Emerging Trends in Digital Video
Joshua M. Wepman
GCA Savvian Advisors
“Tremor Video Kicks Off a Web Ad IPO Wave”
- Peter Kafka
“AOL Buys Web Ad Platform Adap.tv for
$405 Million”
- Melodie Warner
“Hulu Owners Call Off Sale, Instead Pledging
to Invest to Take On Rivals”
- Brian Stelter
“YuMe IPO Start Stronger Than Expected”
- Sam Thielman
“Netflix, 'House of Cards' Trump Traditional
Media on Emmy Nominations”
- David Horsey
“Maker Studios Reaches Deal in Principle to
Acquire Blip”
- Todd Spangler
1
Broad Strategic Focus on Digital Video
$1 $2
$3
$4
$6
$0
$2
$4
$6
$8
$10
2010 2011 2012 2013 2014
On
line
Vid
eo
Ad
S
pe
nd
ing
($
Bn
)
Why Does Digital Video Matter?
Rapidly Growing Market (1)
Expanding Market Share (1)
Notes:
(1) Wall Street research.
$57 $58 $63 $64 $67
$1 $2 $3 $4 $6
0%
2%
4%
6%
8%
10%
$0
$25
$50
$75
2010 2011 2012 2013 2014
Yo
Y G
row
th (
%)
Ad
ve
rtis
ing
Sp
en
d (
$B
n)
TV Ad Spend Digital Video Ad Spend Digital Video as % of Total TV Ad Spending
2
3
The Drivers are All Up and to the Right
146 158
169 179 188
196 201
0
50
100
150
200
250
2010 2011 2012 2013 2014 2015 2016
US
On
line
Vid
eo
Vie
we
rs
(MM
)
Scale (1)
Engagement (1)
Time Spent (1)
15%
72%
31%
71%
0% 20% 40% 60% 80%
Worse than TVAdvertising
Same or BetterImpact than TV
Advertising
Awareness Engagement
5
2
0 0
0
1
2
3
4
5
6
TV Radio Print Online Video
Tim
e S
pent
0%
25%
50%
75%
100%
0
25
50
75
100
125
150
Hou
se
ho
lds (
MM
)
Penetration (1)
1% (8%) (3%) 41%
Change (%)
Total TV
Households
Connected
TV Devices
Connected TV
Device
Penetration
Notes:
(1) Wall Street research.
Fragmentation Drives Consumption … and Ad Budgets
3 6 7 10
27
63
97
128 137
33
37
43
47 50
54 57 57 58
0
10
20
30
40
50
60
0
20
40
60
80
100
120
140
160
1950 1960 1970 1980 1990 2000 2005 2009 2011
Wee
kly
Se
t U
sa
ge
pe
r H
om
e
Cha
nn
els
Rece
iva
ble
pe
r H
om
e
Average Number of Channels Receivable per Home Weekly Set Usage per Home
Notes:
(1) Wall Street research.
Increasing Choice Drives Higher Consumption (1)
1980-2000 2010+ 2000-2010 1930-1980
Network
TV
Cable
TV
Niche
Cable
Digital
Video
4
+
Battle for Media Dollars Blurs Content & Distribution
Funding and investing in
content to drive supply
Acquired Blip to lower
YouTube advertising “tax”
Producing own content to
lower content costs
Acquired DBG to create
agnostic distribution
platform
The future of video will be the combination of content and
distribution to drive greater share of every dollar
5
Content Distribution
Publishers
Transparency
Efficiency Liquidity
Focus on Premium
$190
$402
$686
$1,141
$0
$400
$800
$1,200
2011 2012 2013 2014
Programmatic video advertising is growing quickly but evolving
differently than display
To
tal R
TB
Vid
eo
Sp
en
d (
$M
M)
Video Advertising is Going Programmatic
Notes:
(1) Forrester Research. 2013.
Fast Growing Market (1)
Brands & Agencies
Drivers
Programmatic Video Enablers
6
• Tweets are
driving TV
engagement
• Results in
increased
ratings
• Creates more
attractive ad
opportunities
• Increasing
volume of
tweets during
popular shows
• Way for
advertisers to
capture
engaged
audiences
Social is driving audience, engagement and advertising
opportunities
Tweets increasing audience and ratings
Viewers are tweeting about shows … and creating inventory
Second Screen Driving Engagement and Dollars
7
Video Advertising Growth Forecast (1)
Notes:
(1) Wall Street Research.
Facebook Could Quickly Become a Major Digital Video Force
$0
$2
$3
0%
5%
10%
15%
20%
25%
30%
35%
$0
$1
$2
$3
2013 2015 2017
U.S. Facebook Potential
Facebook % of U.S. Internet Video
Facebook % of U.S. TV
8
• From standing start, Facebook
could have a major impact on
video advertising
• Timeline video ads create new
inventory and broadcast-like
experience
• Initial format designed to drive
branding impact
OTT Platforms Erasing the Distinction Between TV & Digital
OT
T &
Web
Ap
ps
TV
Bu
dg
et?
Dig
ita
l B
ud
ge
t?
OTT Platforms have the potential to disintermediate the MSOs
and impact how content is monetized
9
Cable Company Not Required!
Convergence is Coming …
• Online platforms
designed for
cross-channel
delivery
• High degree of
targeting
• Higher quality
content designed
for TV-like
experience
• Changing
viewing
behaviors
• Development of
Internet-enabled
TVs to capture
online video
• Incumbents look
to avoid
disruption
Online Offline
Convergence will leverage the best of online and offline to
optimize the video experience for audiences and marketers
10
… But TV is Safe (For Now)
No universal buying
metric
Movement toward GRP as
standard
11
New Developments Inhibitors to Digital Growth
Concern over whether
an ad has actually been
viewed
Separate technology
vendors and platforms
Separate Digital vs. TV
media buying agencies
and budgets
Tech platforms designed
for cross-channel delivery
New consortium developed
to ensure viewability
NewFronts highlighted
budget shift
Content
Creators
Publishing
Tools
Delivery / Content
Management Enablers Monetization
Aggregation /
Portals
2011
2011
2010 2006 2011 2013 2005 2010
2011
2010 2011
2008
2011 2008 2010 2010 2009 2006
2011 2008 2011
2010 2009 2011
2012 2010 2011
2011 2013 2013 2013 2012
2012 2008 2011 2006
Strategics Using Consolidation to Build Video Stack
12
InPlay from
13
Sale of
Acquired by Acquired by Acquired by Preferred Acquired by Acquired by Acquired by Preferred Stock
Stock
to
We Advised the Seller We Advised the Seller We Advised the Seller Financial Advisor Fairness Opinion for Buddy Media We Advised the Seller We Advised the Seller Financial Advisor We Advised the Seller
Pending August 2013 January 2013 August 2012 August 2012 August 2012 June 2012 June 2012 May 2012
Acquired by Acquired by Acquired by Acquired by Acquired by Acquired by Preferred Stock Acquired by Acquired by
We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller Financial Advisor We Advised the Seller We Advised the Seller
May 2012 March 2012 February 2012 January 2012 December 2011 December 2011 November 2011 October 2011 October 2011
Merger with
Preferred Stock Preferred Stock Acquired By Preferred Stock Acquired By Acquired By
Acquired by Acquired by
We Advised the Seller Financial Advisor We Advised the Seller Financial Advisor We Advised the Seller Financial Advisor We Advised lolapps We Advised the Seller We Advised the Seller
September 2011 August 2011 August 2011 August 2011 August 2011 July 2011 July 2011 May 2011 April 2011
Sale of Subscription Acquisition of JV from Sale of Business Unit Secondary Preferred Stock Acquired by Acquisition of Preferred Stock Acquired by
Music Service to Mogae Consultants Six Apart KK to Sale
We Advised the Seller We Advised the Buyer We Advised the Seller We Advised the Founders Financial Advisor We Advised the Seller We Advised the Buyer Financial Adviser We advised the seller
March 2011 January 2011 January 2011 January 2011 December 2010 December 2010 November 2010 October 2010 October 2010
Preferred Stock Acquired by Acquired by Acquired by Acquired by Acquired by Preferred Stock Acquired by Preferred Stock
a Subsidiary of
Financial Advisor We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller We Advised the Seller Financial Advisor We Advised the Seller Financial Advisor
August 2010 July 2010 June 2010 June 2010 June 2010 January 2010 October 2009 April 2009 February 2009
Proven Leadership in Digital Media Transactions
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14
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