Media Environment Update
McMaster University February 9, 2006
CBC Strategy & Planning 2/16/06 Contents
• The Macro View • Attitudes Towards Media • Broadband & Connectivity • Audio Business Models • Video Business Models
CBC Strategy & Planning 1 The Macro View
CBC Strategy & Planning 2 User Experience in the “Old Days”
Television Radio Film Magazines Books Newspaper Out-of-Home
View moving Participation via or static 2-way images Communication
Read Listen to Text Audio User Experience Now
Television Magazines Film DVD Talking Books HDTV Interactive TV Newspaper HD-DVD PVR Out-of- Books Console VOD SVOD Podcasting Home Games Portable CDs Internet Blogs Satellite Games Radio DAB Online eMail Games MP3 Players Text Wireless Radio iBiquity Messaging CD-ROM etc…
View Utility & Participation via moving or Interactivity 2-way static Communication images
Read Listen Text to Audio CBC is Committed to new platforms…
Streaming Media 1995
Terrestrial Digital Radio 1999
Legal Downloads 2004
Podcasts 2005
Satellite Radio 2005
CBC Strategy & Planning 5 CBC’s Multiple Platforms
Text News & Messaging 2001
Video On Demand 2003
Interactive TV 2003
HDTV 2005
Cellular TV 2005 (Newsworld & RDI)
CBC Strategy & Planning 6 CBC’s Multiple Platforms
Syndication – screens, screens, 2002 ! screens
CBC Strategy & Planning 7 CBC’s Multiple Platforms
• 2006 Winter Olympic Coverage !TV: CBC Television !Cable: Newsworld & TSN & Country Canada !Radio: CBC Radio !Internet: CBC.ca !Mobile: Streaming video on Bell !VoD: Rogers On-demand !Content production follows !platform demands
CBC Strategy & Planning 8 Attitudes Towards Media
CBC Strategy & Planning 9 For North Americans, the PC/Internet has Become the 2nd Most Popular Media Activity
Source: Forrester, All North American Consumers
CBC Strategy & Planning 10 Canadians are Spending Less Time with Radio and More Time on the Internet
2003 2004 2005 2003 2004 2005 2003 2004 2005 2003 2004 2005
Source: SRG
CBC Strategy & Planning 11 This Seems Especially True for Tweens, Teens & Young Adults
Average Number Of Hours per Week 9 to 13 14 to 29
Listening to the radio 4.94 5.12 Listening to online radio 0.72 1.25 Listening to satellite radio 0.43 0.30 Total 6.09 6.67
Using the Internet for news and entertainment 5.15 6.48 Using the Internet for work or studies 3.12 8.56 Using the Internet to communicate 4.77 9.48 Using the Internet to blog 0.82 1.45 Total 13.86 25.97
Watching television 13.42 8.85
N=1417, Canadian Youth 9-29, Ping National Survey, October 2005
CBC Strategy & Planning 12 Americans Spend More Time with Media Than They do Sleeping • Americans spend 9 hours hour per day interacting with Media • As much as 1/3 of that usage is multi-tasking (e.g. watching TV and text messaging at the same time )
Source: Pew, Ball State Univ.
CBC Strategy & Planning 13 Teen Behaviour is Driven Primarily by Entertainment & Socializing
Source: SRG
CBC Strategy & Planning 14 Downloading Gets All the Press, but the Real Story is Instant Messaging
Source: SRG
CBC Strategy & Planning 15 Teenage Girls are More Comfortable with Online Technology
Source: Pew Internet & American Life Project, Ratio of participation in online activities by gender
CBC Strategy & Planning 16 Broadband & Connectivity
CBC Strategy & Planning 17 Internet Use has More Than Doubled in the Last Seven Years
Source: SRG
CBC Strategy & Planning 18 Canada Ranks No.5 in Broadband Penetration
Source: Forrester, Jan 2005
CBC Strategy & Planning 19 Broadband Continues to Grow
Source: SRG
CBC Strategy & Planning 20 We May See a Surge in Broadband Penetration in Rural Areas • Broadband Satellite (Anikast) !Always on !Uplink & Downlink (No Phone Line) !$54.95 / month !Fully compatible with Broadband Router / home network
CBC Strategy & Planning 21 Rogers and Bell Will Launch Inukshuk, a National Wireless Broadband Network by 2008 • Uses WiMax technology !Essentially WiFi with range of up to 50 km !Consumer products should start arriving in late 2006 • Plan to Launch in: !40 Urban Centres !50 Unserved Rural Areas !Need spectrum
CBC Strategy & Planning 22 Broadband and Cell Phone Access Coming to the Skies? • December 2006 U.S. Regulators will auction off spectrum allowing Cell Phone & Broadband usage on airplanes !Carlson Wagonlit Survey - 61% of Business Travellers oppose Cell Phone use on planes • Transport Canada Has “No Immediate Plans” to lift bans on Cell Phones or Broadband access
CBC Strategy & Planning 23 Cell Phones are Mainstream but Growth may be Starting to Plateau
Source: SRG
CBC Strategy & Planning 24 Text Messaging on Phones Grew Significantly in the Last Year
Source: SRG
CBC Strategy & Planning 25 Audio Business Models
CBC Strategy & Planning 26 Competing New Audio Delivery Models
File Sharing Free but Illegal* User owns and can do whatever they want
iTunes Model 99¢ Per Song User owns and can play back on compatible devices
Broadcast “Pay” Radio (limited commercials, Satellite Radio $14.99/Month exclusive & niche content) User downloads “radio” programming for free, play PodCasting Free back on compatible devices, amateur & pro content $9.95/Month. Access to 700,000 songs with varying Subscription $9.95/Month rights. User must continue to pay to play Internet streaming of terrestrial & personalized radio, Internet Radio Free access to local markets from anywhere in the world Digital Terrestrial Radio, offers improved sound HD Radio/DAB Free quality plus data and interactivity Audio service over cell phone network. Hybrid of Mobile Music $3 per Song iTunes, Subscription & Satellite Radio type services 6 channels of audio separation, compatible with 5.1 Audio $TBD home theatre/DVD audio playback systems *Technically File Sharing is Currently Legal in Canada, Although the Music Industry is Lobbying to Change This File Sharing Still Dominates Downloads
Awareness
Usage
Source: SRG Fast Forward 2005
CBC Strategy & Planning 28 Many Canadians Don’t Believe File Sharing is Theft
Source: SRG Fast Forward 2005
CBC Strategy & Planning 29 Since Its Introduction in 2001, 42 Million iPods Have Been Sold Worldwide
Source: Apple Quarterly Financial Reports / Q4 2005 Estimate from Lehman Bros
CBC Strategy & Planning 30 In Canada, the iPod Enjoys a 31% Share of the MP3 Player Market
• In the U.S., Apple has a 51% share • Measured in dollars, it’s closer to 75% ! This is due to Apple’s dominance in high-end players
Source: SRG Fast Forward 2005 & Apple Computer
CBC Strategy & Planning 31 Over 30% of Canadians will Own an MP3 Player by Mid 2006
Source: SRG Fast Forward 2005
CBC Strategy & Planning 32 iTunes is the King of Legal Downloads with an 80% Market Share
Billionth Song? iTunes Music Store Launches Feb 2006 April 28 ‘03 Oct. 16 ‘03 June 15 ‘04 Oct. - Dec. ‘04 Jan. 6 ‘05 May. 10 ‘05 Nov. 1 ‘05
Source: Apple Computer, Q4 2005 and Billionth song Projected
CBC Strategy & Planning 33 The Average iPod Owner has Purchased Less Than 25 Songs • Consumers are likely filling their iPods with Music from their CD collections and through File Sharing • Sharing of purchased Average # songs in multi-iPod of Songs Downloaded households may decrease the number of songs downloaded per iPod
Source: Apple Computer
CBC Strategy & Planning 34 iPod & iTunes have a Demonstrable Lead in Car Audio Integration • Many Automakers offer factory audio systems which integrate with the iPod • In January, Apple filed a patent for a technology that would wirelessly connect an iPod to a car stereo system ! Seeking to establish an industry standard (e.g. USB) • There is a slew of iPod compatible car audio systems available in the aftermarket ! Although iPod integration leads there is strong demand from the industry to integrate other devices with car audio systems (e.g. Satellite Radios, MP3 players, GPS)
CBC Strategy & Planning 35 There is also a HUGE Cottage Industry in iPod Peripherals • Major Consumer Electronics Manufacturers including Harmon Kardon, Denon, Bose, Tivoli and JBL have products which integrate the iPod into home stereo systems • Other peripherals improve on the iPod experience offering benefits like improved battery life, audio recording, digital camera integration and ability to listen under water • Some range from the sublime to the ridiculous (e.g. iPod underwear, Levis iJeans) • This only underscores how much of the iPod’s success is driven by fashion sensibilities
CBC Strategy & Planning 36 Potential iPod Killers?
SanDisk Sansa e200 SanDisk Sansa e200 • Music • Music • Movies • Photos • Photos • Similar in Size & Price • Similar in Size & Price to the iPod Nano to the iPod Nano • Microsoft PlaysForSure • Interchangeable (Compatible with battery Napster, Rhapsody, • Microsoft PlaysForSure Puretracks, Bonfire, (e.g. Napster, etc.) Rhapsody, Puretracks, • Available Feb 2006 Bonfire, etc.)
• Usability & Device Integration still an issue with PlaysForSure group of services
CBC Strategy & Planning 37 New Music Services From Bell & Rogers
• Bell Full Track Music !$3 per download through mobile service (on top of $5 monthly charge) !Free download to PC within 90 days once purchased on mobile phone !100,000 songs available • Rogers uR Music !$2.99 Download to to mobile phone !$1.25 Download to PC !“Thousands” of tracks
CBC Strategy & Planning 38 The Subscription Model Still Struggles to Gain Traction…
7% Up 8
41% Up 2
Source: Nielsen SoundScan
CBC Strategy & Planning 39 …While CD Sales Continue to Fall
Dow n 8%
Source: Nielsen SoundScan
CBC Strategy & Planning 40 Digital Music Vending Machines are Coming… • Starbucks is rumoured to be in talks with Apple about adding iTunes Kiosks to Retail locations !Currently Starbucks has a partnership with Microsoft & HP which lets users burn mixed CDs in some locations • Many other companies are testing/experimenting with Kisoks that can burn or download music
CBC Strategy & Planning 41 PodCasting is Expected to Grow in the Next Five Years
Bridge Ratings
Forrester
Source: Forrester March 2005, Bridge Ratings, Nov 2005
CBC Strategy & Planning 42 PodCasting Will Likely go Through Similar Adoption Phases as the Internet
Phase 1 Phase 2 Phase 3 Enthusiastic Disenchantment Value-Driven Experimentation Abandonment Adoption
This exuberant phase will see Consumers will quickly find that Advertising and Subscription models millions of iPod owners and other most PodCasts aren't worth listening will survive. successful PodCasting audio enthusiasts subscribe to to. PodCasting programming will will include a healthy dose of PodCasts about PodCasting, divide recognizably into mass- professional content and editorial mainstream programming and niche market programming (broadcasting) control programming and niche programming (narrowcasting).
Source: Forrester
CBC Strategy & Planning 43 More Men have tried PodCasts, but Women who’ve tried Listen More Frequently
Source: Taylore, Nelson, Sofres
CBC Strategy & Planning 44 In North America, Satellite Radio is Gaining Momentum
*2006 Projection 15,249,560
2005 9,249,560
2003 4,253,846 2003 2002 1,576,923 365,384
Source: Sirius & XM Financial Reports and Projections for 2006
CBC Strategy & Planning 45 Sirius and XM Radio both Launched in Canada in Q4 2005
$14.99 / Month $14.99 / Month
CBC Radio One, CBC Radio Three Home Ice, (un)Signed CBC Infoplus, Hardcore Sports Laugh Attack, Canada 360 Iceberg Radio, Energie2 Quoi de Neuf, Air Musique RC Premiere Plus, RC Bande a part Franc Parler, Sur La Route Rock Velours
Martha Stewart, Discovery, BBC, NPR, CNN, CNBC, NFL, Maxim, E! CNN, FOX, CNBC, BBC, Baseball, NHL Lots of Music Stations Lots of Music Stations
CBC Strategy & Planning 46 Consumers Likely View Sirius as having Better Content… • Sirius U.S. scored a major coup by convincing Howard Stern to move from conventional Radio to Satellite ! Research has indicated that as many as 23% of Stern’s terrestrial audience will follow him to Satellite in January 2006* ! Sirius Canada has decided not to offer Howard Stern (likely would have hindered CRTC licence) ! However speculation is this could grow the “grey market” to as many as 80,000 Canadians** • Sirius is also considered to have an edge in content by their deals with Martha Stewart and the NFL *Bridge Ratings **London Free Press
CBC Strategy & Planning 47 …But XM as Having Better Technology
• XM is the only Satellite Service that offers truly portable on-the-go receivers !Sirius current “portable” technology needs to be connected to either a home or auto antenna to receive signals Samsung’s New XM Portables • XM generally has the advantage when it comes to the all important gadget “cool factor” • XM will also launch two 5.1 Audio stations in March, a first for the radio
industry on any platform Pioneer ino XM
CBC Strategy & Planning 48 Sirius is Catching XM in Auto Subscriptions and Winning in Retail • Many Auto Manufacturers offer XM and Sirius Radios as Standard Equipment !XM available through GM, Honda and Hyundai !Sirius available through Ford, Daimler Chrysler, BMW and Mitsubishi !Nissan, Subaru, Toyota, Lexus, Infiniti and Audi offer both • Sirius is gaining share from XM in the retail market !Increased from 47% share in August ‘05 to 61% in November* *NPD Group
CBC Strategy & Planning 49 Existing Satellite Subscribers Value Program Variety and Lack of Commercials Most
Source: Forrester
CBC Strategy & Planning 50 Most U.S. Consumers aren’t Interested in Satellite, but Interest in Sirius is Higher
Source: Forrester
CBC Strategy & Planning 51 Canadian Interest in Satellite Radio is Healthy, but it’s Still Early
27% 26%
Source: SRG Fast Forward 2005
CBC Strategy & Planning 52 For U.S. Consumers, Cost is the Biggest Obstacle to Getting Satellite Radio
Source: Forrester
CBC Strategy & Planning 53 Ford & Chevy Owners are Most Likely to Have or Want Satellite Radio
Source: Forrester
CBC Strategy & Planning 54 Online Radio Goes Far Deeper than Satellite in Genres & Personalization • Radiolibre.ca !Allows users to listen to deep selection of play lists put together by experts Or !Refines and builds your personal preferences based on user ratings
CBC Strategy & Planning 55 Music Recommendation Sites are Maturing • Pandora.com • Music Genome project !Combines • Expert Opinions • User Input • Data Mining !Provides recommendations you can actually use
CBC Strategy & Planning 56 Time Shifting Options are Maturing for both Broadcast and Streaming Audio • Radio Time !An online service that records and time-shifts Internet Radio and Broadcast Radio !Compatible with devices such as the Radio Shark • Motorola ROKR-E2 !Includes FM receiver with ability to pause and record live radio
CBC Strategy & Planning 57 The Failure of Digital Terrestrial Radio in Canada Has Prompted the CRTC to Re-Evaluate • Key Questions Being Considered in Public Hearings May 15, 2006 1. How can Canada Best Make the Transition from Analog to Digital? 2. Should DAB continue to be the standard or should other formats such as Ibiquity, DRM, DMB and DVB-H be considered? 3. Should new entrants be allowed? 4. If no plans are identified what should be done with the Spectrum?
CBC Strategy & Planning 58 U.S. Digital Terrestrial Radio (a.k.a. Ibiquity/HD-Radio) is Starting to Roll • 624 Stations On Air • 70 Stations doing Multi-Casting • eBay National Rebate Program “Trade in Your Old Radio” • Brazil, France, Mexico, New Zealand, the Philippines, Switzerland and Canada (apparently?) are testing Ibiquity • BMW 6 & 7 Series Vehicles Offering Ibiquity Factory Installed
CBC Strategy & Planning 59 Many HD Radio Stations are Embracing the Second Audio Channel • Station Groups such as Clear Channel, CBS, Emmis, Greater Media and Bonneville are planning on rolling out over 250 new channels • These include new music and talk formats to compete with Satellite, Internet and iPods • Examples !HOT 97 in New York will program “Old School Hip Hop” on it’s HD2 channel !Unplugged, Fitness, Relaxation experimental formats
CBC Strategy & Planning 60 Ford & Microsoft Announce Computer as Option in F-Series Trucks • $3,000 U.S. Option Available Spring/Summer 2006 • Touted as “Mobile Office Space” !Word, Powerpoint, Excel, Outlook • But also… !GPS, Music, Video, Wireless Internet
CBC Strategy & Planning 61 Pioneer Launches in-Car Media Hub
• Runs on Windows Automotive OS • Does just about everything ! GPS ! Bluetooth Cell Phone Integration ! MP3 Hard Drive ! iPod Connectivity ! Video / Home Theatre ! Satellite Radio Connectivity ! WiFi Connectivity ! Voice Control ! Traditional Radio
CBC Strategy & Planning 62 Wireless Movie Rentals are Coming to Cars through WiMax • Oxford Media (Hotel VOD) have teamed up with VizuaLogic (in- Car Electronics) !WiMax Hubs set up at gas stations !Consumers would be able to rent/download movie to auto !Have rights to play for specific number of hours
CBC Strategy & Planning 63 New Music Services Coming in 2006
• URGE (Microsoft & MTV) !Subscription Service (2 Million Song Library - iTunes equivalent) !Embedded in new Windows Operating System, Media Center & X-Box • iRadio (Motorola) !Integrates user’s MP3 collection with customized individual radio stations delivered through computer and cell phone !Ability to deliver over 3G wireless network
CBC Strategy & Planning 64 New Music Services Coming in 2006
• V Cast (Verizon) ! iTunes Model using Cell phones as playback devices ! 99¢ for songs bought over the Internet, $1.99 for songs bought over cell wireless network ! Model is successful in Korea and Japan • Virgin Radio Canada ! 6 Radio Stations ! Currently available online, but will be available over wireless network when 3G launches ! $TBD
CBC Strategy & Planning 65 New Music Services Coming in 2006
• Clear Channel !In January Clear Channel is Launching a free music video download service to compliment its radio stations !The free downloads are an attempt to create buzz in terrestrial radio !Warner and Universal are partners • Google (Napster?) !Google launched video download service in Fall 2005 (CBS content) !Rumoured to be launching music service or buying Napster
CBC Strategy & Planning 66 Nine Inch Nails Remix
CBC Strategy & Planning 67 Demo: NIN Garageband
CBC Strategy & Planning 68 Video Business Models
CBC Strategy & Planning 69 Competing New Video Delivery Models
Bit Torrent, Kazaa, Limewire File Sharing Free but Illegal User downloads essentially pirated video for free - often extremely long download times Google, iTunes, WebFlix Download Model $1.99 Per Episode User downloads and owns and can play back on compatible devices - Fast Stable Downloads $500 for Sony (launching 2006), Sling Media Location Free User is able to watch their home television signal (cable, satellite, Equipment OTA) anywhere in the world over the Internet Mobile $75 - $99 per Mobi TV User can stream / download select television programming on cell Streaming Month phone Free, Subscription, TMN On Demand, Treehouse On Demand VOD User can watch VOD over Cable / IPTV with pause, rewind, fast- Pay Per View forward features. Comparable with Bell / Microsoft IPTV Cable Television type services Delivered over extremely High Cable & Satellite Speed Broadband. Similar to Digital Cable in service offering Free - $20/Month Available OTA and through BDUs HDTV Intended as a replacement for analog TV. 5x higher resolution, Premium widescreen & surround sound Media Environment Update
McMaster University February 9, 2006
CBC Strategy & Planning 2/16/06