Google Fiber

Pre-Launch Survey

August 2012

• Objectives:

o Establish a baseline of media consumption and piracy levels in KC prior to the launch of Google Fiber, including

o Awareness and interest in both Google Fiber and Google TV

o Projected changes in behavior if Google Fiber is adopted

o In the post wave, we will assess any changes in consumption and piracy levels after Google Fiber is in homes

o Note: the post wave will be conducted next year, a few months after Google Fiber launches

• Details:

o SmithGeiger completed comprehensive online interviews with 2,159 Kansas City residents and 1,205 St. Louis residents for a total of 3,364 respondents.

o Respondents were ages 13-54, residents of the Kansas City and St. Louis markets

o Demographics were managed to be representative of each market.

o The average interview required approximately 18 minutes to complete.

o Interviews were conducted in late June and early July, 2012.

• St. Louis worked well as a control market for Kansas City, with most responses a mirror image between the two markets

o Similar levels of piracy, attitudes toward piracy, and interest in the concept of Google Fiber

• Not surprisingly, Kansas City residents are much more familiar with Google Fiber than St. Louis (28% vs. 8%).

o Much of the awareness in KC has been driven by press / PR

• Overall, interest is strong in both markets once they know the concept

o 57% “can’t wait” in KC, 52% in St. Louis

o Interest is even higher among males 18-34 and current movie pirates

• Appears there will be some shifts in HE activity after Google Fiber:

o 32% in KC expect to do more illegal downloading or streaming o 39% in KC would use paid streaming subscription services more

o 34% in KC would purchase/rent more online

o 34% in KC would rent fewer discs, 29% would buy fewer

• Overall movie piracy levels are at 31% in both markets – with variations by age group:

• In Kansas City, for example, we see:

o Ages 13-17 – 36% movie pirates

o Ages 18-24 – 47% movie pirates

o Ages 25-34 – 34% movie pirates

o Ages 35-44 – 24% movie pirates

o Ages 45-54 – 20% movie pirates

Demographics Demographics Kansas City St. Louis % Female 51% 50% Average Age 34 33 % White 77% 76% Average Length of Residence 12 13 Average Years of Education 15 14 % Employed Full-Time 54% 48% Average Household Income $68,343 $63,813 % Married 43% 41% % With Children in Home 48% 48%

Tech Usage 76% 24% Desktop or laptop computer that does not play Blu-ray discs 75%Standalone Blu-ray player (non-PS3) 21% Video on Demand programming66% from a cable company (VOD) 23% High Definition television (HDTV) 65% 26% 56%Video iPod or other portable video player 22% MP3 or portable audio- player (including iPod) 55% 23% 22% Desktop46% or laptop computer that plays Blu-ray discs 22% Nintendo Wii 49% Sony PS3 21% Digital video recorder (DVR) or a TiVo 44% 22% 41% 15% Internet-enabled TV 16% DVD or Blu-ray recorder 41% 43% 3D TV 5% 34% 4% Xbox 360 36% 5% Kansas City Roku box 5% Portable videogame system 29% 33% Apple TV 4% St. Louis 3% iPad, Samsung Galaxy, or other tablet 28% 2% 21% Slingbox 2% 25% 2% Wireless enabled e-book reader 26% None of these 2%

• Digital cable has a firmer foothold in Kansas City than in St. Louis, where DirecTV is notably stronger.

TV Service Digital cable 39% Kansas City 29% St. Louis 14% AT&T U-verse 18% 14% Regular or analog cable 15% 14% DirecTV 21% 11% Dish Network 12% 1% Verizon FiOS 1% 3% Other 2% 15% None of the above 12%

• More than 1 in 3 in both markets use Netflix for streaming video, but most still have no regular paid streaming video or music subscription.

Monthly Subscription

Kansas City St. Louis 53% 55%

36% 35%

15% 13% 7% 8% 5% 6% 5% 4%

Netflix streaming subscription Hulu Plus Blockbuster Total Access

• St. Louis residents spend just slightly more time than Kansas City online.

Hours Spent on the Internet per Day

Average Hours Spent on the Internet Kansas City 4.7 72% St. Louis 5.3 66%

Kansas City

25% St. Louis 21%

4% 6% 1% 1% 2% 1% 1% 1% Less than 1 1 to 5 6 to 10 11 to 15 16 to 20 More than 20

• DVD and Blu-ray rentals show the highest average usage in both markets. Movie Viewing by Each Method within the Past 12 Months Averages 81% 5.0 Saw a movie in a theater In person 77% 4.5 31% 1.7 Paid to order on cable/satellite/ISP via Video-On-Demand or Pay-Per-View Via TV service 27% 1.6

58% 6.8 Rented on DVD/Blu-ray from a rental store or kiosk, such as Blockbuster or RedBox 53% 5.9 50% 3.1 Purchased a DVD/Blu-ray from a retail store or online retailer 51% 3.3 Via 26% 5.1 Rented on DVD/Blu-ray from a mail subscription service such as Netflix physical 25% 4.4 disc 20% 1.3 Purchased or been given a burned disc or other storage media 21% 1.3 8% 0.4 Purchased a bootleg DVD/Blu-ray from a street vendor 9% 0.7

- Indicates pirate items Kansas City St. Louis

• In terms of averages, Kansas Citians are slightly more active viewers of subscription-paid movies (Netflix) on the web. Movie Viewing Via the Internet Within the Past 12 Months Averages 9.4 Watched on the internet from a monthly paid subscription service, such as Netflix Watch Instantly 33% 32% 6.8 2.0 Watched on the internet from a TV channel’s website or TV service provider’s website 22% 24% 2.2 19% 1.0 Paid to download and own from a paid downloading service, such as iTunes or Amazon downloads 16% 0.9 13% 1.0 Streamed from streaming websites like MegaVideo 12% 0.8 Via 11% 0.5 internet Paid to rent and download from a digital rental service, such as iTunes 9% 0.4 0.8 Paid to rent and stream from a digital rental service, such as Amazon Instant Video 10% 8% 0.4 1.2 Downloaded from peer-to-peer downloading services 9% 9% Kansas City St. Louis 0.9 0.6 Downloaded from downloading websites like MegaUpload 9% 9% 0.6 - Indicates pirate items

S21: Approximately how many movies/TV shows have you watched in each of the following within the past 12 months? © 2012 SmithGeiger LLC 12 KC slightly higher (on average) for TV shows via VOD and Netflix by mail

TV Show Viewing within the Past 12 Months

Averages 9% 10% 1.5 0.7 Via TV service

19% 0.8 Purchased a DVD/Blu-ray from a retail store or online retailer 20% 0.8 15% 1.6 Rented on DVD/Blu-ray from a mail subscription service such as Netflix 13% 1.0 Via 9% 0.7 Purchased or been given a burned disc or other storage media physical 10% 0.5 disc 9% 0.5 Rented on DVD/Blu-ray from a rental store or kiosk, such as Blockbuster or RedBox 8% 0.3 6% 0.8 Purchased a bootleg DVD/Blu-ray from a street vendor 5% 0.2 - Indicates pirate items Kansas City St. Louis

S21: Approximately how many movies/TV shows have you watched in each of the following within the past 12 months? © 2012 SmithGeiger LLC 13 KC also slightly higher (on average) for TV shows via online subscription

• Kansas Citians have watched an average of 14 TV episodes on the internet via a monthly paid subscription service over the past year, versus 11 for St. Louis residents. TV Show Viewing Via the Internet Within the Past 12 Months Averages 42% 8.3 Watched on the internet from a TV channel’s website or TV service provider’s website 42% 6.9 14.3 Watched on the internet from a monthly paid subscription service, such as Netflix Watch Instantly 30% 28% 10.6 1.0 Paid to download and own from a paid downloading service, such as iTunes or Amazon downloads 12% 11% 0.4 2.0 Streamed from streaming websites like MegaVideo 11% 11% 1.6 Via 1.0 Downloaded from peer-to-peer downloading services 8% internet 8% 1.0 0.6 Downloaded from downloading websites like MegaUpload 7% 7% 0.7 Paid to rent and download from a digital rental service, such as iTunes 7% 0.3 6% 0.3 Paid to rent and stream from a digital rental service, such as Amazon Instant Video 7% 0.3 7% 0.4 Kansas City St. Louis - Indicates pirate items

S21: Approximately how many movies/TV shows have you watched in each of the following within the past 12 months? © 2012 SmithGeiger LLC 14 Total per capita consumption similar across markets, though movies and TV shows slightly higher in KC

Kansas City St. Louis

Total # of movies consumed annually in 39.8 34.5 each market (per person) Total # of TV shows consumed annually in 33.7 25.4 each market (per person) Total # of video games consumed annually in 5.8 7.4 each market (per person)

• Numbers based on 13-54, online population estimates of 1,056,933 people in KC and 1,402,631 people in St. Louis. • Dollar amounts for each type of movie are based on MPAA figures (from IHS Screen Digest): • Cinema ticket: $7.50 Kansas City St. Louis • Disc sales: DVD $13.24 /Blu-ray $24.88 (we used a combined Total # of movies estimate of $17.50) consumed annually in 39.8 34.5 • Disc rental: $2.84 each market • VOD (TV): $5.15 • Download-to-own: $12.45 Total Dollar Amount $82MM $100MM • VOD (internet): $3.83 • Note: Dollar figures do not Total annual movie include Netflix/subscription $77.86 $71.48 services spending per capita

Percentage of Respondents Who Have Heard of Google Fiber 8%

28%

Yes Yes No No

72% Kansas City St. Louis 92%

How Have You Heard About Google Fiber? (KC)

TV news story 48% Newspaper or magazine story 46% Online article, story, or posting 38% From a friend, relative, coworker, or acquaintance 29% Radio news story 22% Online ad 12% Newspaper or magazine ad 9% Radio ad 5% TV ad 5% Outdoor ad 3% Direct mail, flyer, or newspaper insert 3% Other 4%

Based on 28% of respondents that live in Kansas City who are aware of Google Fiber Q23: Where/how have you heard of about Google Fiber? © 2012 SmithGeiger LLC 19 Those aware of GoFi are pretty well informed…

What Have You Heard About Google Fiber?

• “100 times faster than DSL. Kansas City will be the first to have the service. Consumer costs are comparable to DSL service.”

• “Being in KC, people are talking about the jobs it will bring to the area as well as the technology advancements that will be available to the KC area.”

• “Coming to Kansas City. Supposed to be a boom for tech companies to come to the area. Possibilities of how it can be used are endless. Very fast, yet affordable.”

• “Google fiber is a broadband internet connection. The Google company is a trusted brand, so this seems like a high-quality proposition that would be interesting to try. Kansas City was chosen as a test area.”

• “It is a super high speed network that will provide data speeds 100 times faster than current internet service. It will make it possible to utilize more online multimedia services without loss of quality through compression.”

• “Google is installing a fiber network in Kansas City, Kansas, and is being assisted by KC Power and Light to extend that network into KCMO as well. The fiber network will have much faster connections than anything currently available, and is said to be on par with or better than other fiber optics providers.”

• “I have heard that it will be available with higher download speeds than currently available, but I don't know when or if it will be in my neighborhood or how much it will cost.”

Based on 28%/8% of respondents that live in Kansas City/St. Louis who are aware of Google Fiber Q24: In your own words, what have you heard about Google Fiber (or what are your friends saying about it)? © 2012 SmithGeiger LLC 20 Anticipation is high, even in St. Louis

• “Can’t wait” climbs to 64% and 57%, respectively, for those with prior awareness

Agreement Based On What You Know About Google Fiber (1 of 2) 57% Kansas I can’t wait for it to be available in my area City 52%

50% If I had the Google Fiber service, I would watch more movies/TV shows on the Internet from a TV channel’s website or TV service provider’s website 49%

39% If I had the Google Fiber service, I would stream more movies/TV shows through a paid subscription service 36%

38% If I had the Google Fiber service, I would upload/share more content 36%

34% If I had the Google Fiber service, I would rent fewer DVDs or Blu-ray discs 35%

Q25: How much do you agree or disagree with each of the following statement about Google Fiber? © 2012 SmithGeiger LLC 21 A third say they’ll pirate more – but a third also say they’ll buy/rent more online

• Among movie pirates in KC, 47% say they’ll pirate more, though this drops to 26% among non-movie pirates – more on the financial implications of this in a bit. Agreement Based On What You Know About Google Fiber (2 of 2)

Kansas 34% If I had the Google Fiber service, I would purchase or rent more movies/TV shows over the Internet using websites City 33%

33% My current Internet seems fast enough, without having Google Fiber service 36%

32% If I had the Google Fiber service, I would do more downloading/streaming of free movies/TV shows from Torrent sites, or free streaming sites 35%

29% If I had the Google Fiber service, I would buy fewer DVDs or Blu-ray discs 28%

Q25: How much do you agree or disagree with each of the following statement about Google Fiber? © 2012 SmithGeiger LLC 22 Of those saying they would pirate more – more than half are currently non-pirates • One indication of the potential rise in the sheer number of pirates in the market after the introduction of Google Fiber Would Pirate More (download/stream)

32% Movie or TV 15% Pirate

Not a movie or 17% TV Pirate

Q25: How much do you agree or disagree with each of the following statement about Google Fiber? © 2012 SmithGeiger LLC 23 Google Fiber likely to bring more “sharers” into the market too • More than half of those who would upload/share more are currently non-pirates (note: this could be either legal or illegal sharing). Would Upload More Content

38% Movie or TV 16% Pirate

Not a movie or 22% TV Pirate

Q25: How much do you agree or disagree with each of the following statement about Google Fiber? © 2012 SmithGeiger LLC 24 60% of monthly streaming (Netflix) users say they would do more streaming with GoFi • Along with 28% of non-monthly subscription users Agreement Based On What You Know About Google Fiber by Streaming Subscription Users and non-Streaming Subscription Users 70% I can’t wait for it to be available in my area 50% 63% If I had the Google Fiber service, I would watch more movies/TV shows on the Internet from a TV channel’s website or TV service provider’s website 43% 60% If I had the Google Fiber service, I would stream more movies/TV shows through a paid subscription service 28% 48% If I had the Google Fiber service, I would upload/share more content. 33% 44% If I had the Google Fiber service, I would rent fewer DVDs or Blu-ray discs 28% 44% If I had the Google Fiber service, I would purchase or rent more movies/TV shows over the Internet using websites 28% 36% My current Internet seems fast enough, without having Google Fiber service 31% 38% If I had the Google Fiber service, I would do more downloading/streaming of free movies/TV shows from Torrent sites, or sites 29% 38% If I had the Google Fiber service, I would buy fewer DVDs or Blu-ray discs 24% Monthly Streaming Subscription Users Monthly Streaming Subscription Non-Users

Percentage shown reflects Kansas City’s market population Q25: How much do you agree or disagree with each of the following statement about Google Fiber? © 2012 SmithGeiger LLC 25 Looked at another way – both current subscription streamers and non-users are likely to stream more • Nearly equal numbers of the 39% who will use monthly streaming services more with GoFi come from current users and non-users of these services Would Stream More Through Paid Subscription

Users of monthly 39% streaming 21% services for movies or TV

Non-users of monthly 18% streaming services for movies or TV

Q25: How much do you agree or disagree with each of the following statement about Google Fiber? © 2012 SmithGeiger LLC 26 For current EST/iVOD users, 55% would purchase or rent more online • Along with 26% of non-EST/iVOD users Agreement Based On What You Know About Google Fiber by EST/iVOD Users and non EST/iVOD Users

EST/iVOD Users Non EST/iVOD Users Percentage shown reflects Kansas City’s market population Q25: How much do you agree or disagree with each of the following statement about Google Fiber? © 2012 SmithGeiger LLC 27 Looked at another way – more than half of those who would do more EST/iVOD with GoFi aren’t doing it today

Would Purchase or Rent More

34% Users of 15% EST/iVOD

Non-users of 19% EST/iVOD

Q25: How much do you agree or disagree with each of the following statement about Google Fiber? © 2012 SmithGeiger LLC 28 Likely adoption relatively high • Even higher among younger men, rising to 56%-57% among men 18-34 • Among movie pirates in KC, likely adoption rises to 53%; among non-movie pirates, it falls to 39%. Likelihood of Subscribing When Google Fiber is Available in Your Area

42% 44% Kansas City

St. Louis 28% 25%

15% 14% 10% 12% 6% 4%

Definitely will Probably will Might or might not Probably won’t Definitely won’t

Q26: How likely are you to subscribe to Google Fiber Internet service when it becomes available in your area? © 2012 SmithGeiger LLC 29 Desire for a better internet driving likely adoption • Along with curiosity, trust, and ease of downloading/streaming • For movie pirates in KC, ease of downloading/streaming actually falls a bit, to 68%; among non-movie pirates, it rises to 73%. Reasons for Subscribing to Google Fiber Kansas It will make using the Internet easier/faster overall 85% 85% City 77% I just want to try it out 72% 74% I trust the Google brand name 76% 71% It will be easier for me to download/stream content online 78% 61% It will be easier for me to upload content 64% 51% I think the price will be cheaper than my current Internet service 51% 40% I’m unhappy with my current Internet service provider 42%

Based on 43%/38% of respondents that live in Kansas City/St. Louis who are likely to subscribe to Google Fiber Q27: How much of a reason is each of the following for why you are likely to subscribe to Google Fiber service when it becomes available? © 2012 SmithGeiger LLC 30 Likely adoption of GoFi TV service lower than GoFi internet • Likely adoption here is 33% in KC, vs. 43% for the internet service • Men 18-34 are again higher here, at 40-42%

Likelihood of Subscribing to Google Fiber with Subscription TV Service 50% 49% Kansas City

St. Louis

23% 22%

11% 11% 11% 10% 8% 5%

Definitely will Probably will Might or might not Probably won’t Definitely won’t

• Pirates here are defined as anyone engaging in pirate activity in the past year

Pirate Type

31% Kansas City All Movie Pirates St. Louis 31%

19% All TV Pirates 20%

13% All Game Pirates 14%

37% All Pirates 38%

63% All Non-Pirates 62%

• Using a method similar to the 2011 MPAA study, we are able to estimate what the national cannibalized volume for movies would look like in the US if KC piracy levels are projected to the entire nation.

• Our basic formula is as follows:

13-54 online population in the US (estimated at 133.5MM)

% consuming movies through each pirate method

Activity rate (the mean volume of movies consume in the past 12 months by each pirate method)

• By using this formula, we arrive at the following estimates for total number of movies pirated per year in the US (in millions of movies):

17270%16040%13460%7470% 5760% MM

Total 600MM

• 34% of all movie pirate activity in KC is “sampling” (those who later paid for the same movie) – which is not counted as lost revenue.

• If the pirated version weren’t available, the person may have waited for a free option – which is not counted as lost revenue. This is 28% of all movie pirates in KC.

• If the pirated version weren’t available, the person may have paid to see the movie in some form – this is the overall cannibalization rate (38% in KC).

• Using the overall cannibalization rate and the piracy volumes, we then layer in how respondents might have paid for the movies if they hadn’t pirated them (applying a downweight of .65, since we know that not all would actually have followed through with paying).

• This allows us to estimate overall annual revenue losses due to movie piracy. (Again using KC results to project to the country as a whole.)

• This method gives us the following estimates for annual national revenue losses due to movie piracy (in millions of dollars). (Note, we again use the IHS screen digest price estimates for cinema tickets, disc rentals, etc.):

MM MM MM MM MM 94900%23600%17100%15000%12800%10800%

Total $1,742MM

• Earlier, we saw that 26% of non-movie pirates in KC are likely to pirate once they get Google Fiber

• So if this 26% actually does start to pirate, this means an additional 18% of total consumers become pirates.

• If this 18% act like current pirates, then this means we would add another $1,011 million in movie piracy, bringing the annual total to $2,753 million.

• If even half of these non-pirates (who say they will start pirating with Google Fiber) actually do start to pirate, an additional 9% of total consumers become pirates, adding $506 million in movie piracy – bringing the annual total to $2,248 million.

• Among movie pirates in KC, use of Megavideo doubles, to 14% Top 20 Sites Downloaded or Streamed From 11% 52% comedycentral.com 13% YouTube 55% 8% 47% HBOgo.com Netflix.com 47% 11% 8% 37% MTV.com ABC.com 35% 6% 7% 35% Megavideo Hulu.com / Hulu Plus 38% 7% 26% PlayStation Network 7% CBS.com 23% 6% 6% 23% BitTorrent.com iTunes 22% 7% 22% U-Verse Online (AT&T) 5% NBC.com 23% 6% 18% 5% Amazon.com/Amazon Instant Video 19% Blockbuster on Demand 5% 4% fox.com 17% Vudu 15% 3% Kansas 13% City Xbox Live uTorrent 4% - Indicates pirate items 14% 4%

Based on 65%/65% of respondents that live in Kansas City/St. Louis who are downloaders and/or streamers Q30: Through which of the following online sites or services have you streamed or downloaded movies or TV shows within the past 12 months? © 2012 SmithGeiger LLC 41 A look at the top pirate sites • Again, these numbers roughly double among movie pirates

Top 20 “Pirate” Streaming or Download Sites 2% 7% LetMeWatchThis 2% Megavideo 7% 2% 6% novamov.com BitTorrent.com 7% 2% 2% 4% rapidshare.com uTorrent 4% 3% 2% 4% CinemaNow The Pirate Bay 5% 3% 4% Demonoid.com 2% LimeWire 5% 2% 2% 3% mediafire.com Putlocker 4% 3% 3% Movie2K 2% Megaupload 5% 2% 3% 2% 4shared.com 4% sidereel.com 2% 2% watchonlinefree.tv 2% Blinkx 2% 2% Kansas 2% 2% City FrostWire.com 3% KickAssTorrents 3%

Based on 65%/65% of respondents that live in Kansas City/St. Louis who are downloaders and/or streamers Q30: Through which of the following online sites or services have you streamed or downloaded movies or TV shows within the past 12 months? © 2012 SmithGeiger LLC 42 Most are using YouTube for free content; both pirated and legit video streaming is a mix of HD and SD

Average Percentage of Streaming

YouTube95% Streaming96% or Downloading Legitimate Video in HD or SD

Kansas City 50% 50% 54% St. Louis 46% 33% 31%

10% 8% HD SD Not Sure Streamed or downloaded movies/TV shows from YouTube for free Based on 34%/36% of respondents that live in Kansas City/St. Louis who have used Based on 63%/62% of respondents that live in Kansas City/St. Louis who YouTube to stream/download in the past 12 months are legitimate downloaders/streamers Q30_1: Which of the following have you done in the past 12 months on YouTube? Q30_2: What percentage of your downloads are in high definition (HD) vs. standard definition (SD)? Average Percentage of Streaming Pirated Video in HD or SD 48% 47% 52% 52% 38% 34%

HD SD Not Sure Based on 20%/21% of respondents that live in Kansas City/St. Louis who are pirate downloaders/streamers Q30_3: What percentage of your pirated downloads are in high definition (HD) vs. standard definition (SD)? © 2012 SmithGeiger LLC 43 On average, respondents believe that a quarter of people are pirates • Among movie pirates in KC, this rises slightly to 28%; among non-movie pirates, it falls a touch, to 23%. Movie Viewing Habit for People Average Percentage Kansas City St. Louis 34% 33% 34% 31%

25% 25% 24% 25%

People who regularly see movies in the theater on opening weekend People who regularly watch “unofficial” versions of movies or TV shows

Q35: Thinking of people in general, and using your best guess, what percentage of people would you say do each of the following things? © 2012 SmithGeiger LLC 44 More than a third say they know someone who pirates • Just a bit higher than the actual pirate activity they reported overall (31% in each market)

Do You Personally Know Anyone who Ever Does Each of the Following? Kansas City St. Louis 65% 68% 68% 60%

45% 43% 37% 39%

Watch “unofficial” versions of movies or TV shows Watch movies on pay-per-view or video-on-demand on TV

Reasons for Watching Unofficial Copies of Movies or TV Shows (1 of 2)

It’s free 44% Kansas 40% City 38% Retail prices for movies/TV shows are too high 38% 36% There are no commercials or ads to get in the way 42% 33% It’s easy / convenient 37% 31% There are a wide selection of movies/TV shows available 34% 29% I like to check out movies/TV shows for free before I spend money on them 34% 27% I spend enough money on movies/TV shows already 26% 27% Because I can 29% 25% I wouldn’t bother to watch them at all if they weren’t free 24% 24% I can watch at the same time (or before) the official release 27%

Based on 37%/38% of respondents that live in Kansas City/St. Louis who have pirated Q37: How much of a reason is each of the following for why you watch “unofficial” copies of movies or TV shows? © 2012 SmithGeiger LLC 46 Roughly a quarter of pirates cite speed as a reason for pirating • Another indication that pirating becomes more attractive with GoFi Reasons for Watching Unofficial Copies of Movies or TV Shows (2 of 2)

24% My Internet connection is so fast that it makes it very easy Kansas 29% City 22% The quality of video/sound is good enough 25% 21% I don’t see anything wrong with it / it doesn’t hurt anyone 22% 21% I can copy to any device (no digital rights management restrictions) 20% 20% Actors and movie studios already have enough money 23% 20% Lots of people I know do the same thing 24% 17% I enjoy the challenge of trying to find new titles for free 14% 16% It keeps me ahead of the crowd 16% 15% Nobody ever gets caught doing it 14%

Based on 37%/38% of respondents that live in Kansas City/St. Louis who have pirated Q37: How much of a reason is each of the following for why you watch “unofficial” copies of movies or TV shows? © 2012 SmithGeiger LLC 47 For those watching both pirate and official versions, it’s about quality • Price matters, but so does collectability, and the desire to support good content Reasons for Watching Official Copies of Movies or TV Shows 57% It’s sometimes easier to pay and know that I’m getting a version that will work Kansas 55% City 56% I like to support movies and TV shows that are really good 56% 56% I’d rather have the “official” version for things where the picture quality is really important to me 56% 55% I’ll sometimes pay for the “official” version if it goes on sale / if I can get a discounted price 50% 54% I’d rather have the “official” version to keep as part of my home collection 56% 52% It’s worth paying for the “official” version of my favorite movies/TV shows 51% 46% It’s sometimes easier to pay and know that I’m getting the “official” version 49% 37% Sometimes I can’t find what I’m looking for so I pay for the “official” version 36%

Based on 36%/38% of respondents that live in Kansas City/St. Louis who watch both pirated and legitimate content Q38: How much of a reason is each of the following for why you also watch some “official” copies of movies/TV shows? © 2012 SmithGeiger LLC 48 One bright spot: most see pirating as wrong

• Even 48% of movie pirates in KC agree that it’s wrong – but this jumps to 62% among non- movie pirates Agree with Statements about Watching Unofficial Copies of Movies / TV Shows

58% It’s wrong to download or stream “unofficial” copies of movies/TV shows without paying for them Kansas City 57% St. Louis 57% Not paying for movies/TV shows is the same as stealing 55% 50% Copying a friend’s DVD is the same as stealing 47% 36% Movie/TV companies make plenty of money without people paying for every single thing they watch 37% 36% All movies/TV shows should be free online 35% 32% Uploading movies/TV shows takes too long 33% 24% Trying to download the “unofficial” copy of a movie/TV show takes too long 25% 22% Trying to download the “unofficial” copy of a movie/TV show is too difficult 23% 19% I wouldn’t pay for the “official” version of a movie/TV show if I could get the “unofficial” version for free 18% 16% Consuming “unofficial” copies of movies/TV shows doesn’t hurt anyone 17% Q39: How much do you agree or disagree with each of the following statements about people watching “unofficial” copies of movies/TV shows? © 2012 SmithGeiger LLC 49 Thank you!

• Note: these %s are based to the number of films pirated in each market; e.g., of all the films pirated in KC, 19% were action movies

Pirated Movie Genre 19% Action 21% 18% Comedy 17% 11% Drama 10% 9% Sci-fi and fantasy 7% 5% Adventure 7% 5% Horror 4% 4% Children’s movies 5% 3% Family (animated) 4% 3% Mystery/thriller 2% 3% Romantic comedy 4% 3% Family (live action) 4% 2% Musicals 1% 1% Foreign0% 1% Independent0% 1% Anime (Japanese animation) 1% 1% Documentary 2% Kansas City 1% Inspiration/religious0% St. Louis 0% Concert films0% 10% Other 11% Based on the number of Piracy Occasions Q32_1: What type of movie is this? © 2012 SmithGeiger LLC 53 Of all pirated movies, roughly a third are new releases

Pirated Movie Release

37% New release 33% New release An older An older title title 63% 67%

Kansas City St. Louis

Based on the number of Piracy Occasions Q32_2: And was this movie a new release (released in theaters within the 3 months before you watched it), or was it an older title? © 2012 SmithGeiger LLC 54 Picture and audio quality nearly identical (and fairly high)

Pirated Movie Quality – Positive Ratings

70% 65% Kansas City 60% 61% St. Louis

Picture Quality Audio Quality

Pirated Movie First Seen

Kansas City 39% 38% St. Louis

24% 22% 21% 18% 18% 14%

3% 2%

Before it was initially released in theaters in the US After the original DVD/Blu-ray release

Ever Paid to Watch Previously Pirated Movie

12% 9% 34% 34% Yes Yes No No Not sure Not sure

55% 57%

Kansas City St. Louis

Based on the number of Piracy Occasions Q33_1: Have you also paid to watch this movie? © 2012 SmithGeiger LLC 57 For those who never paid to see the film, rental would have been their most likely option

Alternative Way of Accessing Movie if Piracy Not Available (for those who didn’t ever pay to see the film)

31% Rented the DVD or Blu-ray of the movie 35% 20% Would not have watched 21% 18% Waited until it was on TV 17% 18% Bought the DVD or Blu-ray 18% 18% Borrowed or watched someone else’s DVD/Blu-ray/download 18% 17% Waited until it was available through a subscription streaming service 14% 10% Paid to rent it (streaming or downloading) using a video-on-demand service over the internet 8% 8% Seen the movie in a theater 12% 8% Watched on pay-per-view or video-on-demand on TV 6% Kansas City 4% Paid to download it from a website where you can keep it forever 5%

Based on the number of Piracy Occasions and never saw the “official” version Q34: Thinking about this movie. If you hadn’t been able to do piracy, which of the following would you have likely done? © 2012 SmithGeiger LLC 58 General Role of Home Entertainment

Agree With Statements (1 of 2) I feel like I now have more entertainment options than ever before 75% Kansas 75% City 68% Watching movies/TV shows is one of my favorite things to do 70% 68% My family really enjoys watching movies/TV shows together 67% 67% I find new technology interesting and engaging 70% 66% I like to wait and see if a new technology / product is really going to work out before I buy it 66% 64% I frequently use social networking sites like Facebook or Twitter to keep up with my friends 61% 55% Renting or buying movies is a great value for my entertainment dollar 58% 45% I wish I had more movies/TV shows available to me for streaming/downloading at home 44%

Q19: How much do you agree or disagree with each of the following statements about things you do for entertainment and technology? © 2012 SmithGeiger LLC 60 A third are confused by all the options for streaming/downloading

• This confusion rises to 44% among ages 45-54.

Agree With Statements (2 of 2) 45% I now have more entertainment options than I need Kansas 47% City 42% I wish I had an easier way of finding movies/TV shows I would like 44% 37% Playing video games is one of my favorite things to do 42% 37% My friends usually ask me to give them advice on new products 41% 35% It’s confusing now with all the different services available for streaming or downloading movies and TV shows 35% 28% I am usually the first person among my friends and family to get a new technology 30% 21% I feel like new technology is usually more trouble than it’s worth 21%

Q19: How much do you agree or disagree with each of the following statements about things you do for entertainment and technology? © 2012 SmithGeiger LLC 61 Repeat viewing a top reason for consuming physical media

Reasons for Purchasing/Watching Physical Media (1 of 2)

61% Kansas So that I (or my kids) can watch the movie again whenever we like 61% City 56% So that I can keep the movie for a long time 59% 54% For movies/TV shows I really care about, I’d rather have the disc 62% 49% I just like having a physical copy 57% 49% I’d rather have a disc so I can easily take it other places 50% 42% I like having discs to add to my collection 48% 42% I like having discs to add to my collection 47% 38% It just seems easier to buy the disc 42%

Based on 80%/78% of respondents that live in Kansas City/St. Louis who have watched physical media in the past 12 months Q20: How much of a reason is each of the following for why you purchase or watch physical DVDs/Blu-rays/discs instead of downloading or streaming? © 2012 SmithGeiger LLC 62 Bonus content and price tend to be secondary reasons for consuming physical media

Reasons for Purchasing/Watching Physical Media (2 of 2) 36% Because discs tend to come with bonus content Kansas 39% City 34% It’s sometimes cheaper to buy the disc 35% 33% There are more titles available on disc than on downloading or streaming 31% 32% Downloaded copies don’t feel as “collectible” as a disc 35% 30% It takes too long to download or buffer a downloaded or streamed movie 31% 17% I don’t know how to play downloaded or streamed movies/TV shows on my TV 18% 17% I don’t have a very fast Internet connection 19% 16% Downloading or streaming movies is too complicated/intimidating 17%

Based on 80%/78% of respondents that live in Kansas City/St. Louis who have watched physical media in the past 12 months Q20: How much of a reason is each of the following for why you purchase or watch physical DVDs/Blu-rays/discs instead of downloading or streaming? © 2012 SmithGeiger LLC 63 Internet speed is a key reason for downloading/streaming

• “I have a fast internet connection” changes just slightly for movie pirates vs. non- pirates, with pirates 5 points higher (47% vs. 42%). Reasons for Downloading or Streaming Instead of Buying Physical Discs Kansas I have a fast Internet connection 44% City 48% St. Louis 43% I like the portability of downloading or streaming 43% 43% Downloading or streaming tends to be cheaper than buying the physical disc 43% 37% It just seems easier than buying the disc 38% 36% Because I like to be able to watch on my tablet, iPod, or video mp3 player 35% 35% I’d rather download or stream when I don’t have to take the movie to other places 35% 29% I don’t usually care about the bonus content 31% 28% I don’t want the clutter of a collection of physical discs 23% 25% I download or stream for movies/TV shows I really don’t care about 28%

Based on 65%/65% of respondents that live in Kansas City/St. Louis who have watched digital media in the past 12 months Q21: How much of a reason is each of the following for why you download or stream instead of buying physical discs? © 2012 SmithGeiger LLC 64 UltraViolet

Aware of UltraViolet

72% 69% Kansas City St. Louis

19% 21%

4% 5% 5% 5%

Yes I’ve heard of it, and I’ve used it No, I’m not familiar with it

Impact of UltraViolet on DVD or Blu-ray Purchases

43% 42%

35% 32% Kansas City St. Louis

13% 13% 7% 5% 4% 5%

Much more likely Would not affect likelihood Much less likely

• St. Louis sees a higher rate of paid videogame downloads, as well as a slightly higher average retail purchase of videogames.

Video Games Purchased or Downloaded within the Past 12 Months Averages 51% 3.0 Bought a game on a disc from a retail store, kiosk, or online retailer 56% 4.2 In person/via TV service 7% 0.5 Purchased or been given a bootleg or burned copy of a game 7% 0.3

20% 1.4 Paid to download or play a game on the Internet from a paid downloading service 21% 2.5 Via internet 10% 0.8 Downloaded a game on the Internet from a downloading or peer-to-peer website 11% 0.5

- Indicates pirate items

Pre-Launch Survey

August 2012