Redefining the Pay TV Experience · Redefining the Pay TV Experience Aunindo Ghosh Senior Product...

Redefining the Pay TV Experience

Aunindo Ghosh Senior Product Manager – Service Provider Video BU

July 2015

SP Video Market Trends and Case Studies

© 2013-2014 Cisco and/or its affiliates. All rights reserved.

1. Pay TV Updates

2. Time Shifted Viewing Trends

3. Next-Gen UX Trends

4. Latest on OTT

Agenda


Pay TV Updates


Total Pay TV Subscribers and Annual CAGR by Regions (in M)

Worldwide Pay TV Growth

12

530

82 112

52

120

14

603

88 112

61

125

Africa and Middle East Asia Pacific Central and EasternEurope

North America South and CentralAmerica

Western Europe

2012 2013 2014 2015 2016 2017 2018

+2.1% +5.3%

+1.3%

+4.9%

0%

+4.4%

Source: IHS Screen Digest, 2/2015


Screen, Screens, Screens

of all media interactions

are screen based

10% On average we spend

4.4 hours of our leisure

time in front of screens

each day. of all media

interactions are

non-screen based

Smartphone Laptop/PC Tablet Television

Source: Google, Sterling Brands & Ipsos: The New Multi-Screen World, 2012

Radio Newspaper Magazine

90%


TV Consumption is Undergoing a Revolution

3 Screens

Source: IAB – The Multi-Screen Marketer, 5/2012

TV is still the main household video

consumption device

However, almost a third of 4-screen

owners regularly watch TV on other

video-enabled devices

Share of Television Viewing by Device

77%

18% 5%

4 Screens

69%

16%

4% 10%

TV Computer Smartphones Tablets

Size matters: Consumers prefer the

biggest screen available at any point:

TV at home, 3G/4G Dongle on the

move, else mobile


Two major Go-to-Market strategies: White-Label and Aggregation Portal

Both monetize via combination of paid subscription and dynamic ad insertion

Will Content Providers Go “All In” on OTT in 2015?

White-Label Platform Aggregation Portal

Platform

Owner CBS MLB DISH DirecTV

Affiliated

Networks

CBS,

Showtime

MLB,ESPN,

WWE, HBO

Disney: ESPN,

Disney Channel

Turner Broadcast:

Adult Swim, TNT,

CNN, TBS, HLN,

Cartoon Network

beIN SPORTS en

Español, Cine Sony

Television, MTV,

¡Hola! TV


Annual US Multichannel Network Programming Expenses (in $Bn)

Content Innovation – Heavy Investment in Programming

18.6 19.8 21.7

24 26.4

29 31.5

33.9 36.1

2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: SNL-Kagan, 2014

US networks collectively invest $30Bn annually in premium TV content

DirecTV and Dish each spend 45-52% of their revenue on programming


Revenue Synergy

Upsell / Package upgrades

Advertising scale

Cost Synergy

Sales & Marketing

Support & Maintenance

Reduce content acquisition costs as a result of increased bargaining power

Network / Backbone

Increasing Costs and Competition Bring SPs to Consolidate

Buyer Seller/s Sum Paid

($Bn)

Total Subs

(M)

49 27

45 32.6

25.4 24.5

10.1 8.5

7.5 17.8

2.2 0.7


Service & Technology Innovation – Dish Case

Non-Dish subs: “Sling TV”

Pure OTT service for linear TV

$20/month (no commitments)

Adding News or Kids packages will cost an extra $5 each

Offers linear streaming from ~12 basic and premium cable networks including ESPN

Features pause, rewind and replay of (some) live shows for up to 3 days after airing

Premium subscribers: 4K Joey

Uses BCM 7448 SoC capable of 4K playback at 60fps or side-by-side HD display

Available this summer. New 4K content partnerships deals are in the works

Compatible with current Hopper STB and works with any 4K sets (unlike Comcast, DirecTV)

Mainstream subs: New RC, UI and Vevo music video app

The Hopper voice controller is equipped with a touchpad, responding to swipe gestures

In addition, a new UI will coming to the Hopper DVR this year as well as a Vevo app


“To date, DirecTV has offered “synthetic” bundles with AT&T and Verizon, which combine TV, Internet and phone. But those bundles aren’t integrated, requiring two truck rolls and two separate bills. Last year only 9% of DirecTV’s customers opted for such a “synthetic” bundle.”

− Mike White, DirecTV president and CEO

“AT&T sees opportunities to extend DirecTV service in other areas, too. We are planning to expand the satellite TV service into the auto market (as a way of entertaining kids in the back), building on ours agreement with General Motors to deliver 4G LTE to the select vehicles.”

− Ralph de la Vega, president and CEO of AT&T’s mobility division

Creating New Service and Bundling Opportunities

Source: Goldman Sachs’ Communacopia conference, 9/2014


Catch-Up and Box Sets

Catch-Up TV (up to 30 days from

airing) Up to 60 channels (depends on package)

Restart TV – enabled only after show ends

(currently in SKIT, UK launch later this year)

Sky Box Sets (TV Series, S-VOD) Solution targets binge viewers

Examples of available premium content: Downton Abbey S1-4 (Feb 14)

The Walking Dead S1-5a (Oct 14)

True Detective S1 (Mar 2014)

The Following S1-2 (Apr 14)


Movies On-Demand and Sky Store

Sky Movies On-Demand (S-VOD) Netflix equivalent (mostly long-tail)

VOD must be downloaded to HDD

Counts against BB usage caps

Filtered by Cast and Genre

Also includes push-VOD items (found on

“Showcase” section) and link to Sky Store

Sky Store (Movies, Transactional VOD) Rental, Purchase-to-Own, Pre-Order

Downloads can be archived to save DVR

space (only title metadata is saved)

DVD shipped within 5 business days

Plans to enable device access via apps

Non-Sky TV customers will be able to

purchase via the Sky Store website


DTH Monetize Content While Cable Monetize the Pipe

Provider Sky Deutschland Viasat Virgin Media Com Hem

Footprint Germany & Austria Scandinavia UK Sweden

Platform DTH DTH Cable Cable

TV Subs 3.5M 580K 3.7M 612K

Service Snap Viaplay Netflix on TiVo

Audience Subs & Non-Subs Subs & Non-Subs Existing Subscribers

Content VOD VOD + Live Sports Netflix VOD Catalogue

Price Subs: €4.90

Non-Subs: €9.90

Subs: Free

Non-Subs: From

$12/m

£5.99/month

(to Netflix) $11.57/month

(to Netflix)


Time-Shifted Viewing


Time-shifting accounts for 15% of viewing in UK and steadily growing

The Tip of The Iceberg…

0

10

20

30

40

50

60

70

80

90

100

Jan-0

6

Apr-

06

Jul-0

6

Oct-

06

Jan-0

7

Apr-

07

Jul-0

7

Oct-

07

Jan-0

8

Apr-

08

Jul-0

8

Oct-

08

Jan-0

9

Apr-

09

Jul-0

9

Oct-

09

Jan-1

0

Apr-

10

Jul-1

0

Oct-

10

Jan-1

1

Apr-

11

Jul-1

1

Oct-

11

Jan-1

2

Apr-

12

Jul-1

2

Oct-

12

Jan-1

3

Apr-

13

Jul-1

3

Oct-

13

Jan-1

4

Apr-

14

Jul-1

4

Oct-

14

Jan-1

5

Live Viewing

Time- Shifted

UK Live vs. Time-Shifted Viewing (in %), 1/2006 - 1/2015

Source: BARB, Feb 2015


Linear accounts for only half of video consumption among ages 16-24, while time-shifted content account for almost 30%

The Younger They Are, The Less Linear They Will Watch

50 61 64 69

80 82

16

18 17

20 13 12

7

6 7

4 3 3

6

6 3

13

7 5 4 8 2

0%

20%

40%

60%

80%

100%

16-24 25-34 35-44 45-54 55-64 65+

Short Online Clips

DVD/Blu-Ray

Online Subscription

VOD/Catch-Up

PVR

Linear TV

(4:14) (3:51) (3:50) (4:31) (4:37) (4:36)

UK Video Consumption by age (in %), 2013

Source: Ofcom, Aug 2014


Total UK Viewing Time by Genre, Time-Shifted and Linear (in %), Feb 2015

Original Programming Accounts for Bulk of TSTV Viewing

5.0 2.8 2.4

1.3 1.2 0.9 0.5 0.5 0.2 0.2

13.7

15.4

12.0

7.0 7.6 7.3 5.7

4.0 3.5

7.9

18.6 18.2

14.4

8.3 8.8 8.2 6.2

4.5 3.7

8.0

0.6 0.1 0.2 0.1 0.0

Linear

TSTV

Source: BARB, Feb 2015


47

24

10 6 5 4 3 1

Same day as live Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7

UK TSTV Viewing by Playback Delay, 2013

71% of time-shifting occurs within the first 24hrs after airing;

87% of time-shifted viewing occurs within the first 3 days

TSTV Challenges Methodology for Audience Measurement

Source: Statista


Networks campaign to retire live and same-day ratings

Showtime: “Its been years since the network last paid attention to live viewing.”

60-70% of Dexter viewers watch via VOD or DVR

Only 32% of Homeland’s 7M weekly views occur during a live Sunday night telecast

ABC, CBS, NBC, Fox: “viewers are time-shifting more than many might think.”

Last season, the average rating among adults 18-49 grew by 40% in live+C7 ratings alone

Industry is moving towards recognizing longer viewing windows

It’s Finally Happened: A Big Ad Buyer is Paying for a Week of Time-Shifting (Jun 14)

Multiple broadcasters have reached pacts with ad-buyer GroupM to do prime-time entertainment deals based on 7 days of commercial viewing after shows air

CBS/Dish Deal: No Skipping Ads With AutoHop (Dec 14)

Ad-skipping functionality of AutoHop will not be available for CBS-owned stations during the C7 window

Why Does This Matter? Advertising.


Latest on OTT


Why its not all about OTT yet ?

Source: Accenture – Video-Over-Internet Consumer usage survey, 2012

Frustrations/Concerns With Watching Video Content Over the Internet

53% 51% 45%

19% 19% 17% 12%

0

10

20

30

40

50

60

Advertising during theprogram

Time required tobuffer/download the

video

Video quality (ie poordefinition)

Cost of the videocontent

Broadband / high-speed cost of

downloading thevideo

Range of programsavailable

Navigationexperience (i.e.search / epg)


“Cord cutting in general remains less a thing than many pundits would have you believe;

The number cord-cutters dropped in 2014, and was the lowest rate since 2008.”

− Leichtman Research Group, Mar 2015

“Yes, some consumers are cutting the cord, but they’re in the low single digits percentagewise. A more real behavior is cord-shaving, where consumers reduce what they spend, rather than eliminating it altogether.”

− eMarketer, Dec 2014

Cord Cutting “Nibbling at the Edges” But Not Mainstream


MSO Strategy: Befriending Disruptors

Competition (Past)

SPs saw Netflix as a threat

Used various countermeasures

Imposed bandwidth caps for Netflix traffic

Launched their own OTT/TVE services

But Netflix kept growing

Netflix’s +23M subscribers account for 1/3 of downstream IP traffic in the US

Co-opetition (Present)

• Partnership is mutually beneficial

Reduces SP’s content costs on VOD

Retains cord-cutters in SP’s ecosystem

Provides a one-stop-shop for video content

• Does not cannibalize SP business

Netflix offers mostly long-tail content with no live or premium VOD, complementing SPs

Several European operators already offer Netflix app

American SPs are negotiating…


TV Everywhere: Monetization Strategy

Target Audience Premium Mainstream Non-Subscribers

Business Model Increase ARPU Reduce Churn Monetize Content

Offer Type TV Everywhere TV Everywhere Pure OTT

Registered Devices 4 2 2

Downloading Enabled Yes No No

Available on YouView No No Yes

Content Sky Movies & Sports

Live channels + VOD

Sky Movies & Sports

Live channels + VOD Sky Movies & Sports

Price

Extra £5/m Free for Sky TV

customers

Movies: £8.99/m for first

3 months, then £15/m

Sports: £9.99 day-pass

Different consumer segments warrant different business models for TVE


Sky’s Multiscreen Strategy in Numbers

Source: BSkyB, 6/2013

£5 SkyGo Extra

Monthly Cost

12 Months

X 44K SkyGo Extra

Subscribers

X = £2.7M annually

£397 New Subscriber

Acquisition Cost

0.2% Average Annual

Churn Reduction

10.4M Total Sky TV

Subscribers

X X = £8.3Mannually

£8.99X3 NowTV Cost for

first 3 Months

£15x9 NowTV Cost from

3rd Month

25K NowTV

Subscribers

+ X ( ) = £4M annually


Next-Generation User Experience


Cast & Crew Info

Now Showing In

Comcast X1: Enhanced Metadata and Public API Integration

Rotten Tomatoes

More Like This

Buzzing on Twitter

Most Popular Now


Liner Recommendations “For You” Menu

Comcast X1: Personalization and Customizable Menus

Customizable EPG “Personal, Prioritized Guide”

Customizable VOD “Kid’s View”


Comcast X1: Cloud-Based Services

Restart TV “Instant On Demand”

Predictive Search Home Automation Surveillance Cameras, Locks


23% reduction in voluntary churn

+25% Views

+20% Purchases (Transactional VOD)

2x increase in penetration for X1 versus native

75% of new X1 customers are triple play

20% of all triple play are X1

Comcast Experience for X1 Subscribers

Reduced Churn

VOD Uplift

DVR Penetration

Increased Bundling

Source: Comcast Earnings Release, Q3-FY14


Cox Contour: 9 Months from Launch

+40% Shows Viewed

-15% Churn

+20% VOD Sales

+30% Channels Viewed


Key Takeaways

Pay TV Innovation happening on STB Middleware, as hardware gets commoditized

OTT off-take to be additive to linear viewing rather than cannibalizing

Content monetization, advertisement & VAS drivers for ARPU lift

TV Viewing behavior slowly shifting towards On Demand, multi-screen & IP driven

Time Shifted TV fundamentally changing consumption behavior, revenue chain

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Thank you.

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