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Redefining the Pay TV Experience SP Video Market Trends and Case Studies

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Redefining the Pay TV Experience SP Video Market Trends and Case Studies Redefining the Pay TV Experience SP Video Market Trends and Case Studies Aunindo Ghosh Senior Product Manager – Service Provider Video BU July 2015 Agenda 1. Pay TV Updates 2. Time Shifted Viewing Trends 3. Next-Gen UX Trends 4. Latest on OTT © 2013-2014 Cisco and/or its affiliates. All rights reserved. Pay TV Updates © 2013-2014 Cisco and/or its affiliates. All rights reserved. Worldwide Pay TV Growth Total Pay TV Subscribers and Annual CAGR by Regions (in M) +4.4% 603 530 0% +1.3% +2.1% +5.3% +4.9% 112 112 120 125 82 88 52 61 12 14 Africa and Middle East Asia Pacific Central and Eastern North America South and Central Western Europe Europe America 2012 2013 2014 2015 2016 2017 2018 © 2013-2014 Cisco and/or its affiliates. All rights reserved. Source: IHS Screen Digest, 2/2015 Screen, Screens, Screens 90% Smartphone Laptop/PC Tablet Television of all media interactions are screen based On average we spend 10% 4.4 hours of our leisure Radio Newspaper Magazine time in front of screens of all media each day. interactions are non-screen based Source: Google, Sterling Brands & Ipsos: The New Multi-Screen World, 2012 © 2013-2014 Cisco and/or its affiliates. All rights reserved. TV Consumption is Undergoing a Revolution Share of Television Viewing by Device TV is still the main household video consumption device 3 Screens 4 Screens 10% 4% 5% 18% However, almost a third of 4-screen 16% owners regularly watch TV on other video-enabled devices 77% 69% Size matters: Consumers prefer the biggest screen available at any point: TV Computer Smartphones Tablets TV at home, 3G/4G Dongle on the move, else mobile Source: IAB – The Multi-Screen Marketer, 5/2012 © 2013-2014 Cisco and/or its affiliates. All rights reserved. Will Content Providers Go “All In” on OTT in 2015? . Two major Go-to-Market strategies: White-Label and Aggregation Portal . Both monetize via combination of paid subscription and dynamic ad insertion White-Label Platform Aggregation Portal Platform Owner CBS MLB DISH DirecTV Disney: ESPN, Disney Channel beIN SPORTS en Affiliated CBS, MLB,ESPN, Turner Broadcast: Español, Cine Sony Networks Showtime WWE, HBO Adult Swim, TNT, Television, MTV, CNN, TBS, HLN, ¡Hola! TV Cartoon Network © 2013-2014 Cisco and/or its affiliates. All rights reserved. Content Innovation – Heavy Investment in Programming . US networks collectively invest $30Bn annually in premium TV content . DirecTV and Dish each spend 45-52% of their revenue on programming Annual US Multichannel Network Programming Expenses (in $Bn) 36.1 33.9 31.5 29 26.4 24 21.7 18.6 19.8 2009 2010 2011 2012 2013 2014 2015 2016 2017 © 2013-2014 Cisco and/or its affiliates. All rights reserved. Source: SNL-Kagan, 2014 Increasing Costs and Competition Bring SPs to Consolidate Revenue Synergy Sum Paid Total Subs Buyer Seller/s ($Bn) (M) . Upsell / Package upgrades 49 27 . Advertising scale Cost Synergy 45 32.6 . Sales & Marketing 25.4 24.5 . Support & Maintenance 10.1 8.5 . Reduce content acquisition costs as a result of increased bargaining power 7.5 17.8 . Network / Backbone 2.2 0.7 © 2013-2014 Cisco and/or its affiliates. All rights reserved. Service & Technology Innovation – Dish Case Non-Dish subs: “Sling TV” Premium subscribers: 4K Mainstream subs: New RC, UI . Pure OTT service for linear TV Joey and Vevo music video app . $20/month (no commitments) . Uses BCM 7448 SoC capable of . The Hopper voice controller is 4K playback at 60fps or side-by- equipped with a touchpad, . Adding News or Kids packages side HD display responding to swipe gestures will cost an extra $5 each . Available this summer. New 4K . In addition, a new UI will coming . Offers linear streaming from ~12 content partnerships deals are in to the Hopper DVR this year as basic and premium cable the works well as a Vevo app networks including ESPN . Compatible with current Hopper . Features pause, rewind and STB and works with any 4K sets replay of (some) live shows for (unlike Comcast, DirecTV) up to 3 days after airing © 2013-2014 Cisco and/or its affiliates. All rights reserved. Creating New Service and Bundling Opportunities . “To date, DirecTV has offered “synthetic” bundles with AT&T and Verizon, which combine TV, Internet and phone. But those bundles aren’t integrated, requiring two truck rolls and two separate bills. Last year only 9% of DirecTV’s customers opted for such a “synthetic” bundle.” − Mike White, DirecTV president and CEO . “AT&T sees opportunities to extend DirecTV service in other areas, too. We are planning to expand the satellite TV service into the auto market (as a way of entertaining kids in the back), building on ours agreement with General Motors to deliver 4G LTE to the select vehicles.” − Ralph de la Vega, president and CEO of AT&T’s mobility division © 2013-2014 Cisco and/or its affiliates. All rights reserved. Source: Goldman Sachs’ Communacopia conference, 9/2014 Catch-Up and Box Sets Catch-Up TV (up to 30 days from Sky Box Sets (TV Series, S-VOD) airing) . Solution targets binge viewers . Up to 60 channels (depends on package) . Examples of available premium content: . Restart TV – enabled only after show ends . Downton Abbey S1-4 (Feb 14) (currently in SKIT, UK launch later this year) . The Walking Dead S1-5a (Oct 14) . True Detective S1 (Mar 2014) . The Following S1-2 (Apr 14) © 2013-2014 Cisco and/or its affiliates. All rights reserved. Movies On-Demand and Sky Store Sky Movies On-Demand (S-VOD) Sky Store (Movies, Transactional VOD) . Netflix equivalent (mostly long-tail) . Rental, Purchase-to-Own, Pre-Order . VOD must be downloaded to HDD . Downloads can be archived to save DVR . Counts against BB usage caps space (only title metadata is saved) . Filtered by Cast and Genre . DVD shipped within 5 business days . Also includes push-VOD items (found on . Plans to enable device access via apps “Showcase” section) and link to Sky Store . Non-Sky TV customers will be able to purchase via the Sky Store website © 2013-2014 Cisco and/or its affiliates. All rights reserved. DTH Monetize Content While Cable Monetize the Pipe Provider Sky Deutschland Viasat Virgin Media Com Hem Footprint Germany & Austria Scandinavia UK Sweden Platform DTH DTH Cable Cable TV Subs 3.5M 580K 3.7M 612K Service Snap Viaplay Netflix on TiVo Audience Subs & Non-Subs Subs & Non-Subs Existing Subscribers Content VOD VOD + Live Sports Netflix VOD Catalogue Subs: Free Subs: €4.90 £5.99/month $11.57/month Price Non-Subs: From Non-Subs: €9.90 (to Netflix) (to Netflix) $12/m © 2013-2014 Cisco and/or its affiliates. All rights reserved. Time-Shifted Viewing © 2013-2014 Cisco and/or its affiliates. All rights reserved. The Tip of The Iceberg… Time-shifting accounts for 15% of viewing in UK and steadily growing UK Live vs. Time-Shifted Viewing (in %), 1/2006 - 1/2015 100 90 80 70 60 50 Time- Shifted 40 30 20 Live Viewing 10 0 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Oct-10 Oct-12 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Apr-11 Oct-11 Apr-12 Apr-13 Oct-13 Apr-14 Oct-14 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 © 2013-2014 Cisco and/or its affiliates. All rights reserved. Source: BARB, Feb 2015 The Younger They Are, The Less Linear They Will Watch Linear accounts for only half of video consumption among ages 16-24, while time-shifted content account for almost 30% UK Video Consumption by age (in %), 2013 100% 2 8 7 5 4 3 3 3 4 13 6 7 13 12 80% 6 20 6 17 7 18 Short Online Clips 60% 16 DVD/Blu-Ray Online Subscription 40% 80 82 VOD/Catch-Up 69 61 64 PVR 50 20% Linear TV 0% 16-24 25-34 35-44 45-54 55-64 65+ (4:14) (3:51) (3:50) (4:31) (4:37) (4:36) © 2013-2014 Cisco and/or its affiliates. All rights reserved. Source: Ofcom, Aug 2014 Original Programming Accounts for Bulk of TSTV Viewing Total UK Viewing Time by Genre, Time-Shifted and Linear (in %), Feb 2015 18.6 18.2 14.4 13.7 15.4 8.3 8.8 8.2 8.0 12.0 6.2 Linear 4.5 TSTV 7.0 7.6 3.7 7.3 7.9 5.7 5.0 4.0 3.5 0.6 2.8 2.4 0.1 0.2 0.1 0.0 1.3 1.2 0.9 0.5 0.5 0.2 0.2 © 2013-2014 Cisco and/or its affiliates. All rights reserved. Source: BARB, Feb 2015 TSTV Challenges Methodology for Audience Measurement 71% of time-shifting occurs within the first 24hrs after airing; 87% of time-shifted viewing occurs within the first 3 days UK TSTV Viewing by Playback Delay, 2013 47 24 10 6 5 4 3 1 Same day as live Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 © 2013-2014 Cisco and/or its affiliates. All rights reserved. Source: Statista Why Does This Matter? Advertising. Networks campaign to retire live and same-day ratings . Showtime: “Its been years since the network last paid attention to live viewing.” . 60-70% of Dexter viewers watch via VOD or DVR . Only 32% of Homeland’s 7M weekly views occur during a live Sunday night telecast .
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