Digital Content Creation: Where will the funding come from?

1TELEFONICA S.A.Corporate Content Unit

Digital Content Creation – Where will the Funding Come From? The Telefónica Experience

Angel Blasco.Head of Films. Corporate Content UnitJune, 25th 2008

Telecommunications and Media Forum Madrid, Spain


Telefónica Overview

Content Creation – Content Adaptation - Services

Content in Telefónica

Funding: Looking for Business Models

Cross – Platform Content

Conclusions

Summary


Telefonica Group: Market Size


What do we do in content?

Spain

LatAm

Telefónica Europe

MarketsMarkets

Highlights of results

Cable & MMDS

•800 k customers

•Bra •Per

• One of the worldwide leaders; 550+ k homes

IPTV

•Bra•Chi •Col

•R Checa

• 53 MM UVs

• More than 8 MM video users

• 20 MM users

• Bigger than any off-deck player

Satellite TV

•500+ k customers

•Bra•Chi •Per•Col •Arg•Ven

FTA TV leaderin Argentina

Internet Portals

Mobile Portals

FTA TV & other

Internet PortalsPay TV






Cross Platform Content

Conclusions

Summary



From a Business Point of View, Digital Platforms are:— Content Platforms

— Service Platforms

— Promotional Platforms

Key Driver of Content is the “Interest” of our Customers

New Platforms have great potential for “Target segmentation”

Interactivity, Screen Size, Speed, Portability… shape Content of each platform

Content may be “Adapted” from other Platforms or “Created”— From Newspapers to Music or Movies

— From “Mobisodes” or “Mobigames” to “You Tube” or “Uniqlock”

Content may be “Professionally Produced” or “User Generated”

… Or “User Moderated”

A Whole Universe of Services around the Customer


Interactivity: VoD, interactive services and other featuresVideo on Demand

Delivery platforms with full control over content

Interactive Services

Interactive content that can complement and enhance customer experience

Internet & e-mail Maps Information

Camera Choice

Other features that make content new experience customer







Conclusions

Summary


Pay TV

Active since 1997; pioneered IPTV in 2004

IPTV as core technology choice

DTH and Cable to ensure Content offer in selected areas

Move towards personal TV

Personalized line-up selection

PVR VoD Catch-up TV

Telefónica TV activities


Internet

Active Portal since 1999

Expanded by content download/streaming services

Terra TV Sonora/

Pixbox

More than 53 MM unique visitors per month

Top 3 or 4 in all markets. Usually sole non-GYM performer among market leaders

Telefónica Internet (PC) activities


Mobile

One of the mobile forerunners in content

Mobile portals in all markets

Strong non-SMS data revenues

Early mover in Full-track

downloads Video Open

mobile internet

Telefónica Mobile Internet activities


Specific reasons to enter contentDescription

Extend and improve associations

Brand spillovers

Access to new elements of discretional spending

Up to 100% more than existing base

GROWTH FOCUSEDGROWTH FOCUSED

New revenue sources

Support to differentiation

Content/service players extending its market position into telecoms services

Content distributors exploiting infrastructure to provide telecoms services

Avoid churn and pricing pressure

Competitive matching

Protection againstdownstream moves

DEFENSIVEDEFENSIVE


Some experiences about availability of Content

DSL with music subscription

included in the monthly price

TV over 3G - Live F1 (Ad Funded)

Terra TV FreeoD – Series & Movies

Sample Developments

integrating creation,

adaptation, and distribution of

content on multiple platforms?

Full tracks Download O2 UK

and others

Over 1 Million tracks on your mobile for only 6€ per month

IPTV


Flexibility: “Time shifting”

• PVR on net• PVR on net • PVR on deck• PVR on deck

“Te lo Perdiste” PVR

New services give customer full control over the TV: forward, stop, rewind….

New services give customer full control over the TV: forward, stop, rewind….


Flexibility: “Place shifting”

• Mobile TV offer’s already allows access to TV channels on simulcast

• Spain: 40 channels, of those:• 20 channels in simulcast: MTV, Hollywood, Historia, Odisea, Intereconomia etc

• 20 channels with special version exclusive for mobile (“Loops”): Paramount Comedy, Nick, Boomerang etc.

• Mobile TV offer’s already allows access to TV channels on simulcast

• Spain: 40 channels, of those:• 20 channels in simulcast: MTV, Hollywood, Historia, Odisea, Intereconomia etc

• 20 channels with special version exclusive for mobile (“Loops”): Paramount Comedy, Nick, Boomerang etc.







Conclusions

Summary


Where will the Funding come from?

Dealing with the “Right to

See”

ProducersProduce

The Product

Equity Investors

Library value

Soft MoneyGrants Subsidies

SponsoringProduct

Placement

SequelsPrequelsSpin-offs

Advertising

Pre – SalesMGs

SalesRevenue Sharing

Film – DVD - TV

New Media

Financing Producing Distributing Exhibiting

Loans

Prizes

Deferrals


Allocation of Players in the value chain

Final Customer

Final Customer

DistributorsDistributors

AggregatorsAggregators

Rights

Holders

Rights

HoldersCreatorsCreators

As online distribution increases,allocation of revenues will move down stream the

chain


Financing models in online distributionTransactional – Subscription – Free On Demand

Upfront Fee

Revenue Share(With or W/O

MG)

Ad Share (With or W/O

MG)

•Integrated Music with ADSL

•VoD – IPTV•Full Track download

•(Aggregator or content Provider)

•Mobile VoD over 3G •(Aggregator or content Provider)

•Terra TV Spain•F1


Adjustment of business models to digital convergence

Bundles

Live content and interactivity

Aproaching to date to date window and

longer Viewing Periode for customers

Flat Rate and Dual Delivery Services

Free Content on PC in the same window

that uses Free to Air TV Operators

Exclusivity Rights for Music Concerts

Nature of content makes networks the

natural distribution

system







Conclusions

Summary


Evolution of cross-platform offers will push integration

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12

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8

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11

While commuting, Maria watches the Best-of-the-Week of OT in her mobile

Once at home, she downloads a more extended version of OT weekly summary to the PC

Maria downloads the full-track of the last OT programme, and also receives the ringtone and wallpaper in her mobile

Beep Beep!!! An alarm sounds it its mobile: OT is going to start in 5 minutes!!! She runs to the TV

The program is over and Maria joins the OT forum from the PC and draws up a ranking of the best songs

Maria chats through TV IM with Carlos about today’s singers’ performances

Voting starts! Send an SMS with the name of your favourite singer to make him win

11

22

3344

55

66

77







Conclusions

Summary


Summing up

Telefónica:

leading growth

in digital

entertainment

Opportunity brought

by industry changes

Broadband explosion

Digitalization of content

New user needs and expectations

New competitors

Telefónica broad

scope in content

All platforms Pay TV Internet

services Mobile

Rationale Defensiv

e Growth-

driven

Strategic focus

enabling effective

entry

Support of a strong marketing machine

Bundling Effectiveness

in content acquisition and economies of scale

Innovation: technology and beyond

Increasingly able to create 360º cross-platform offers

Already a leading

player and speeding

up

Content, broadband and digital services 14% of revenues

Growth well above (5x) overall company growth or telecom market


Some Conclusions

1. Content will “find its way” to the Consumer, depending the “interest” it may generate.

2. Cross plataform is a multiplier when something hits that interest

3. The Best ideas are still to come

4. We try to approach “Content” as a “Stand alone business”, not only as a “hook” for selling something else.

5. We’d like to monetize content, services and promotions in a way that doesn’t “burn” the customer. Therefore the importance of creating communities, transparency, and balance between “real value” and “perceived value”

Thank you

[email protected]

Date post:	10-May-2015
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