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Allan Mclennan Chief Executive, PADEM Media Group [email protected]

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Allan Mclennan Chief Executive, PADEM Media Group Allanmc@Pademgroup.Com TechTour Allan McLennan Chief Executive, PADEM Media Group [email protected] 1 Sports in Real Time…The Vision and opportunity PADEM Group Q3, 2018 Allan McLennan, Chief Executive Global Market Technologist M&E, IP/OTT/Video/AI/Data [email protected] 415‐383‐8397 Pioneering sports broadcasters are looking for next‐ generation TV over IP to transform their businesses and game that will allow new services and programming previously not possible directly to their viewers. Thanks to the flexibility of both the market and Cutting‐ Edge today, LIVE and synchronized programming over IP that is driven with data distribution/intelligence, multichannel offerings, cloud‐based LIVE linear TV, LIVE VOD and ultra‐high definition are now all on the table. Critical Questions Is TV Dead? No! Explosion of LIVE IP Sports Social / Stats Integration Millennial/Generational Multi-Screening Active Syncro Viewing Shift in “Balance of Power” LIVE Now! New expansive LIVE OTT Business issues LIVE, Technology Move to the New Sports Business Model Synchronized Evolution Cloud Strategies Transformation Streaming Questions that are key Who are you, really? What battle are you fighting? What is your primary offering? Recent study…. • TV & OTT Convergence: Platform – agnostic model – moving to Post-OTT all DTC • Digital Transformation: Products, services, production and engagement • Content piracy remains significant threat. Bottom line….what’s happening? • LIVE online Video Traffic is Skyrocketing • Traditional TV still holds 78% of viewing dropping from 96% just five years ago. • A torrid growth rate for OTT/IP video will continue for the foreseeable future with the growth of new connected devices, new refined OTT services, combined offerings (data, IP & mobile) and advertising which are all connected through and managed by network of “clouds.” • IP Video traffic – already staggering in size and interest – is estimated to grow another 26% reaching 37,660 petabytes per month this year (2018). Ie. A petabyte is one million gigabytes. (Cisco Visual Networking Index) • By the end of this year, 2018, online video will account for close to 90% of all consumer IP traffic. (Cisco Visual Networking Index) • Mobile data traffic will grow 10-fold over the next two and half years (Ericsson Traffic and Market reports) Combine that with….. • Globally, current sports TV offerings have the potential to grow their programming value due to DTC offerings over IP, but run the potential of having their offerings stagnate and not capture full return if not done right • Carriers/broadcaster’s are being hit with a double-whammy due to both a reduction in their legacy businesses and now network build outs. • There is a major need to launch sports franchises their own services to try to recoup and gain revenues. • They must leverage their strengths as an operator and content creator to established their brand creating new streams of revenue. • This will drive three trends and behavior shifts: North American households alone are forecasted to grow with ConnectedTV’s by 60% this year (2018) and continue the growth for multiple years to come. (Parks Associates) ConnectedTV’s will compromise 90% of ALL Television sold by 2019. (IMS Research) There are ONE billion Connected TV devices globally searching for streamed and multi- camera synchronization content. The market is going to EXPLODE! (Strategic Analytics 8/2018) While forecasted to be huge, the cost of Sports rights exceeds logic…. Audience reach critical to justify investment or to give another option > The global value of sports media rights was just under $47bn in 2017, up from $43.6bn in 2016. > Year-on-year growth will continue, with the value of the market forecast to break the $50bn-barrier in 2019 and reach almost $54.3bn by 2021 > Among sports, US football is the world’s largest generator of rights fees at $18.8bn in 2017, and is the fastest growing sport in the top 10 with a 9.9-per-cent rise on 2017 > Basketball overtook baseball to become the world’s second most valuable sport in 2017 following a 32-per-cent increase on 2017 revenue > The multi-sport competitions total is almost entirely from the Olympic Games. Olympics media rights revenue has been divided over four-year ‘Olympic cycles’, each covering one Winter Olympics and one Summer Olympics > Even golf’s media rights generated $1.2bn in 2017, a 3-per-cent increase on 2016. > Cricket is due to break the $1bn revenue mark in 2018 with the start of the new $510m-per-year Indian Premier League global rights contract However, are Sports really that strong? Yes…it will be huge! • Viewer interest and corporate investment in Sports has been increasing steadily over the past few years. • Approximately 10% of U.S. broadband households claim to watch sports on a connected device, with the majority of viewership among young consumers. • In 2017, the League of Legends finals in China enjoyed a peak concurrent viewership of the English-language stream of over 870,000 viewers. • ESPN telecast of the 2017 MLS Cup averaged 803,000 viewers, which was up by 20% over 2016 figures. • NBC Sports reported an average per-game viewership for the 2017 Stanley Cup of over 4.7 million viewers and a peak viewership of almost 9.5 million viewers. • Several NBA franchises are beginning to invest in eSports franchises and several media outlets have created basic coverage for those. Baseball’s Opportunity - Provide LIVE, synchronized connections immediately around the world to build audience. - Empower all viewers on all screens with a better television engagement - Provide all carriers with stable, scalable and continuous live coverage via IP video programming easily on all platforms – effectively, efficiently in-order to build an engaged and profitable audience engagement - Drive the acceleration of LIVE video to everyone - Provide the underpinnings for LIVE OTT engagement over every IP Video network today • Voice-based user interfaces & technologies that support LIVE streaming and Why? high-resolution formats are the dominant themes among product and service upgrades in the OTT Video Market (Frost & Sullivan March 2018) • TV (video) initiatives will push more live programming to portable, connected devices • Viewers who already like long-form cable/IPTV programming on their TV sets will rapidly supplement this behavior with OTT offerings via IP services on connected devices. In fact, time spent watching sports on connected devices grew over 75% between Q4/2017 and Q2 2018. (Ooyala Global Video Index Report) • TV is not dead! The subscription model has just shifted and the race is on to provide all programming, both new and legacy available to retain audiences. • Introduction/retainment to become the holy grail of the M&E category Being in the right position….key Fundamental shift in the economics of television • All new new deployments provide multiple platform/device distribution – it’s a given • Time to market critical – Cloud based service providers capitalizing and pace of Networks (Telco/Cable) deployments. • Portability’s the primary growth category • Mobility - 60+% of all video delivery/consumption Tablets/phablet’s = personalized viewing • Short form LIVE programming capitalizing on second screen behavior. • Nearly 90 percent of people watching television are also tuned in to another device • It’s no longer enough to receive information via one screen at a time. (NPD) • A continuous, stable connection is a mandate for networks in order to retain viewership! Viewers want LIVE programming on all devices… 15 Why is LIVE, synchronized programming so important…. • Whether you are a broadcaster, publisher, producer or operator leveraging valuable LIVE assets accurately creates a recognized social reality and direct engagement for retainment of viewers • LIVE interaction platforms are more productive and open up new motivators for revenue. • The quality, speed and breadth of delivery and playout are just as important as content creation. Audience behavior now demands endless, instantaneous selection. Poor streaming can break what may be an otherwise tremendous real-time engagement • Faster, more efficient, real-time, multi-platform content delivery generates greater ROI at every point of the content chain. • Live content increases popularity of programming in crowded markets • 47% of respondents in a recent Q1/2018 IAB study state they had increased their “live” viewing due to the perceived quality and availability of select programming. • LIVE streaming is not just Sports but also news (especially sports related)or breaking events where immediacy is paramount. • LIVE programming goes beyond monetization providing community and cultural engagement that has proven to bring audiences back. Synchronized devices are personalized…. Total # of TV Households Where? Who’s driving the fear…? Jump on or be left behind • FAANG’s enjoy scaled economics way beyond the capabilities of nationally Devices bound service providers • FAANGs may be willing to sustain loss making businesses in order to build Facebook Apple Amazon Netflix Google market share Handsets iPhone Pixel OTT streamer Apple TV Fire TV Chromecast • Local service providers have a lead in sports and local language content, but STB, TV OS Android TV • Sports rights auctions have FAANGs bidding with increasing levels of Smart speaker Homepod Echo Home spending and aggression need LIVE streaming –– device synchronization key as well as non-English language • Where there is opportunity against FAANG’s is in LIVE NEWS and significant
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