Video content distributionNew challenges for the Media industry

DƯƠNG Huy Cảnh2nd VN Telecom Conferences

Paris – 9 May 2008

Agenda

Market trends

Digital Rights Management

Behind the glass

Players

Key challenges

Popular content

• ADSL, Cable, Satellite, Broadband networks• Set-top-box + TV, Internet PC, Portable Multimedia Player (PMP), Mobile

• Home, hotel, hospital, train• Same as DVD market

• Rental: 4.99€ (Premium) / 3,99 € (Catalog) / 1,99€ (Promotion)• Buy: 14.99€ (Premium) / HD: 6.99€

• Cinema, Sport, News, TV Series, Kids, Adult contents• Hollywood productions (+93%) vs. French titles (+20 %) / Foreign (+53%)

Pricing model

Location

Devices

Market trends – On-demand usage

• High Definition (HD); Burn & Go• Mobility: Sony PSP, Archos; TGV / Havas Voyages• Gaming: Xbox, PS3

Innovation

• Streaming / Download / Progressive download• Catch-up TV vs. linear TV; FOD (Free On Demand: 42% on Comcast)• SVOD: 25 000 subscriptions/month

Usage

“C’est quand vous voulez” Anytime, anywhere, in one clic?

Market trends – Key figures 2012

By 2012, 909 million homes will have access to VoD (~78% world's TV households) 12 to 15 billion $ revenues: 50% generated by North America, only 12% by Asia Pacific Europe: UK is leading, followed by France and Germany France: 10 million downloads on 2nd semester 2008

Revenues have doubled (30 million € in 2007 / 60 millions in 2008)

Are TV broadcasters repeating the same mistake as the music industry?

12%

50%

33%

5%

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2006 2012

VoD revenues (billion $)

Rest of the world

Europe

North America

Asia Pacif ic

25

455

45

200

10

70

0

50

100

150

200

250

300

350

400

450

500

2006 2012

Homes with VoD (millions)

Asia Pacif ic

North America

Europe

Rest of the world

Source: Informa Telecom & Media, march 2008

“Companies that do not provide their content online will suffer serious damage from piracy” Adam Thomas, Informa Telecom & Media

A world without DRM?

Legal: Loi HADOPIHaute Autorité pour la Diffusion des Œuvres et la Protection des droits sur Internet

“Trying to make digital files uncopyable is like trying to make water not wet…” Bruce Schnieir, Counterpane Internet Security (Wired 2006)

Compete against the “free”: Strict security vs. user experience

Microsoft’s Windows Media is cracked, Apple’s FairPlay is cracked acceptable amount of “breakage”

P2P and advertising model? (M6 Replay, Joost, 1-Click Media, Kewego) “Better product + Fair price = iTunes” (Steve Jobs, Apple)

2007 Accenture 10 years projection: DRM business model Beware legal « victories »

Interoperable, simpler, faster, « cool », superior search

Lightweight DRM for P2P networks to track usage data (CRM)

Success: Warner Bros DETE (Digital End-To-End) / Vongo (Video on the go) / Canal+ But how many fails ?

Edit & Transform

Behind the glass – The chain value

Improbable profits? 25% of movies have a negative margin Critical size and volumes to invest

2 strategic functions: Availability and access to content rights Control distribution channel and access to final

costumer Technical challenges:

Complex video transformation supply chain Powerfull portal CMS for customized renderings,

advanced multimedia, personalization and profiling

Produce

1.04 €

0.52 €

0.86 €

1.57 €

0.58 €

0.98 €

0.86 €

1.57 €

- €

0.50 €

1.00 €

1.50 €

2.00 €

2.50 €

3.00 €

3.50 €

4.00 €

PC TVIP

Cost breakdown / Rental price: 3.99€

Rights owner royalty

Tax & droits d'auteurs

ISP commission

Distribution cost

Gross margin

Content productionRights acquisitionRoyalty management

EncodingDigital transfo.DRM

Publishing digital contentProvisioning the networkInsure servers performance

Commercialisation & billingDownload/StreamingClient support

Ability to negociate interesting contract deals with major studios

Capacity to master diverse technologies and deliver a high performing platform

Ability to partner with reliable operator and control the (high) cost for best service level

Knowledge of the user, providing good service, capacity to create loyalty

Distribute Consume

No end-to-end packaged solution on the market yet

Source : Media Consulting GroupCNC march 2008

“Content is king, transmission quality must be high,a stable platform is essential” Greg Douglas, Accenture

Key challenges – The players

Disruptive players have engaged in a vast competition to transform the way they do business and take advantage of the opportunities.

Media chronology: trials to test the effects of merging of DVD and VoD release windows

In bad economic times, challenges this industry in seriously challenged

Edit & TransformProduce

Major studiosProducers

TV broadcastersVoD independent platformsDistributors

ISPCableTelecom operators

High tech and software companies

Distribute Consume

“The big issue will be trying to convert the technology to reliable revenue… trying to monetize the network”

The current global financial crisis has pushed many companies into survival mode. Immediate attention to cost control is an urgent imperative. Accenture analysis, media and entertainment companies have the potential to realize

savings of up to 40% of their operational costs by migrating to a fully digital environment.

Now is not the time to go into protectionist mode. Now is the time to reach out to crossindustry Partners for an integrated vision from

high tech, to media to telco operator companies. Previous recessionary periods have seen people turn to entertainment, reading and

other forms of enrichment and diversion more than ever. we’re seeing a tremendous uplift in the number of people going to the box office,

watching movies, spending time in front of the television, downloading video-on-demand films and so forth.

people's needs for entertainment and escape Ad revenue decline the content creation business—predominantly movies and television shows Ressources: senior executives move from one company another, lower staff stay, so

It's one reason why companies are looking for external talent through an outsourcing or managed services provider. It's a way to gain immediate and ongoing access to deep experience and resources.

Key challenges – Digital transformation

How about Vietnam?

TBC

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