has
phone numbers, but
they’re for texting.”
Digital is the medium for the
new generation.
Digital will grow for decades.
So, what’s next?
Connected cars — we spend 1.2 hours a day in them
Source: Bureau Of Labor Statistics
8.8 hours
7.6 hours
2.5 hours
1.2 hours
1.1 hours
1.1 hours
1.7 hours
0
12
24
Average Daily Time Spent Per Person
U.S. Employed Citizens ages 25 to 54
Other
Household Activities
Eating And Drinking
In The Car
Leisure And Sports
Sleeping
Working
Wearables (someday)
Source: BI Intelligence estimates
Smartwatches
Fitness Bands And Other
Activity Trackers
Rest Of Wearables Market
0
20
40
60
80
100
120
140
160
2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E
MillionsOfUnitsShippedAnnually
Global Wearable Device Unit
Shipments Forecast
35% CAGR
We Are Here
Smartwatches, like Apple Watch, should do okay
Source: BI Intelligence estimates
Total Smartwatch
Market
Apple Watch
0
20
40
60
80
100
120
140
2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
Millions
Apple Watch Annual Shipments Forecast
2015-2020
Fitness bands will remain niche
Source: NPD Group, BI Intelligence estimates; Annual Data From April Through March
Fitbit
Jawbone
Nike
Other
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2010-2011 2011-2012 2012-2013 2013-2014
ThousandsOfFitnessBandsSold
Fitness Band Hardware Annual Unit Sales
By Device Maker, US Only
“Internet of Things” — 20B connected devices by 2020
Source: BI Intelligence estimates
Enterprise
Government/Infrastructure
Home
-
5
10
15
20
25
2014E 2015E 2016E 2017E 2018E 2019E
BillionsofDevices
Estimated Number of Installed
IoT Devices by Sector
We’ll fill our houses with smart devices
Source: ABI Research, TechNavio, Pike Research, BI Intelligence estimates
Smart Home Energy
Smart Home Security
Smart Appliances
Other Systems
0
500
1,000
1,500
2,000
2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
Millions
Global Connected Home Device Shipments
By Device Category
And companies will buy them by the billions
Source: BI Intelligence estimates
-
1
2
3
4
5
6
7
8
9
10
2014E 2015E 2016E 2017E 2018E 2019E
BillionsofDevices
Global Enterprise Device Growth
Five-Year (2014-2019) CAGR 49%
Gain access to all BI Intelligence reports,
forecasts, charts, and data.
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Future of Digital 2014

  • 1. A Research Service By Business Insider The Future Of Digital: 2014
  • 2. intelligence.businessinsider.com Henry Blodget CEO & Editor-in-Chief Emily Adler Senior Research Editor Marcelo Ballvé Editorial Director Cale Weissman Reporter Hope King Reporter Nicholas Quah Research Associate John Greenough Research Analyst Jessica Smith Research Associate Tony Danova Senior Research Analyst Mark Hoelzel Research Analyst John Heggestuen Research Analyst Cooper Smith Senior Research Analyst BI Intelligence
  • 3. There are now nearly 3 billion people online Source: International Communication Union, Google 0 1 1 2 2 3 3 1990 1994 1998 2002 2006 2010 2014E Billions Global Internet Population
  • 4. Four billion to go Global Population Internet Population 0 1 2 3 4 5 6 7 8 1990 1994 1998 2002 2006 2010 2014E Billions Global Internet Population Source: International Communication Union, Google
  • 5. Attention is shifting to digital, especially mobile Source: eMarketer, April 2014 45% 25% 17% 9% 7% 4% 37% 18% 11% 4% 2% 23% TV Online Radio Print Other Mobile US Consumer Media Consumption Share 2009 2010 2011 2012 2013 2014
  • 6. This is a generational shift Source: Ofcom 0 10 20 30 40 50 60 70 80 90 100 Total Aged 16-24 Aged 25-34 Aged 35-44 Aged 45-54 Aged 55-64 Aged 65-74 Aged 75+ Digital Is Reaching The New Generation Top Five Media Mentions Among all Adults, 2013 Watch TV Read Newspapers/Magazines Listen To The Radio
  • 7. One law of media…
  • 9. Ad spending is moving to digital (and mobile) Source: IAB, U.S. Census Bureau, Strategy Analytics, BI Intelligence estimates Offline All Other Online Mobile $0 $60 $120 $180 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Billions U.S. Advertising
  • 10. Print ads have fallen off a cliff Source: Newspaper Association Of America *Estimate $- $10,000 $20,000 $30,000 $40,000 $50,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* Millions Newspaper Ad Revenue (Print vs. Online) Print Online
  • 11. Google is now bigger than all newspapers, magazines Source: Google, NAA, PIB $0 $10,000 $20,000 $30,000 $40,000 $50,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Millions Google vs. Magazine vs. Newspaper Ad Revenue, US Data, 2004-2013 Google (US) US Magazines US Newspapers
  • 12. Google now dwarfs “big media” Source: Company Filings, BI Intelligence estimates $30 $18 $16 $14 $5 $5 $3 $2 $70 Time Warner Facebook CBS Viacom Gannett Yahoo AOL New York Times Google Billions Estimated 2014 Revenue Select Media Companies
  • 13. Google is almost half the size of all global TV advertising $174 $70 Global TV Ad Revenue Google Billions Estimated 2014 Ad Revenue Google vs. Global TV Ad Market Source: Google, PWC
  • 14. For many years TV folks have (rightly) laughed off digital concerns
  • 15. Time to stop laughing.
  • 16. Ratings are falling… Source: Nielsen 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 6 6.1 6.2 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 NielsenHouseholdRating (%OfHouseholds WithTVSetsWatching) Primetime Household TV Ratings Big 4 U.S. TV Networks Average
  • 17. Pay TV subscriptions are dropping… Source: Leichtman Research Group Cable Satellite Telephone Total (800) (600) (400) (200) - 200 400 600 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 NetAdditionsInThousands Pay-TV Net Additions (US)
  • 18. Facebook reaches more young people than free TV Source: Nielsen, January 2013 58% 73% 83% 89% 63% 68% 63% 42% Age 18-24 Age 25-34 Age 35-54 Age 55+ PercentReach Facebook vs. TV Daily Reach (US) Four TV Networks Facebook
  • 19. Netflix now has more US subscribers than HBO Source: Netflix, SNL Kagan HBO Netflix 0 10 20 30 40 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 MillionsOfUSSubscribers Paid Domestic Subscribers — Netlix v. HBO
  • 20. YouTube reaches more 18-34s than any cable network 0 200 400 600 800 1000 1200 1400 2010 2011 2012 2013 2014E Millions YouTube “Ratings”
  • 21. Digital video revenue is no longer a joke… Source: BI Intelligence estimates, Company Filings Netflix YouTube Hulu $0 $2 $4 $6 $8 $10 $12 2006 2007 2008 2009 2010 2011 2012 2013 Billions Estimated Digital Video Revenue
  • 22. iTunes and Netflix already dwarf small cable networks Source: News Reports, Company Filings iTunes Netflix AMC Networks $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 2007 2008 2009 2010 2011 2012 2013 Billions Cable Network vs. Digital Content Revenue 2007-2013
  • 23. YouTube is closing in on broadcast-network revenue Source: News Reports, BI Intelligence estimates, Company Filings $- $2 $4 $6 $8 $10 $12 2007 2008 2009 2010 2011 2012 2013 Billions YouTube Ad Revenue vs. CBS Ad Revenue And AMC Networks Revenue CBS Ad Revenue YouTube Ad Revenue AMC Networks Revenue
  • 24. (Some) live sports are now being streamed Source: Ooyala 2014 34.5 7.1 3.5 42.8 11 17.1 10.5 16.9 2.6 4.1 2.8 5.1 Desktop Tablet Mobile Connected TV TimeSpentPerPlay InMinutes Time Spent Watching Online Video By Content Type Global All Live Events Sports VOD
  • 25. TV now has to share attention with digital Source: Millward Brown, 2014 83 (55%) 65 (63%) 20 (45%) 68 (45%) 38 (37%) 24 (55%) Smartphone Laptop Tablet TimeSpentInMinutes (PercentageOfTotalTime) Daily Time Spent With Devices, While Watching TV Or Using The Device Independently Ages 16 - 44, United States Only Without TV With TV
  • 26. So, eyeballs are leaving TV
  • 27. But, so far, TV money is hanging in there
  • 28. TV still massive, digital video still a blip Source: Nielsen, IAB $0 $20 $40 $60 $80 2007 2008 2009 2010 2011 2012 2013 Total TV Ad Spend (Billions) US Ad Spend, 2007-2013 TV Vs. Online Video TV Ad Spend Online Video Ad
  • 29. So no worries in TV land?
  • 31. It’s a generational shift — look what Millennials are doing Source: Ofcom TV TV TV Print Print Radio Radio Radio Computer 3 Computer Smartphone Smartphone All Adults Aged 75+ Aged 16-24 “Media you would miss most” Use A Smartphone Go Online On A Computer/Laptop/Netbook/Tablet Listen To The Radio Read Newspapers/Magazines Watch TV
  • 32. Money follows eyeballs… Source: Mary Meeker, IAB, eMarketer 5% 38% 25% 12% 20%19% 43% 22% 10% 4% Print TV Web Radio Mobile 2013 U.S. Ad Spending vs. Consumer Time Spent By Media
  • 33. So it’s only a matter of time.
  • 34. What’s going on in digital?
  • 35. Smartphone sales are still booming Source: IDC, Strategy Analytics, BI Intelligence estimates Samsung Apple Xiaomi Lenovo Huawei LG ZTE Coolpad Nokia Sony Motorola HTC BlackBerry Other - 50 100 150 200 250 300 350 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 Millions Global Smartphone Shipments By Vendor
  • 36. PCs Tablets 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Thousands Global Computer Shipments Tablets have carved out a chunk of PC sales Source: Gartner, IDC, Strategy Analytics, Company Releases
  • 37. “Phablets” are replacing small smartphones Source: BI Intelligence estimates Phablets Tablets Smartphones (Non-Phablet) 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2006 2008 2010 2012 2014E 2016E 2018E Millions Global Annual Shipments By Device
  • 38. Nearly half of TVs are now connected Source: Leichtman Research Group, BI Intelligence estimates 27.7 35.7 43.8 50.1 56.5 61.1 65.7 68.6 71.4 72.6 24% 31% 38% 44% 49% 53% 57% 60% 62% 63% 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E U.S. Households With Connected TV Percentage Of Households; Number Of Households In Millions
  • 39. “Wearables” are overhyped but growing Source: BI Intelligence estimates Smartwatches Fitness Bands And Other Activity Trackers Rest Of Wearables Market 0 20 40 60 80 100 120 140 160 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E MillionsOfUnitsShippedAnnually Global Wearable Device Unit Shipments Forecast 35% CAGR We Are Here
  • 40. Cars are increasingly connected Source: SBD, GSMA In-vehicle services Hardware Telematics service providers Telecom service providers € 0 € 5,000 € 10,000 € 15,000 € 20,000 € 25,000 € 30,000 € 35,000 € 40,000 € 45,000 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E Millions Connected Car Revenue Forecast
  • 41. 300 million PCs are still sold each year Source: Gartner, IDC, BI Intelligence estimates Lenovo HP Dell Acer Other 0 20,000 40,000 60,000 80,000 100,000 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Thousands Global PC Shipments By Manufacturer iPad released Windows 8 released
  • 42. Should you be “mobile only?”
  • 43. No!
  • 44. It’s a “multi-screen” world Source: Gartner, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates Personal Computers Smartphones Tablets Smart TVs Wearables 0 1 1 2 2 3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E UnitsBillions Global Internet Connected Device Shipments
  • 45. You should be “mobile, too.”
  • 46. ~60% of online devices are now smartphones or tablets Source: BI Intelligence estimates Personal Computers (Desktop And Notebook) Smartphones Tablets Smart TVs Wearables 0 1 2 3 4 5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E NumberOfDevicesInUse(InBillions) Global Internet Device Installed Base
  • 47. Other 8% Visit Websites 14% Games 8% Social Networking 15% Talk 26% Text 20% Email 9%Breakdown Of The Average Smartphone Owner's Daily Time-Spend On Average, U.S. Smartphone Owners Spend 58 Minutes Daily On Their Phones We spend an hour a day on our smartphones Source: Experian Marketing Services, May 2013
  • 48. We spend ½ hour on tablet each time we use it Source: Google, August 2012 43 39 30 17 TV PC/Laptop Tablet Smartphone Average Minutes Spent Per Interaction By Device
  • 49. More than ¼ of Internet traffic is mobile Source: StatCounter, BI Intelligence estimates 0% 25% 50% 75% 100% Dec-08 Jan-10 Feb-11 Mar-12 Apr-13 May-14 Global Internet Traffic Share Desktop Vs. Mobile
  • 50. Mobile has extended the digital day to 18/7 Source: Google Analytics, Business Insider 9/1/12 9/15/12 9/29/12 10/13/12 10/27/12 11/10/12 11/24/12 12/8/12 12/22/12 1/5/13 Mobile Visits Desktop Visits
  • 51. Each device has a different “prime time” Source: comScore, Telefonica, Macquarie Capital (USA), December 2011
  • 52. Where are we in the mobile device cycle?
  • 53. Developed mobile markets are nearing maturity Source: comScore 18% 72% 0% 10% 20% 30% 40% 50% 60% 70% 80% Jan 10 Jun 10 Nov 10 Apr 11 Sep 11 Feb 12 Jul 12 Dec 12 May 13 Oct 13 Mar 14 (asapercentageofthemobilepopulation) U.S. Smartphone Penetration
  • 54. The action is now in China, India, and emerging markets Source: Mediacells via The Guardian 0 50 100 150 200 250 300 MillionsOfSmartphones Smartphone Sales In 2014 Will Be Driven By New Users In Emerging Markets Sales To New Smartphone Users In 2014 Smartphone Upgrades In 2014 Top 11 Markets Other Markets
  • 55. China is already twice the size of the US market Source: China Internet Network Information Center Mobile Users Total Users US Users 0 100 200 300 400 500 600 700 June 06 Dec 06 June 07 Dec 07 June 08 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 June 12 Dec 12 June 13 Dec 13 June 14 MillionsOfInternetUsers Chinese Internet Users
  • 56. Prices are dropping fast Source: BI Intelligence estimates $100 $150 $200 $250 $300 $350 2010A 2011A 2012A 2013E 2014E 2015E 2016E AverageSellingPrice Global Smartphone Average Selling Price Forecast
  • 57. iPhone sales growth has slowed (iPhone 6 will help) Source: Company Filings 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 0 10,000 20,000 30,000 40,000 50,000 60,000 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 YoYSalesGrowth UnitSales(Thousands) iPhone Sales Unit Sales YoY Growth
  • 58. Chinese companies sell ~25% of smartphones in world Source: Canalys, IDC, Strategy Analytics, BI Intelligence, Company Reports 0 10 20 30 40 50 60 70 80 90 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Millions Selected Local Manufacturers From China Global Quarterly Smartphone Shipments Xiaomi Huawei Lenovo ZTE Coolpad
  • 59. Global tablet growth has hit a wall Source: IDC, Strategy Analytics, BI Intelligence estimates Year-Over-Year Growth -100% -50% 0% 50% 100% 150% 200% 250% 300% 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Global Tablet Shipments Quarterly Year-Over-Year Growth Sequential Growth
  • 60. (iPad now experiencing “negative growth”) Source: Apple -50% 0% 50% 100% 150% 200% 0 5,000 10,000 15,000 20,000 25,000 30,000 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 YoYSalesGrowth UnitSale(Thousands) iPad Sales Unit Sales YoY Growth
  • 61. Why have tablet sales cratered?
  • 62. 1. Long upgrade cycle 2. Phablet cannibalization 3. Need keyboard for serious input 4. Price
  • 64. We have a winner!
  • 65. Apple is strong in the US, where it’s a two-horse race Source: comScore Android Apple BlackBerry Windows Phone Other 0% 20% 40% 60% 80% 100% Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 US Smartphone Platform Market Share
  • 66. But, globally, it’s an Android world
  • 67. ~85% of smartphones run Google’s Android Source: IDC, Strategy Analytics, BI Intelligence estimates Android iOS Microsoft BlackBerry Other 0% 25% 50% 75% 100% 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 ShareofGlobalUnitShipments Global Smartphone Market Share By Platform
  • 68. ~65% of tablets run Android Source: BI Intelligence estimates Android Apple Amazon BlackBerry Nook Windows 0% 25% 50% 75% 100% 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Global Tablet Market Share By Platform
  • 69. ~70% of all new computing gadgets run Android Source: Gartner, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates Android Windows Apple BlackBerry Other 0% 20% 40% 60% 80% 100% 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Global Computing Platform Market Share
  • 70. Android used to lag Apple badly with app developers.
  • 72. Android “fragmentation” problem is improving Source: Google Other Froyo Gingerbread Honeycomb Ice Cream Sandwich Jelly Bean Kit Kat 0% 20% 40% 60% 80% 100% 9/15/12 11/15/12 1/15/13 3/15/13 5/15/13 7/15/13 9/15/13 11/15/13 1/15/14 3/15/14 5/15/14 7/15/14 Jelly Bean And Kit Kat Are Now ~80% Of Android
  • 73. Android now more popular with developers than iOS Source: Developer Economics, Q3 2014 Android 42% iOS 32% BlackBerry 10 3% Windows Phone 10% Other 13% Mobile Developers' Main Platform
  • 74. Android will soon overtake iOS in app revenue Source: Jana, App Annie, BI Intelligence estimates $0 $1 $2 $3 $4 4Q13 2Q14 4Q14E 2Q15E 4Q15E 2Q16E Billions Estimated App Revenue Apple App Store Vs. Google Play
  • 75. Android is catching up to iOS in developer payouts Source: Jana, App Annie, BI Intelligence estimates Apple App Store Google Play $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 3Q13 4Q13 1Q14 2Q14 Billions Estimated App Developer Payout Apple App Store And Google Play
  • 76. Android now generates more global ad traffic than iOS Source: Opera Mediaworks Android iOS BlackBerry Symbian Other 0% 20% 40% 60% 80% 100% 2Q12 4Q12 2Q13 4Q13 2Q14 ShareOfTraffic Global Mobile Ad Traffic Share By Platform
  • 77. The key digital media trends…
  • 79. Most digital growth is now mobile Source: comScore, April 2014 Smartphone 131 Smartphone 442Tablet 11 Tablet 124 0 200 400 600 800 1000 1200 Dec-10 Dec-13 BillionsOfMinutes Time Spent By Digital Platform Per Month U.S., December 2010 Vs. December 2013 1,040% Growth 237% 7% Desktop 401 Desktop 429
  • 80. Messaging apps are exploding Source: Company Statements, News Reports, BI Intelligence estimates 0 100 200 300 400 500 600 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Millions The Messaging Wars — MAUs For Top Apps (Monthly Active Users - Global)
  • 81. Social networks and sharing are exploding Source: BI Intelligence estimates based on data from company filings, comScore, Global Web Index, Totem and news reports Facebook Twitter Tumblr Instagram Snapchat Google Plus LinkedIn Pinterest Vine 0 500 1,000 1,500 2010 2011 2012 2013 2014E Millions Social Network MAUs (Global)
  • 82. Mobile video is booming… Source: Cisco, 2013 0 1 2 3 4 5 6 7 8 2011 2012 2013 2014 2015 2016 2017 MillionsofTerabytesPerMonth Global Mobile Video Traffic Will Continue To Surge
  • 83. Mobile video has enabled the rise of the YouTube stars Source: Company Filings 35 million viewers 8 million viewers 1 million viewers
  • 84. Social and music are now mostly mobile Source: Company Filings Pandora Facebook Twitter 0% 25% 50% 75% 100% 2008 2009 2010 2011 2012 2013 Mobile Usage: Pandora, Twitter, Facebook
  • 85. Mobile is driving all of Facebook’s growth Source: Company Filings Advertising (Non-Mobile) Mobile Advertising Payments And Fees $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Billions Facebook Revenue By Segment (Global)
  • 86. Mobile is now a third of eCommerce traffic Source: Monetate PC Tablet Smartphone 0% 25% 50% 75% 100% 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 Ecommerce Website Traffic By Device
  • 87. PayPal powers $30 billion in mobile payments *PayPal counted a small portion of Braintree’s transaction volume as its own in the last 12 days of Q4 2013.Source: PayPal PayPal Mobile Braintree Mobile* $0 $5 $10 $15 $20 $25 $30 $35 2008 2009 2010 2011 2012 2013 U.S.DollarsInBillions PayPal Mobile Transaction Volume (Including Braintree 2013)
  • 88. Venmo is (finally) replacing friend-to-friend payments Source: PayPal, BI Intelligence $81 $105 $141 $194 $314 $468 $700 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 MillionsOfDollars Venmo Payment Volume
  • 89. Ad growth is mobile, social, video, native, programmatic Source: BI Intelligence estimates based on data from BIA/Kelsey, IAB, IDC, and Magna Global Note: Formats overlap. Mobile includes all ad formats that appear on mobile. -0.4% 15.1% 2.3% 42.6% 18.0% 34.7% 35.7% Desktop Display Desktop Video Desktop Search Mobile Social Native Programmatic Advertising Revenue Growth (US) CAGR 2013 - 2018
  • 90. Mobile is a “green field” Source: eMarketer $1 $1 $1 $3 $10 $12 $1 $1 $1 $3 $15 $30 $1 $1 $1 $4 $19 $46 Latin America Middle East and Africa Eastern Europe Asia-Pacific Western Europe North America Annual Mobile Ad Spend Per Mobile Internet User By Region 2011 2012 2013
  • 91. Social is booming Source: BI Intelligence estimates, BIA/Kelsey Non-Mobile Mobile $- $2 $4 $6 $8 $10 $12 $14 $16 2013 2014E 2015E 2016E 2017E 2018E Billions FORECAST: Social Media Advertising Spend (US)
  • 92. “Display” ad spending is still respectable, but… Source: Company Filings, BI Intelligence estimates Google Other Yahoo AOL Microsoft $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 Total Display Advertising Revenue (Millions) US Display Advertising, 2006-2014 (Quarterly)
  • 93. Growth is shifting to “native”… Source: BI Intelligence estimates, IAB $1.0 $1.3 $1.9 $2.7 $3.9 $5.7 $0.8 $1.0 $1.3 $2.0 $2.7 $3.4 $2.9 $5.6 $7.5 $9.2 $10.7 $11.9 $0 $5 $10 $15 $20 $25 2013 2014E 2015E 2016E 2017E 2018E Billions Native Advertising Revenue (US) Desktop And Mobile Native-Style Display Sponsorship Social
  • 94. And “programmatic” Source: BI Intelligence estimates, Magna Global, IDC $6 $8 $12 $18 $23 $28 2013 2014E 2015E 2016E 2017E 2018E AdSpendInBillions FORECAST: Programmatic Ad Spend (U.S.)
  • 95. Google is still the digital advertising king Source: Company Filings Note: Based on GAAP revenue. Google Facebook Yahoo AOL $0 $4 $8 $12 $16 $20 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Billions Digital Advertising Revenues (Global)
  • 96. Google’s YouTube dominates digital video and video ads Source: Company Filings, BI Intelligence estimates YouTube Tremor YuMe TubeMogul $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 RevenueInMillions Global Digital Video Advertising Revenue (Select Companies)
  • 97. Google’s Chrome browser is crushing Firefox and IE Source: StatCounter Other Safari Firefox Internet Explorer Chrome Opera 0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 Global Web Browser Usage Share
  • 98. Google’s Android has peak-Windows-like market share Source: IDC, Strategy Analytics, BI Intelligence estimates Android iOS Microsoft BlackBerry Other 0% 20% 40% 60% 80% 100% 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 ShareofGlobalUnitShipments Global Smartphone Market Share By Platform
  • 99. Google 93% Bing 3% Yahoo 2% Other 2% Europe Search Market Share Oct. 2014 In Europe, Google has peak-Windows-like search share Source: StatCounter
  • 100. Basically, Google is swallowing the world… Source: Google, 2014 Is An Estimate $- $10 $20 $30 $40 $50 $60 $70 2009 2010 2011 2012 2013 2014E Billions Google Global Annual Revenue
  • 101. (And people are noticing!) Source: StatCounter
  • 102. (For Microsoft, DOJ attack was the beginning of the end) Source: StatCounter
  • 103. Have Google and Facebook won?
  • 106. Search click growth is finally decelerating Source: Google 20% 23% 26% 31% 26% 25% 17% Q1 13 Q3 13 Q1 14 Q3 14 Google Paid Clicks Growth Global, Year-Over-Year
  • 107. US desktop search queries are now shrinking Source: comScore Note: Explicit user initiated search queries only. 10% 12% 14% 10% 7% 4% 0% -3% -5% -7% -8% -7% -7% Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Total Monthly Search Query Growth U.S., Year-Over-Year; Desktop Only
  • 108. “No one uses Facebook anymore” — Gen Z-er Source: Piper Jaffray 42% 33% 27% 23% 27% 30% 31% 27% 12% 17% 27% 30% Fall 2012 Spring 2013 Fall 2013 Spring 2014 The Most Important Social Networks To US Teens Percent Of Respondents Who Say The Network Is Most Important Facebook Twitter Instagram
  • 109. Why do teens love Instagram? 0 50 100 150 200 250 300 2010 2011 2012 2013 2014E Millions Instagram “Because parents see that camera icon and think it’s a photo app. They don’t know it’s a social network.”
  • 110. What’s Tumblr for? 0 50 100 150 200 250 300 350 2010 2011 2012 2013 2014E Millions Tumblr “Fandom. And depressed and creepy people.”
  • 111. What about phone calls? Do people talk anymore? 0 200 400 600 800 2010 2011 2012 2013 2014E Millions WhatsApp “No. Everyone has phone numbers, but they’re for texting.”
  • 112. Digital is the medium for the new generation. Digital will grow for decades.
  • 114. Connected cars — we spend 1.2 hours a day in them Source: Bureau Of Labor Statistics 8.8 hours 7.6 hours 2.5 hours 1.2 hours 1.1 hours 1.1 hours 1.7 hours 0 12 24 Average Daily Time Spent Per Person U.S. Employed Citizens ages 25 to 54 Other Household Activities Eating And Drinking In The Car Leisure And Sports Sleeping Working
  • 115. Wearables (someday) Source: BI Intelligence estimates Smartwatches Fitness Bands And Other Activity Trackers Rest Of Wearables Market 0 20 40 60 80 100 120 140 160 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E MillionsOfUnitsShippedAnnually Global Wearable Device Unit Shipments Forecast 35% CAGR We Are Here
  • 116. Smartwatches, like Apple Watch, should do okay Source: BI Intelligence estimates Total Smartwatch Market Apple Watch 0 20 40 60 80 100 120 140 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E Millions Apple Watch Annual Shipments Forecast 2015-2020
  • 117. Fitness bands will remain niche Source: NPD Group, BI Intelligence estimates; Annual Data From April Through March Fitbit Jawbone Nike Other - 500 1,000 1,500 2,000 2,500 3,000 3,500 2010-2011 2011-2012 2012-2013 2013-2014 ThousandsOfFitnessBandsSold Fitness Band Hardware Annual Unit Sales By Device Maker, US Only
  • 118. “Internet of Things” — 20B connected devices by 2020 Source: BI Intelligence estimates Enterprise Government/Infrastructure Home - 5 10 15 20 25 2014E 2015E 2016E 2017E 2018E 2019E BillionsofDevices Estimated Number of Installed IoT Devices by Sector
  • 119. We’ll fill our houses with smart devices Source: ABI Research, TechNavio, Pike Research, BI Intelligence estimates Smart Home Energy Smart Home Security Smart Appliances Other Systems 0 500 1,000 1,500 2,000 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E Millions Global Connected Home Device Shipments By Device Category
  • 120. And companies will buy them by the billions Source: BI Intelligence estimates - 1 2 3 4 5 6 7 8 9 10 2014E 2015E 2016E 2017E 2018E 2019E BillionsofDevices Global Enterprise Device Growth Five-Year (2014-2019) CAGR 49%
  • 121. Gain access to all BI Intelligence reports, forecasts, charts, and data. Click here to sign up for a trial membership.