Entertainment Unbound

AN INTRODUCTION TO ROVI INSIGHTS SERIES IFA & IBC 2013 EDITION Mobile ~72M unique devices, including smartphones, using Rovi technology to recognize media ~12M times With the arrival of fall, two major industry events are upon us: IFA and IBC. Entering “With Entertainment per day the halls of IFA 2013, a global consumer electronics exhibition in Berlin, our focus shifts to the entertainment user. Ultra HD, wireless devices and multi-screen Unbound ... Video Delivery & Display solutions are among the innovations that will take center stage. And, at IBC in consumers are at More than 1B DivX® devices shipped and nearly 1B Amsterdam, businesses operating in the digital entertainment space will explore the center of the DivX software downloads HEVC, the coding standard that enables Ultra HD transmission and other consumer technologies more deeply. personal media Entertainment Discovery Rovi guidance technologies in 168M service Both shows are rightly taking cues from consumers who continue to drive the experience, and provider households (including 41M in Europe) and business forward toward the vision of Entertainment Unbound. With Entertainment not bound to 386M devices Unbound, we aim to work with manufacturers, service providers and content producers to support a hyper-personalized entertainment experience in which speci c devices or Cloud Services consumers are at the center of the personal media experience, and not bound to programming” Cloud-delivered entertainment metadata speciﬁ c devices or programming. covering over: • 5M programs, including 525K movies In this issue of Rovi Insights Series, we cover HEVC and its relationship with Ultra • 3.5M albums HD plus advanced streaming capabilities that can elevate the end-user experience. • 34.5M tracks In addition, we discuss predictive analytics in the context of hyper-personalization, which enables individual entertainment settings for multiple members of a household Advanced Advertising – providing a foundation for more targeted ads and relevant recommendations 7B monthly ad impressions that can drive revenue. As always, you’ll ﬁ nd new data and exclusive research that can help us gain perspective and work together to create a better entertainment Multi-Screen experience for consumers. 30 years of continuous innovation in the discovery, delivery and monetization of entertainment for TVs, set-top boxes, PCs, tablets, smartphones and more CONTENTS

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Accelerating the HEVC Consumers Satisﬁ ed Consumer-Driven Data – Hyper-Personalization For access to exclusive digital-only content, download Adoption Cycle With Streaming? Past, Present & Future Done Right QR code generated on http://qrcode.littleidiot.be the Rovi Insights Series App by scanning the QR code or go to rovicorp.com/insights Pages 4-5 Pages 6-7 Pages 8-9 Pages 10-11 ACCELERATING THE HEVC DELIVERING HEVC TO THE MASSES

DivX® 10 is the fi rst consumer software to support ADOPTION CYCLE HEVC video creation and playback, and it is one of the keys to accelerating market adoption of the Service providers, such as DirecTV, Comcast, to effectively deliver video content. With The DivX Ecosystem new compression standard. Sky and Canal Plus, have already started bandwidth as a limiting factor, HEVC reduces testing and, in some cases, broadcasting live the bitrate and promises to deliver video at fi le Available for Windows and Mac systems through sporting events in Ultra HD. In addition, major sizes up to 50% smaller at the same quality a free download, DivX 10 is compatible with ® players in the CE industry, such as Samsung, as H.264. 1 billion devices thanks to the DivX Certifi ed Sony, Toshiba, LG, Sharp and Hisense, are Program. This unique program allows device manufacturers to support the DivX format while already developing and manufacturing Ultra Still, despite the promise of cost savings and also differentiating products with the DivX logo. HD-capable TVs. higher quality video, HEVC is currently facing With built-in support for MPEG-4, H.264 and a classic chicken-and-egg dilemma. To date, now HEVC video, DivX 10 enables consumers HEVC adoption has been slowed by the to easily convert videos to HEVC for playback scarcity of content and the lack of players. at up to 4K resolution across multiple screens. Content distributors don’t want to invest in a DivX 10 represents the fi rst proof point in Rovi’s new technology without a signifi cant installed commitment to bringing HEVC solutions to the base. And, CE vendors don’t want to support market. a technology with very limited content available for playback. Visit divx.com to explore DivX 10.

HEVC acceptance must be initiated on two fronts: providing solutions directly to The Path to 1 Billion DivX Devices consumers, while simultaneously offering a A foundation for high quality DivX HEVC video playback across multiple screens coordinated toolset to professional content 860M creators, service providers and device FIRST 1B1 manufacturers. These advancements will enable MOBILE consumers to reap the beneﬁ ts of greater PHONE However, a primary challenge to mass compression during streamlined video sharing FIRST 624M TABLET adoption is the increased bandwidth required FIRST and lower storage costs, not only fueling BLU-RAY to transmit Ultra HD content. With twice the PLAYER HEVC content availability, but also increasing 445M aspect ratio and an increased frame rate to FIRST format awareness and igniting broader market HD TV counter higher resolution motion blur, Ultra HD FIRST adoption. GAMING 318M DEVICE demands vastly increased data rates – ones FIRST IN-CAR DEVICE 237M that current infrastructure and compression FIRST Availability of consumer-created HEVC content DVD methods are inadequately prepared to handle. PLAYER 148M will place pressure on consumer electronics 76M 26M manufacturers to support the new standard. 52K Broadcast adoption of Ultra HD is then In turn, professional creation tools and device dependent on the use of High Efﬁ ciency Video support will help fuel the development of HEVC- 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Coding (HEVC), a new compression standard, enabled premium content services. THE TAKEAWAY: THE COMING EXPANSION OF HEVC CONTENT WILL Get More Insights Get an in-depth look at HEVC by DRIVE DEMAND FOR ULTRA HD PLAYBACK ON DEVICES. scanning the QR code on the back Once that interoperability exists, broadcasters and over-the-top content providers will be expected to rapidly page to download the Insights Series deploy HEVC-based content services. App or visiting rovicorp.com/insights.

CONSUMERS SATISFIED ADVANCED WITH STREAMING? STREAMING

When it comes to streaming TV shows and movies Consider the mental shift that has occurred in just the FEATURES on connected devices, consumers are generally past seven months. In January, we asked consumers What capabilities are available satisfi ed. In a recent survey, consumers in France, to rate the importance of specifi c streaming to improve the experience for Germany, Italy, Spain, the U.K. and the U.S.1, rated capabilities; “smooth playback” and “quick to load consumers? DivX Plus Streaming™ their current streaming experience as an 8 on a scale and play” were most important. When the question offers the Blu-ray-like features that of 1 to 10. When we examine the factors driving was posed to the same group of consumers in July, users might not even be aware exist satisfaction, we see that playback reliability is a key “Blu-ray-like features,” including chapters, multiple yet. In addition to adaptive streaming determinant. subtitles and audio tracks, rose to the top of the list. and dynamic resolution scaling for smooth, crisp playback, DivX However, given that more than half of consumers Once content delivery is no longer a barrier, Plus Streaming offers subtitles and surveyed report diffi culty playing a video more consumers’ entertainment expectations will continue audio tracks in various languages, than once a month, we can see that the current to rise. They are already seeking new personalization quick start and resume play, which satisfaction bar is low. This fact could be based on and enhancement capabilities including advanced recalls the last video stop point from different devices in multiple the relative novelty of IP-delivered video today or features such as Blu-ray-like functionality and search the dynamics of an early adopter market, which is & recommendations based on individual preferences. locations, and more. historically more forgiving when it comes to bleeding- edge technology – a point exemplifi ed in the chart Borrowing from noted psychologist Abraham below illustrating consumers’ willingness to continue Maslow’s theory on the stages of human to attempt to play a video that initially failed to launch. development*, we’ve created an “entertainment hierarchy of needs” outlining how consumers’ Regardless of the reasons, with streaming entertainment requirements will evolve over time. entertainment rapidly moving mainstream, From an elementary baseline of functionality and it’s safe to anticipate that consumers won’t reliability, we believe consumer entertainment needs remain satisfi ed for long. In the short will progress rapidly term, the industry needs to embrace ENTERTAINMENT toward the top Get More technological advancements like HEVC HIERARCHY “pleasurable” Insights and advanced adaptive streaming MEANINGFUL and “meaningful” Has personal significance OF NEEDS Get more formats if they are to satisfy the tiers of the pyramid. survey results baseline requirement for a mass PLEASURABLE While defi ning the Memorable & worth sharing via the Rovi market audience. features that will satisfy Insights these evolved consumers USABLE Series App by Can interact with few errors The industry also has to is the industry’s next great scanning the anticipate how consumers’ challenge, an essential part QR code on needs will change once RELIABLE will be providing a far higher Availability and accessibility of content the back page. content delivery is level of empowerment,

no longer a hurdle. FUNCTIONAL interactivity and control When consumers Works as programmed than currently enjoyed. were asked to rank streaming While the lower tiers capabilities beyond basic functionality, customization, of the pyramid are based on current technological advanced features (e.g., multiple subtitles and audio constraints and therefore easy to comprehend, THE TAKEAWAY: tracks, chapters) and transferability became priorities we need to realize the upper tiers by empowering when easy, consistent access was removed from the consumers to do things they previously thought FOR NOW, CONSUMERS ARE SATISFIED WITH THEIR equation.2 impossible. VIDEO EXPERIENCES. When you remove basic playback functionality from the discussion, consumers look to more meaningful features that support personalized video experiences.

PAST, PRESENT Get More Insights Watch a Q&A with John Hoctor, & FUTURE Vice President of Analytics, Rovi. Consumers are connecting with entertainment in – from smartphone and tablet viewing data to entirely new ways, and the days when one ratings market segmentation, socioeconomic statistics company was able to tap into roughly twenty and online usage patterns – to illustrate a more ON ANALYTICS: “VIEWING DATA IN AND OF thousand homes and gain a comprehensive comprehensive user proﬁ le. These enhanced portrait of an audience’s viewing habits have viewer snapshots can help discern the likelihood A CONVERSATION ITSELF IS SIMILAR TO CRUDE disappeared. of where a highly specialized demographic WITH JOHN HOCTOR OIL. THERE’S VALUE IN IT, of viewers will be amidst the ever-expanding “Audiences are fragmenting across time, across broadcast landscape. Rovi’s Vice President of Analytics delves into how new data BUT YOU NEED TO REFINE place and even across platforms,” says John collection sources and analytics methods are enhancing Hoctor, Vice President of Analytics, Rovi. “This Not only will predictive analytics play a key current programming and marketing strategies, and how they IT IN ORDER TO GET TO has been great for the individual consumer, but role in the future of ad targeting, it owns the will potentially transform viewers’ connection to entertainment SOMETHING THAT’S TRULY has been a challenge for the folks who measure potential to optimize entertainment discovery tomorrow. television and for folks who buy and sell television with increasingly intelligent search and VALUABLE.” advertising.” recommendations capabilities.

With viewers consuming countless movies, With future boosts from analytics, search television shows and user-generated content on and recommendations could make proactive, a variety of devices, a fl ood of raw data has been predictive suggestions based on your prior THE TAKEAWAY: unleashed. How can advertisers and content viewing habits and similar viewers’ choices, providers navigate this increasingly complex and even incorporate your social networks’ REFINEMENT IS NECESSARY ecosystem of platforms and content choices recommendations. Entertainment then becomes TO MAXIMIZE THE VALUE while fi ltering the information overfl ow? more than merely connecting with content; it will also be about connecting with people. OF RAW DATA. Today, companies are turning to predictive Understanding consumers’ viewing habits – what, analytics for strategic intelligence about not With a more comprehensive understanding of the when and where – is the key to enhancing both the monetization of airtime and the effectiveness just what people watch – but when and where consumer, analytics benefi ts networks, providers of search and recommendations, thereby returning – to target specifi c audiences for advertisers, and advertisers – but it’s the consumer, fueling value back to the consumer. media buyers and content providers. Predictive the predictive analytics engine, who will benefi t analytics harnesses advanced data collection most of all.

THE HYPER-PERSONALIZED DONE RIGHT ENTERTAINMENT EXPERIENCE With predictive analytics giving us the ability capabilities that would help ensure success. Hyper-personalization contributes to a context-based entertainment experience that makes recommendations to provide better recommendations than ever, Among the key ﬁ ndings: based on the user or group of users, and when and where he, she or they are consuming content. Hyper-per- new solutions are in development to “hyper- sonalized recommendations won’t just suggest what to watch tonight – they’ll suggest what to watch if you’re alone, with your friends or with the family. personalize” the entertainment experience for The user interface and navigation must be consumers. Hyper-personalization refers to the intuitive. Relevant recommendations won’t be next generation of personalized entertainment helpful if it’s unclear how to proceed to the next solutions, beyond bookmarks and simple step. HYPER-PERSONALIZATION: TV EVERYWHERE FOR EVERYONE recommendations. With hyper-personalization, the TV and other devices tap into viewing • The user interface and navigation must be preferences, platform type, user behavior, social intuitive. Relevant recommendations won’t be networks and context to create a highly relevant, helpful if it’s unclear how to proceed to the engaging experience for the consumer. next step.

A prototype of a hyper-personalized solution • Basic functionality and reliability are essential. was recently developed and tested in Germany. Screens should load promptly. Get More In collaboration with Fraunhofer Fokus, Rovi Insights conducted a survey to evaluate TV usage • In addition to live programming, the Get exclusive and, based on the results, developed a hyper- content via the personalized guidance solution across devices experience should encompass HD, on-demand, time-shifted, Internet and cloud- Depending whether users are on-the-go, alone, or at home together, their viewing habits can vary. Rovi Insights that allows a user to “log in” to the TV and by navigate content using a tablet to access a based content and recommendations. Series App Individual and Group Accounts Bridge the Gap personal home screen. scanning the The hyper-personalization user interface requests log-ins for each QR code on • A sleek, engaging design ﬁ lled with imagery is platform before a viewing session begins. This creates not only the back page. From the home screen, users can browse and desirable. user-relevant recommendations, but ones that are contextually search a personalized guide based on favorite appropriate, as well. genres and channels, receive tailored program • The ability to customize features (i.e., Yet recommendations are merely the primary building blocks in recommendations, create bookmarks, access turn them on and off) would be helpful to the hyper-personalization revolution. Snapping content between their recorded and cloud-stored content, get streamline the experience. platforms, social networking and customized advertising are a few suggestions based on social networks and more. more of the beneﬁ ts which will energize the hyper-personalized Blurred in the background of the home screen, • Consumers are open to paying a monthly fee viewing experience. a user can see a content stream consisting of for hyper-personalized functionality. selected live and on-demand programs and start watching with a single touch. As testing continues and technologists continue THE TAKEAWAY: to explore the possibilities offered by predictive Consumers were interviewed regarding their analytics and sophisticated recommendations, CONSUMERS WANT A MORE PERSONAL experience with the prototype, and the response it won’t be long before hyper-personalized was overwhelmingly positive. However, users ENTERTAINMENT EXPERIENCE – BUT IT experiences become more commonplace in indicated the must-have features and other households around the globe. NEEDS TO BE EASY. Understanding consumers’ viewing habits – what, when and where – is the key to enhancing both the monetization of airtime and the effectiveness of search and recommendations, thereby returning value back to the consumer.

10 © 2013 Rovi Corporation 11 MORE INSIGHTS MORE CONTENT MORE MEDIA For access to exclusive digital- only content and to receive future installments right on your tablet, download the Rovi Insights Series App by scanning the QR code or visiting rovicorp.com/insights.

Rovi powers the discovery, delivery, display and monetiza- CONTACT US tion of digital entertainment with technology solutions for consumer electronics manufacturers, service providers, On the web: rovicorp.com/insights content producers, advertisers and websites. A global By email: [email protected] company with more than 1,500 employees in nearly 30 ofﬁ ces in North America, Europe and Asia, Rovi connects people to the entertainment they love. Visit us at rovicorp.com.

SOURCES

1. DivX Streaming Survey, August 2013 n= 4,232 (France, Germany, Italy, Spain, the U.K., U.S.) 2. DivX Player Survey, March 2013, n=2,723 (China, Japan, Brazil, Mexico, the U.S., Canada, France, Germany and the U.K.) 3. DivX Streaming Survey, January 2013 n= 6,382 (France, Germany, Italy, Spain, the U.K, U.S.)

*A Theory of Human Motivation, Maslow, A. H., Psychological Review, Vol 50(4), Jul 1943