Digital Economy:

Prepared by TMB AnalyticsDate: 7 Feb 2017

HOW DIGITAL TRANSFORMED AN INDUSTRY

Example

2

What did they see?

3Source: http://s3.amazonaws.com/fromus/blog_posts/photos_taken_by_year.png/

Photography Industry stays, but not all players survive

4

• For nearly a century, no company commercialised the camera as successfully as Kodak

• The advent of digital photography led to 2 distinct but related disruptions –commoditisation of digital cameras and dramatically reduced physical printing

• The company filed for chapter 11 in January 2012

Source: Bloomberg, press articles, Strategy& analysis

0

20

40

60

80

100

2005199519901980 201020001985

-100%

Eastman Kodak Share Price (US$)

“Kodak executives couldn't foresee a future in which film had no role in image capture at

all, nor come to grips with the lower profit margins or faster competitive pace of high-

tech industries” (LA Times, December 2011)

“That’s cute – but don’t tell anyone about it.”

Pictures that Kodak couldn’t see… Photography remains strong!

5Source: http://resourcemagonline.com/2014/12/infographic-there-will-be-one-trillion-photos-taken-in-2015/45332/

HOW DIGITAL TRANSFORMED ANOTHER INDUSTRY

Example 2

6

What did they see?

7Source: http://static5.businessinsider.com/image/4b9021b17f8b9ae65e850400/digital-entertainment-sai-chart.gif/

Movie rental industry is still booming, just not with Blockbuster.

8

5,933 5,722 5,522 5,300 5,100

4,000

501 682 997 1,205 1,365

1,670

2,163

2004 2005 2006 2007 2008 2009 2010

2004-2010 (USD$ Mn)

• Blockbuster was the largest provider of video rentals in America, with a company value of $8.4 Bn 1990s

• Availability of on-demand movie / TV content from players, including Netflix, significantly reduced the need to endure trips to brick and mortar video rentals stores

– 2000: Blockbuster turned down a chance to acquire Netflix for only $50 Mn

– 2010: Blockbuster filed for bankruptcy, with a company valuation of only $24 Mn

Blockbuster refused to cannibalise…

Source: Press articles, Strategy& analysis

Bankruptcy

“ We have not seen a business model that’s financially viable long-term in this arena. Online rental services are

‘serving a niche market.”

Stories that Blockbuster didn’t lived to see… Movies rental thrives

9Source: https://pmcvariety.files.wordpress.com/2016/02/annual-us-filmed-entertainment-revenue.jpg?w=670

ASK WHAT YOU CAN DO IN DIGITAL ECONOMY

Ask not what Digital Economy can do for you…

10

8 Success Factors to Digital Economy

-11-

Infrastructure Affordability

Ease of Doing BusinessConsumer/Business Usage

Government Electronics ServicesAdvanced Technical Skills

Innovative Products

Myanmar Cambodia Lao PDR

Argentina India Kenya Vietnam

Brazil Indonesia

Emerging Transitional AdvancedPhilippines

Thailand

South Africa Mexico

China Italy

Russia Spain Malaysia

Singapore Finland Sweden Netherlands US UK Japan South Korea Germany France

12

34

56

78

Policy and Regulation

2016

2021

Source: World Economic Forum and TMB Analytics

-12-

Internet and Social Network Will Soon Become Key Channels to Economy

21 23 26 2838 45 48

39

5659

70

18

25

33

5054

64

32 3541 43 46

55

-140-130-120-110-100-90-80-70-60-50-40-30-20-10

01020304050

2011 2012 2013 2014 2015 2016E 2021F

Global Internet Penetration (%)

Thailand’s Internet Penetration (%)

Thailand’s Social Network User Penetration (%)

Thailand’s Internet Users (million)

Source: Statista, NECTEC, and TMB Analytics

Rising Market Access

Retail e-Commerce Market

-13-

4%

Thailand340bn USD

US4,700

bn USD

China4,200

bn USD

16% 8%

e-Commerce share (B2C)

Retail Trade

Source: ETDA and TMB Analytics

Thailand e-Commerce Sales by sectors

-14-

B2G19%

IT&Telco13% Transportation

3%

19

2

2

4

4

7

12

16

17

17

Others Trade

Sport&Toy

Food&Beverages

Online Store

Furniture

Transport&Telco

Fashion Products

Cosmetic Products

Computers&Parts

Hospitality

e-Commerce 2.1 Tn Baht*

*Data as of 2015 Source: 2015 ETDA and TMB Analytics

B2C22%

B2B59%

e-Auction &Procurement

19%

Hospitality28%

Manufacturing15%

e-Commerce Will Expand 2.9X in 6 Years

-15-

1.2 1.2 1.4 1.6 1.92.2

2.7

3.60.4

0.50.5

0.6

0.7

0.9

1.1

0.50.5

0.6

0.7

0.9

1.0

1.4

2.42.7

3.23.9

4.6

6.0

2014 2015 2016F 2017F 2018F 2019F 2020F 2021F

2.0 2.1B2B

B2G

B2C

Tn Baht

+19%2.9X

represents compound annual growth rate (CAGR)

+20%

+19%

+21%

*Note

Source: ETDA and TMB Analytics

72% 70%

47%

28% 30%

53%

2010 . . 2015 . . 2025F

Source : McKinsey, PwC, BOT, and TMB Analytics

4%

+6%

1%

+11%

193 315151

Value of Thailand’s Payments (Tn Baht)

*Note represents compound annual growth rate (CAGR)

e-Payment

Cash

e-Commerce Will Boost e-Payment, Reduced Cash Usage

17

Brick-and-Mortar Channel Will Soon Be Replaced by Digital, Even Banks

-17-

2005 2010 2015

0.3 0.3 0.4 0.4 0.4 0.4 0.40.1 0.1

0.2 0.20.3

0.40.6

'10 '11 '12 '13 '14 '15 2016E

60%25%

Internet & Mobile Phone

ATM & Branch

Compound Annual

Growth Rate‘10-’16

+37%

+8%

+3%

+8%4,200

6,0007,000

+8%

+4% +5%

0%+7%

+5% Small Banks

Medium Banks

Large Banks

Branches Grew at A Slower Pace, Especially in Medium-sized Banks…

… While Transactions via Internet & Mobile Phone Surged Up

Unit: Number of Branches Unit: Number of Transactions (Billion)

2.4X% Digital channel increased

to 60% in 6 Years

1 2

Banks are trying to embrace changes given recent disruptive technology

Digital surged exponentially

Source: BOT and TMB Analytics

Thailand’s Journey to Digital bankingStill high potential to increase digital banking penetration

Digital banking in Asia(1) (2014)Percent (%)

Digital consumers” represent more than 700 million customers across Asia

(1)“Digital banking” penetration is defined as the number of users of internet or smartphone banking divided by total banking consumers in each country; only urban consumers are includedSOURCE: McKinsey Asia Personal Financial Services Survey, 2014 18

Big rooms to increase

-19-Source: World Economic Forum and TMB Analytics

38mn

CAGR +4%

Greater accessibility to the Internet with enhanced usage

2.1tn

6 tn

High growth prospects over the medium-term

CAGR +19%

58tn

109 tn

Increasing Popularity of e-Commerce Induces e-Payment Adoption Over Cash

CAGR +11%

Internet Users

Internet Userse-Commerce

e-Payment

48 mn

2015 2021F

*Note: CAGR represents compound annual growth rate

Accessibility, e-Commerce, e-Payment Are Key Factors Driving Digitization Forward

Physical to Digital: Are You Ready for Disruption?

-20-Source: Company Websites and TMB Analytics

Digitization reshapes industries to the Better Customer Satisfaction

21

“When change is imminent, the best way to change is to

Lead the change ourselves.”

“เมื่อเราไมสามารถหนีการเปลี่ยนแปลง การนําการเปลี่ยนแปลงดวยตัวเองเปนวิธีเปลี่ยนแปลงที่ดีที่สุด”