New Zealand Multi-Screen Report Quarter 1 2017

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NEW ZEALAND MULTI-SCREEN REPORT QUARTER 1 2017

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 2 I TV VIEWING MAINTAINS ITS POPULARITY On average, 77% of Kiwis (aged 10+) watch broadcast TV each week1 (3.1 million people) and this increases to 87% across each month2. Weekly viewers spend more than 21.5 hours watching broadcast TV across an average week – over six hours more than Internet users spend online per week3.

BROADCAST TV REACHES 77% OF PEOPLE IN AN AVERAGE WEEK

PEOPLE SPEND 41% MORE TIME VIEWING BROADCAST TV CONTENT EACH WEEK THAN INTERNET USERS SPEND ONLINE

Around three-in-five (58%) people have a PVR in their home – A level that has grown from 54% since Quarter 1 2016. PVR ownership is a significant driver of TV viewing – consumers who own a PVR are more likely to view TV every day4 than a person without one.

1Television Audience Measurement (TAM), Average Weekly Cumulative Reach 1st Jan – 1st Apr 2017, All People 10+ 2Television Audience Measurement (TAM), Average Monthly Cumulative Reach 1st Jan – 31st Mar 2017, All People 10+ 3Nielsen Consumer and Media Insights, Q1 – Q4 2016, All People 10+ 4Television Audience Measurement (TAM), 1st Jan 2016 – 31st Mar 2017, All People 5+

NO PVR IN HOME HAVE PVR IN HOME

88% 80% 80% 79% 76% 65% 64% 64% 50% 44% 46% 41% 43% 32%

5+ 5-14 15-29 30-44 45-59 60-74 75+

Nielsen Television Audience Measurement, Q1 2017

Despite over half of individuals who own PVR’s, the overwhelming majority of broadcast TV engagement is still live (90%) and this trend has remained relatively stable since measurement commenced in 20125.

SHARE OF ALL DAY FOR LIVE, AS LIVE AND TIME-SHIFTED VIEWING 88% LIVE AS LIVE TIME SHIFT 80% 80%

5% 5% 5% 5% 5% 6% 6% 5% 5% 5% 5% 5% 5% 4% 4% 4% 4% 5% 4% 5% 5% 4% 4% 4% 5% 5%

91% 91% 91% 90% 90% 90% 89% 90% 91% 91% 91% 90% 90%

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

Nielsen Television Audience Measurement, All people 5+

5Television Audience Measurement (TAM), 15th Jan 2012 – 31st Mar 2017, All People 5+

Consumers aged 45-59 have the highest proportion of time-shift viewing (13%); while those aged 75+ have the least at 7%. Across all age groups, live viewing is still the most dominant viewing behaviour6.

SHARE OF AS LIVE AND TIME-SHIFTED VIEWING BY AGE GROUPS (ALL DAY)

13%

10% 10% 9% 9% 9% 7%

05+ 5-14 15-29 30-44 45-59 60-74 75+

Nielsen Television Audience Measurement, Q1 2017

6Television Audience Measurement (TAM), Q1 2017, All People 5+

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 5 WE CONTINUE TO SOCIALISE WHILE WATCHING TV Television viewing continues to be a social activity. While more New Zealanders watch TV on their own, the proportion that watch TV with at least one other person7 has remained fairly steady.

SHARE OF TIME SPENT WATCHING BROADCAST TV ALONE/WITH SOMEONE ELSE

VIEWING BROADCAST TV WITH SOMEONE ELSE VIEWING BROADCAST TV ALONE 51% 51% 51% 51% 51% 50% 52% 52% 52% 52% 53% 53% 53% 53% 53% 53% 54% 54% 54% 55% 55% 55% 56% 56% 56% 50% 49% 49% 49% 49% 49% 48% 48% 48% 47% 48% 47% 47% 47% 47% 47% 46% 46% 46% 45% 45% 45% 44% 44% 44% Q1 2011 Q1 2017 Q4 2011 Q1 2014 Q2 2011 Q1 2012 Q3 2011 Q1 2013 Q1 2015 Q1 2016 Q4 2014 Q4 2012 Q2 2014 Q2 2012 Q4 2013 Q3 2014 Q3 2012 Q2 2013 Q4 2015 Q2 2015 Q3 2013 Q3 2015 Q4 2016 Q2 2016 Q3 2016

Nielsen Television Audience Measurement, All people 5+

Two-person households and those with four or more people are more likely to view television as a shared event; whereas a three-person household is more likely to engage in individual viewing. Interestingly, even those that live alone spend 6% of their viewing time with guests8.

7Television Audience Measurement (TAM), 1st Jan 2011 – 31st Mar 2017, All People 5+ 8Television Audience Measurement (TAM), Q1 2017, All People 5+

53% 55% 46%

6% ONE TWO THREE FOUR OR MORE

Nielsen Television Audience Measurement, Q1 2017, All People 5+ GENRE FAVOURITES In the first quarter of 2017, reality/drama viewing represented 21% of the total share of viewing on free-to-air channels9, followed by news at 17% and movies at 12%. These three genres have a higher weight when it comes to share of viewing than share of broadcast: they account for 50% of total free-to-air viewing and only 32% of broadcast time10.

SHARE OF FREE-TO-AIR BROADCAST AND 5+ VIEWING TIME

REALITY/DRAMA NEWS MOVIE DOCUMENTARY/INFO DRAMA QUIZ/GAME SHOW COMEDY SOAP OTHER

SHARE OF BROADCAST TIME* 23% 3% 5% 8% 3% 4% 4% 1% 48%

SHARE OF VIEWING (5+) 21% 17% 12% 8% 8% 8% 5% 5% 16%

Nielsen Television Audience Measurement, Q1 2017, All People 5+ *Share of Broadcast Time refers to 6:00am – 12:00am and excludes Plus 1 channels

9Free-To-Air channels include: TVNZ 1*, TVNZ 2*, Three*, PRIME*, Bravo*, Maori TV, Choice TV, HGTV, TVNZ Duke, The Edge TV 10Television Audience Measurement (TAM), 1st Jan – 31st Mar 2017, All People 5+

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 7 Share of free-to-air TV genre viewing tends to fluctuate significantly with age: younger people allocate a higher proportion of viewing for movies and comedy, while older people skew more toward news, drama, documentaries and quiz/game shows. Reality/drama programmes tend to have strong appeal11 across all age groups. SHARE OF FREE-TO-AIR VIEWING BY AGE

REALITY/DRAMA NEWS MOVIE DOCUMENTARY/INFO DRAMA QUIZ/GAME SHOW COMEDY SOAP OTHER

15% 16% 15% 14% 17% 24% 4% 8% 6% 5% 5% 5% 3% 1% 8% 7% 9% 7% 9% 11% 5% 5% 11% 5% 9% 10% 6% 9% 7% 6% 6% 8% 10% 4% 9% 5% 16% 16% 12% 9% 5% 15% 11% 10% 17% 23% 28% 10%

25% 27% 19% 21% 17% 15%

05-14 15-29 30-44 45-59 60-74 75+

Nielsen Television Audience Measurement, Q1 2017

11Television Audience Measurement (TAM), 1st Jan – 31st Mar 2017, All People 5+

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 8 HOW KIWIS CATCH UP WITH THE NEWS New Zealanders are more engaged with news content on free-to-air TV channels than online from both a reach and a time spent perspective. In Q1 2017, more than 3.2 million people watched news programmes on TV each month12. This is around 700,000 more than those that visited New Zealand news brands online in the same period13. Each month, those that watch free-to-air TV news spend 10 hours and 29 minutes keeping up with current events via the TV set14; while the average time spent on New Zealand news websites is 3 hours and 46 minutes per month15. WHERE PEOPLE GOT NEWS YESTERDAY 54% WATCHED NEWS ON TV (AS THE PROGRAMME AIRED) 56% 41% LISTENED TO NEWS ON THE RADIO 24% 36% GOT NEWS ONLINE - VIA PC/LAPTOP/NOTEBOOK 22% 32% GOT NEWS ONLINE - VIA MOBILE/TABLET 16% 31% READ A NEWSPAPER 18% 18% FROM PEOPLE TELLING ME ABOUT MAJOR NEW STORIES 13% 9% WATCHED NEWS ON TV (DELAYED TRANSMISSION/RECORDED) 5% NEW ZEALANDERS 2% AUSTRALIANS OTHER 4%

New Zealand: Nielsen Consumer and Media Insights, Q1 – Q4 2016, All People 14+ Australia: Nielsen Consumer and Media View, National Survey 6 2016; All People 14+

12Television Audience Measurement (TAM), 1st Jan – 31st Mar 2017, All People 5+ 13Nielsen Online Ratings, Q1 2017, All People 2+; New Zealand news websites include: nzherald.co.nz, stuff.co.nz. newshub.co.nz or TVNZ – Total Digital News 14Television Audience Measurement (TAM), 1st Jan – 31st Mar 2017, All People 5+ 15Nielsen Online Ratings, Q1 2017, All People 2+

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 9 9 More than half of all New Zealanders use live TV as their primary news source16. And this trend is similar in Australia17. Kiwis claim to use more news sources than Australians, with more deferring to radio, newspapers and online.

11 TV SCREENS HAVE MULTIPLE USES The television set is still the focus of digital video consumption in the average home. More than six-in-10 watch content on their TV sets each day. These viewers are spending close to five hours daily in front of their TV, a number that has been relatively stable since Quarter 1 2014. Broadcast TV (live, as live and time-shift viewing) continues to represent the biggest proportion (73%) of this time, but other TV set usage has increased and now sits at 1 hour and 18 minutes per day in Quarter 1 201718.

AVERAGE DAILY TIME SPENT USING THE TV SET

5:30:00 5:00:00 4:30:00 4:00:00 3:30:00 OVERNIGHTS 3:00:00 TIME SHIFT 2:30:00 OTHER TV SCREEN USAGE 2:00:00 1:30:00 1:00:00 0:30:00 Q1 2017 Q1 2014 Q1 2012 Q1 2013 Q1 2016 Q1 2015 Q4 2014 Q2 2014 Q4 2012 Q2 2012 Q3 2014 Q4 2013 Q2 2013 Q3 2012 Q3 2013 Q4 2016 Q2 2016 Q3 2016 Q4 2015 Q2 2015 Q3 2015

Nielsen Television Audience Measurement, All People 5+ that watch TV in an average day

16Nielsen Consumer and Media Insights, Q1 – Q4 2016, All People 14+ 17Nielsen Consumer and Media View, National Survey 6 2016; All People 14+ 18Television Audience Measurement (TAM), 15th Jan 2012 – 31st Mar 2017, All People 5+

86% of people use their TV set in an average week for consuming video content19. The TV set continues to be by far the most used screen. This is followed by desktop/laptop PCs (59%), mobiles phones (50%) and tablets (27%). These devices are also the most widely used for watching video content20, however they have yet to reach the TV set usage levels: for every person that watches video through their mobile phone there are 3.7 people that use the TV set for the same activity. Likewise, for every person watching video content through a tablet, 5.4 are using their TV set. DEVICE USAGE IN THE LAST 7 DAYS

TV* 86%

59% DESKTOP/LAPTOP PC 36%

50% MOBILE PHONE 23% 27% TABLET E.G. IPAD 16% SMART TV/TV THAT 11% CONNECTS TO THE 10% INTERNET USED FOR INTERNET ACCESS L7D 7% USED FOR VIEWING TV/VIDEO L7D GAMES CONSOLE 5%

Nielsen CMI Q1 – Q4 2016, All People 10+ *Television Audience Measurement (TAM), Average Weekly Cumulative Reach 3rd Jan – 31st Dec 2016, All People 10+

19Television Audience Measurement (TAM), 1st Jan – 31st Dec 2016, All People 10+ 20Nielsen Consumer and Media Insights, Q1 – Q4 2016, All People 10+

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 11 The average person spends just over 23 hours in front of a TV set a week21 (includes broadcast and other video usage on the set), which continues to be significantly more than any device used to watch video content. For every minute spent watching video on desktops or laptops, 11 minutes are spent in front of the TV set.

Compared to the same period in 2015, people spend less time watching video on desktops/laptops and tablets, moving instead to mobile phones, games consoles and smart TVs22. This reiterates that both mobility and size of screen are shifting video engagement to devices that can meet these requirements.

WEEKLY TIME SPENT WATCHING VIDEO CONTENT BY DEVICE

23:04 TV* 24:22

2:06 DESKTOP/LAPTOP PC 2:10

MOBILE PHONE 1:02 0:51

0:36 TABLET COMPUTER E.G. IPAD 0:40

GAMES CONSOLE 0:15 0:09

SMART TV/TV THAT CONNECTS TO THE INTERNET 0:30 0:25 Q1 - Q4 2016 Q1 - Q4 2015 0:14 OTHER (E.G. MEDIA PLAYER, T-BOX) 0:07

Nielsen CMI Q1 – Q4 2015 / Q1 – Q4 2016, All people 10+ *Television Audience Measurement (TAM), Average Weekly Cumulative Reach Jan 4th 2015 – Dec 31st 2016, All People 10+

21Television Audience Measurement (TAM), Average Weekly Time Spent, Jan 3rd – Dec 31st 2016, All People 10+ 22Nielsen Consumer and Media Insights, Q1 – Q4 2015 & Q1 – Q4 2016, All People 10+

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 12 SO WHAT ABOUT NETFLIX? Around 70% of New Zealanders still do not have access to an SVOD service. However, this has been declining steadily since late 201523. It should be noted that during this period, Netflix USA blocked access for New Zealanders and also applied a GST tax to its subscription packages. PENETRATION OF SUBSCRIPTION ON-DEMAND SERVICES NO SVOD SUBSCRIPTION ANY SVOD NETFLIX LIGHTBOX NEON 90 85 81 79 77 70

30 23 21 19 15 10 25 17 15 19 8 11 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016

Source: Nielsen CMI, All People 10+ with a TV set at home

70% OF NEW ZEALANDERS DO NOT HAVE ACCESS TO SVOD SERVICES. THIS HAS BEEN DECLINING DUE TO INCREASING UPTAKE OF NETFLIX

23Nielsen Consumer and Media Insights, Q3 2015 – Q4 2016, All People 10+

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 13 TELEVISION ONLINE BRANDS ARE REACHING ONE-IN- FOUR KIWIS On average since March 2015, around 1.1 million Kiwis are engaging with TV brands online.

MONTHLY UNDUPLICATED ONLINE REACH OF NEW ZEALAND TV BROADCAST BRANDS

2014 2015 2016 2017 1400 1200 1000 800 600 400 200 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Nielsen Online Ratings, All people 2+; excludes mobile apps *Includes the following brands: Choice TV, Maori Television, Prime Television New Zealand, Sky Go, SKY On Demand, SKY TV NZ, TV 3, TV Four, TVNZ

Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers watch and buy. Nielsen’s Watch segment provides media and advertising clients with Nielsen Total Audience measurement services for all devices on which content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen also provides its clients with analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries, covering more than 90% of the world’s population. For more information, visit www.nielsen.com.