Janice Hughes of Redshift, presentation on "Preparing for change" TV content seminar, 16 July 2012, part of the Communications Review. Find out more at http://dcmscommsreview.readandcomment.com/tv

1. Session 3: Preparing for change
Will content, platforms or technology drive future growth?
Janice Hughes, Redshift
Redshift Strategy 2012

2. The connected living room
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3. Rapid take-up and usage of connected TV devices
Connected device forecasts, m
Today by 2020
20m 40m 60m 80m “50% of TiVo subscribers begin their viewing
experience in the ‘My Shows’ section”
Connected 5.7m HHs have – Neil Berkett, CEO Virgin Media
set-top-boxes a primary
connected TV “Users of our smart TV portal average 20-25 TV
OTT devices device today,
24.6m by 2020
app sessions per month”
and smart TVs
– Senior director, Philips Smart TV
Tablets “By 2014 nine out of ten TVs shipped in the UK
will be a smart TV”
– Rovi
Smartphones
“Of the 78% of tablet owners who multitask
while watching TV, 57% are accessing content
Penetration of connected TV devices on the primary set: related to the programme or advert”
Today: 22% 2016: 65% 2020: 90% – Yahoo
Source: Redshift analysis
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4. Enablers of new content experiences
TV app stores Second screen Voice and gesture control
• Creating a marketplace for • Opening access for content • Gesture control and voice
content providers via app providers control
stores • Providing opportunity for new • Enable new types of content
• Redefining the EPG types of content, ie. second • Redefine the way content is
screen, AR accessed
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5. New sources of content creation and investment
New content creators are entering the market, How do we maintain high
including publishers, brands, retailers, etc. quality of content production?
M&S TV Jamie Oliver iPhone & iPad apps Typical TV spend-per-hour
£1m Illustrative
£200k
All3Media VOD store YouTube TV
£2-10k
Drama Factual YouTube
• App offering 230hrs of All3Media BROADCASTERS
content on a PPV basis
… but the sums invested
A wider pool of content creators are investing in content
are relatively small
Source: Redshift analysis
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6. Have we reached the limit of what current funding can invest in
content?
Revenue vs. originated content spend, £bn New monetisation opportunities
% Change 2006-2011
Revenue
Originated content spend
£4.8bn
£2.7bn
£2.4bn
Includes 1. Broadening the scope of the TV ad market:
-15% - 21%
sport &
news £1.3bn
• Interactive advertising, targeted advertising,
£1.2bn
connected TV advertising
£0.4bn (e.g. product placement, sponsorship)
Pay TV Licence fee Ad-funding 2. Pay-as-you-go and in-app purchases
Note: Licence fee revenue for year-end March 2011, only includes portion spent on TV
3. Second screen
Sky’s pay TV originated content spend does not include sports rights
Revenue and originated content spend from advertising includes ITV, C4 and C5 only
Source: Redshift analysis, Ofcom communications market report 2011, Ofcom PSB annual report 2012, BBC annual report 2011, Sky annual report 2011
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7. Gaming monetisation: an example of multiple revenue sources
Case study: Rockstar Red Dead Redemption
1 Sale of game: 3
Add-ons:
• Standard edition £40 • Legends and killers
• Limited edition £60 • Liars and cheats £8
• Free roam pack
• Undead nightmare pack
Game lifecycle
2 4
Rockstar’s Micro-transactions: Rockstar Social Club:
Grand Theft Auto IV:
• In-game virtual goods • Game is registered by user
Sold 6m copies in week 1 • Eg. Weapons, missions,
worth $500m of revenue etc… £0.99+
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8. Increasing competition from global platforms and non UK
players
UK format and programme exports
Outflow of platform and content
licence fees to overseas players
Licence
30% platform fees Fees
Advertising
Pay TV
Foreign imports of new content
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9. Do broadcasters and content creators have enough time to
adapt to a mixed media an IP-based ecosystem?
Loss of spectrum is accelerating the shift to DTT /PSB ecosystem supports high viewing shares
connected TV and high revenues to reinvest in original content
500 band 600 band 700 band 800 band PSB Non-PSB
Today TV free TV Mobile
Viewing share
From 2015 TV Mobile
Future TV Mobile
Originated content
spend
“The universal take-up of broadband could enable IPTV
services to provide a viable substitute for the DTT platforms,
enabling a potential future DTT switch-off scenario”
0% 50% 100%
Consultation: Strategy for UHF bands IV and V
Source: Redshift analysis, BARB data, Ofcom PSB annual report 2012
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10. Issues for discussion
Content
• How do we retain viewership and revenues for PSBs and commercial broadcasters to invest in
UK originated content?
• How do we increase funding for existing broadcasters and producers?
• What new monies can we target to increase investment in content? eg. New data sources,
second screen and in-app add-ons…
Platforms and technologies
• How do we tap into consumers’ willingness to spend more on entertainment through on-
demand, pay-as-you-go and other micropay enablers?
• How do we maintain or increase the UK’s net trade surplus from content exports?
• Issues from the floor…
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11. 2 Cavendish Square
London W1G 0PU
+44 (0) 207 636 6488
janice.hughes@redshiftsc.com
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Redshift Strategy 2012